So and So

Hi all. I don't post here very often but I read the posts almost everyday. I did want to comment on this issue. To me, the IRS is dead in the water on their attempt to penalize a tax preparer for the "owners" not taking a resonable salary. If they do this, they are forcing the S-corp into non-compliance by not allowing them to file a timely return. Then they would want to penalize the S-corp for not filing. But, no preparer can file the return w/o being penalized for filing. It just goes in circles. If the IRS wants to go after the owners for not taking a salary, so be it. But, they cannot penalize me for preparing the return with true and accurate figures. They cannot make me some sort of enforcer or auditor for them. Now, I know that in reality the IRS can and does do whatever they want. But, I think this is the flaw in trying to get preparers to enforce what they don't have the manpower to do.

In the first post, the author refers to a permanent tax home. I read this to mean if the evangelist had a permanent home, that alone created a tax home therfore making the deduction away from home deductible. But, just because the worker has a permament home, it may not be a tax home. And since most traveling evangelists earn the majority of their income traveling, it might be hard to establish a tax home for them. If there is no tax home, then no travel or transportation expenses can be deducted. Transportation expenses would be for local expenses between workplaces. But. I don't see how an evangelist would incur transportation expenses between workplaces. Maybe if he went to one church in the a.m. and from there to another church. But, I think most miles would be commuting miles. That's my take on it.

Diagree. If there is no tax home, there are no deductible travel or transportation expenses.

I actually think it's just the opposite. I think "they" think that if they make this huge annoucement, the regular guy will think "Well, at least they're trying to help us". But, the regular guy doesn't realize that they probably wouldn't have had any tax consequences anyway. So, Congress and the Prez get good publicity without it actually costing much, if anything. JMO

Well, big deal. Some states already prohibit COD on home mortgages.

No, we have no intention of taking on these clients. Sometimes there just isn't enough money. I just thought I would post this experience here to see if others encounter this very often. I figured if people wanted to do "shaky" things with their return, they just did the return themselves with an off the shelf program.

The people who did the '05 return are a very reputable CPA firm here. I was curious as to why T/P is not returning to them. Maybe that group kicked them to the curb too. It seems strange for them to be shopping prices. They have a real mess.

Had a new client come in this week for a price on their returns. (actually they are prior clients that left us about 10 years ago because we were too "nosey" and charged too much.) So, now they're kind of behind the eight ball and shopping for a preparer. They have a Family Ptnrsp, a Grantor trust. personal return, and about four returns for their kids who "work" for them Also, the needed a 5500 filed. They dropped off last years returns for us to review and give them a price we would do the work for. First of all, I asked where the income info was. Wife told me she would tell me whatever I needed to know. I asked if she used QB. I would like her to load info on a CD and I could download on my computer and see the info for myself. They said they do not feel comfortable giving all their financial info out. Whatever! So, I see a prior year Form 5500. I asked why the financial instituion didn't file this for them. They stumbled around and couldn't seem to answer that. As the conversation went on, they revealed they had received some IRS letters. Seems there are 5 years of unfiled 5500's. I asked to see the letters. Again, no. They would tell me what I needed to know. So, I thumb through some more. I see returns for the kids. One child they paid about 4000. is 3 years old. I asked what this child did to earn that much money. "Oh, she stuffs envelopes" The Ptnrshp had it's own set of questions. So, we politely passed on preparing the returns. They asked why. We told them that we didn't have the time this late in the year to get them out by Oct 15th. Which is true. We have our own current clients waiting for their returns. Not to mention having to pull teeth to get info from them. Which we did not say to them. Then they wanted to know our fee if we had done them. We would not give them a quote. Wife said she had some quotes from other firms and wanted to see if they were in line. We told them we don't quote a fee on a return we don't prepare. Now wifey is ticked off. Who cares. But, one thing I saw on their return I have wondered about. They had two Sch C's. One was for his main occupation. The other was for Photography. But, the only income on the Photo Sch C was 7000. paid to him by the other Sch C. No other Photo income at all. What would be the point to that? There was only about 300. of expenses against the Photo income. That could have been deducted on the primary Sch C. If it was business related. Can anyone see any reason to do this? I think it looks funny to the IRS. Just screams audit. Just another day at the office. :)

I agree with this. I can see the scenario now. A client needs something from a tax return from several years ago. Preparer does not have that item. Client begins waving the letter around saying you promised to keep all that stuff for him. He's going to sue, etc, etc, etc. Nevermind that it can't be proven the preparer ever had the info to begin with. So, if it is not stated in the letter, then if the client requests something I happen to still have, all for the good. If not, then the client should have kept better records himself.

Janien Actually, this is a full year resident for Calif. I'm doing the '06 and he didn't move to Texas until March '07. The program completes form 3805V. It takes the AGI and deducts the Sch A to create what it says is the NOL. But when I follow the form along closely, it appears that on page 3 of that form, it does not actually give the NOL. The Sch A deductions are only RE taxes and Mort. interest. So, I don't think this should be creating the NOL. And I certainly didn't request this form!!!! T/P does not have a taxable income for Calif. So, no tax is due. And if I understand the form correctly, the NOL would only carryforward. But, I am really stumped. I'll call my tech help. Maybe I can brighten their day. :lol:

I do not have any problems with the income reported against the deductions taken. As long as you have been doing taxes, I'm sure you have had situations where things like this crop up. There could be income from investments. Maybe they took a bath on some stock sales to get some money out. Maybe they are borrowing the money from dear old Dad. Just because the numbers look upside down, does not mean it is a fradulent return. What I needed to know is if Calif will create an NOL if it is not created at the Fed level. I have found, since I posted here, that Calif does follow the Fed guide lines for what will and won't create an NOL. So, I know something is off with the retun. Thanks anyway.

I know you from the "board that shall not be mentioned". Would you please help me with a problem I am having on a Calif return? I am in Texas and do not do very many Calif returns. I have a client who has an AGI of approx 12000.00. But he has Sch A deductions of about 26000.00. So, no Fed taxable income. The Calif return has generated an NOL. It has taken the Sch A deductions and used it against the AGI to create the NOL. I have searched the FTB site and have had no luck finding any info on their rules for NOL's. Does this sound correct to you? There is no NOL on the Fed level. But one is generated on the Calif level? Thanks for your help.

Did the person who took the check have the same name as your client? Such as father and son? Or Grandfather and grandson? If so, that may be why the bank is digging their heals in. They may be able to show that the ID given them was correct. They have had no way to know he wasn't the owner of the check. The police may think this is an inside deal between the family. That may be why they appear not to be investgating. And, the IRS will be very reticent about accepting the theft theory. Especially if the relative is not prosecuted. My thoughts. :)

OK. Maybe I'm missing something here. Report the distribution on line 15 for IRA's. Then file form 4864 Theft loss of 200,000 which will carry to Sch A. This much loss will make itemizing possible. This will most likely wipe out the tax. But, due to the 10% and 100.00 offset, there might be some shortfall. I don't see why this approach will not work. Now, the T/P better be fully armed with all evidence of the theft and be able to prove it to the IRS. Because I can assure you, they will definately sit up and take notice of this.

It seems to me that the T/P is responsible for this situation. You stated that for each audit, he was unable to provide the documentation needed. The IRS has to have the info to decide in his favor. I have had so many clients that do not take this seriously. They think that ultimately the IRS will just take their word for it. So, they think the IRS should keep taking time to go over and over their situation. No wonder they get so backed up.