SFA

Yowza, I can't even imagine the burden of proof that one took to defend. Thank you for this reference site. I would like to forward it to my client but do not want to "belittle" their point of view. I will search for something a little less humorous.

No really, there is a business deduction/breast implant case that went to tax court and the IRS lost. I just don't have the reference material at my fingertips just now.

Isn't there a breast implant case that sets a precedent here?

Client is a professional who must conduct face-to-face meetings and provide telephone consultations. Client broke off a front tooth and could not speak clearly (lisp and whistle sounds) so immediately had tooth replaced. Now is asking if this is a business deduction because the missing tooth created a physical barrier to him performing his profession. He believes the impediment and cosmetic appearance created embarrassment and affected his ability to do his work and his clients were put-off by the sound of his voice and his appearance. The client is really pressing me on this. If this is a "repair and maintenance" expense, must we apply the BRA test (betterment, restoration or adaptation)? Joking, but not sure exactly what to give the client to satisfy him about whether this is a Sch A and (I believe) not a Sch C deduction.

I think I would suggest that the client ask for a refund of the overpayment and not "apply to 2015." Then after feeling secure that the SS # is not compromised for future transactions, make estimated payments for the year 2015.

This sure is a cranky group. It may be time for a nap and some chicken corn soup. Nite-Nite everyone.

I'm starving. My whole meal thing is off.

We all have come across the penny pincher power trippers. They are hard to please unless everything is perfect, cheap and fast. You never feel good before, during and after their project. Take the satisfaction from them and turn their work down. Let them know that you have taken on new clients and your dance card is full.

Clay, yes we have the detail records that show her direct cost of goods sold. We have treated the activity as "not-for-profit" in 2014 and have asked the client to continue to keep records for all sales and costs so that we can revisit the status on the 2015 return. She is ok with this determination. Thank you for weighing in.

Sadly, what she hoped would be a business has turned into a real flop. Her items cost more to produce than the ebay market is willing to pay. She may be selling in liquidation mode and just trying to recover something/anything for them.

Thanks for jumping in Judy. A agree, we cannot enter a negative amount, but do we enter zero? The example I have is a craft hobby with sales of approx $2,000 and cogs of $2,300. Gross income -$300. The person is selling her items on ebay, but it turns out that she is not recovering her direct costs.

If we find a mistake on a prior year return, (and we have), we tell the client and let them decide if the return should be amended. If the error is significant, and not in the clients favor, and they choose not to amend, we are prepared to drop the client. Over the years, we have discovered our own errors on prior year returns. It is a bummer to admit to the client that we have messed up, but it is the right thing to do, no matter how painful or embarrassing. It's a lot more fun to find the mistakes of other tax preparers and be the hero for getting the client more money by amending!

I respectfully disagree. Certain operating expenses may be deducted on Schedule A (subject to 2%), up to gross income (which is the amount shown on line 21). From IRS Pub 535: Gross income from a not­-for­-profit activity in­cludes the total of all gains from the sale, ex­change, or other disposition of property, and all other gross receipts derived from the activity.Gross income from the activity also includes capital gains and rents received for the use of property which is held in connection with the ac­tivity. You can determine gross income from any not­-for­-profit activity by subtracting the cost of goods sold from your gross receipts. However,if you determine gross income by subtracting cost of goods sold from gross receipts, you must do so consistently, and in a manner that follows generally accepted methods of account­ing

Be careful here. Even if there were no sales, there may still have been assets purchased or contributed to the partnership that need to be sorted out as to what each partner/member received at dissolution. There can be potentially a transfer of wealth from one individual to another, using the partnership entity to "launder" the transaction. I would prepare a final return and present a balance sheet with no assets and a reconciliation of who and what was contributed and to whom assets (if any) were distributed. I am not saying in any way that is the case in your situation, but it is a reason to dig deeper and prepare an accurate final return.

Using the terminology on the Schedule C, "gross income" is sales minus cogs. If gross income is negative, is anything reported on line 21?

Thanks for the update.

I actually feel bad for this man. He's had a pretty tough year. As long as I don't feel personally threatened, I'm ok with eccentrics. Good luck.

renting below fmv to family or friends can be acceptable if there is the expectation that the property will be cared for in a way that strangers will not.

Congratulations! Sounds awesome!

Am wondering what type of software is used in your practice to track time spent on client work. We have been using excel spreadsheets, but believe we should upgrade to a professional time and billing program. During tax season, we have an office of ten employees. We also use the same excel time sheets to track hours for the weekly payroll. Any suggestions will be appreciated.

Thank you for the information Joan. I like your website!

Just finished our Family trust and my corporation. Yep. Freebies. Still had time to watch Penn State game.

Check the regulations for your state. PA now has a $400 no exceptions penalty.

Competition is fine. We don't need the IRS to "help" us by keeping the little guys out of the game. There are plenty of easy tax returns out there. Lots of people do their own and help out family and friends. They should not have to pay the IRS for the "privilege."

Because it is the right thing to do, I pay my employees PTIN renewal fees and the cost of their CPE training. They are compensated for the time they spend at seminars and their travel to and from the events. This is not chump change. The PTIN is simply a method to shield a preparer's social security number. Having a PTIN is not a credential that has been "earned," so it does nothing to attract new clients or add to our bottom line. Perhaps we would be better served by paying for "Life Lock" protection instead of paying for a PTIN.