Andrea M

I'm representing the client; I prepared their returns and they called me in a panic when they received the notice. Apparently, I'm not as stupid as I think I am. I had someone review the returns and they didn't find any errors. They're confident that I took the losses the client was entitled to. They reviewed my basis calculations and all looks fine. And the colleague doesn't see where amendments need to be filed. This is my first ever audit and I'm a bit nervous and was losing sleep over this and reading horror stories on the internet and second guessing everything I did, but all my numbers have backup and are defendable. The IRS auditor went to visit the client this week and he was impressed that they have adequate procedures in place; segregation of duties; files properly secured; No evidence of fraud! I now need to provide a copy of QB, Basis Calc, and support for COGS and Other Expense. I do need to have the client sign an audit engagement letter. Thanks for all responses!

A client is under audit for 2013. It's looking like they're probably going to have to return the refund for that year because of loss limitation rules. It also looks like losses for 2014 & 2015 should not have been taken, so those will need to be amended. The question is: a. Amend 2014 & 2015 now, or b. Wait until 2013 audit is complete to tackle the amendments for 2014 & 2015? Thanks in advance...

The balance sheet has been set-up in the new company with the ending balances from the Schedule C. I'm okay there. My specific concern was the starting carryover # when preparing the Shareholder Basis Sheet, in order to keep track of the changing/fluctuating basis each year. Thank for all the responses. Sorry if my posts are confusing...

^^Thank you for the detailed response. I'm able to calculate the current year ins and outs, just wobbly regarding the beginning #. In the above, there seems to be a conflict in saying the 'carryover basis equals fixed assets' and then saying 'equity is the carryover basis'.

Thanks Rita. I just feel like I've made some mistakes with this and it worries me. I really should buckle down and commit to getting better at it; I guess by saying I'm giving up I'm trying to take the easier way out I think that I'm going to use the ending equity of the Sole Proprietor as the beginning basis. There were no prior calculations of basis, so just saying 'use carryover basis' won't work or it will require a lot of forensic work to figure it out. Thanks

Thanks for the responses. I must admit that I'm over my head with this client and I'm trying to figure out how to transition them to another, more knowledgeable, tax provider. I need to stick with Individual returns.

If a Schedule C client converts his business to an Scorp, how do you calculate starting basis?

Thanks!

The wrong box was checked on a 2014 1120S return. The return was prepared on the accrual basis, but the cash basis box was checked. Should the return be amended? The accrual box will be checked on the 2015 return. Thanks!