JACKSORH Posted February 19, 2008 Report Share Posted February 19, 2008 I have a client who didn't realize that she had to do a Schedule C for her new tavern business. I convinced her that one should be done, however, she told me that since she is the new owner, there was no beginning inventory except what was purchased to stock the tavern. Old owner, presumably, didn't leave any stock. Therefore, here beg. inv. would be "0", correct. Purch. less cost--------------------9220 Mat'ls & supp.------------------------12 lines 35 - 39--------------------------0 line 40-----------------------------9232 line 41 inv. at end of year---------1000 line 42 cost of goods sold----------8232 page 1 ---------------------income 19164 cost of goods sold------------------8232 gross profit-----------------------10932 Her expenses totaled 10900 net profit is only 32 Does this sound right? As a result no SE should be filed. Quote Link to comment Share on other sites More sharing options...
lbbwest Posted February 19, 2008 Report Share Posted February 19, 2008 I am not familiar with the Liquor Control Laws in Wisconsin, however in Michigan they are VERY strict; your scenario at first blush does not appear reasonable. A kinder, gentler lbb Quote Link to comment Share on other sites More sharing options...
Alpha Posted February 19, 2008 Report Share Posted February 19, 2008 When did they buy this. I agree that you need to further investigate this. A business run as a sole prop can not usually get a liquor lic. at least not in CO or WY. How much did she buy the business for and did the liqour lic change to her name. What about employees and such. Quote Link to comment Share on other sites More sharing options...
Booger Posted February 19, 2008 Report Share Posted February 19, 2008 Candy is dandy, but LIQUOR is QUICKER. Booger Quote Link to comment Share on other sites More sharing options...
lbbwest Posted February 19, 2008 Report Share Posted February 19, 2008 Candy is dandy, but LIQUOR is QUICKER. Booger Once again you disappoint me, there are so many more amusing responses possible. I am considering it a trajedy of my day that jainen didn't respond. lbb Quote Link to comment Share on other sites More sharing options...
JACKSORH Posted February 19, 2008 Author Report Share Posted February 19, 2008 When did they buy this. I agree that you need to further investigate this. A business run as a sole prop can not usually get a liquor lic. at least not in CO or WY. How much did she buy the business for and did the liqour lic change to her name. What about employees and such. Client didn't buy the business. Her boyfriend told her to put the tavern in her name. The license is in her name but his tax man gave me some sketchy figures on a plain sheet of paper as follows: Purchases less cost of items within for personal use----------------------------------9,220. The owner's initial investment in the business was zero. Her boyfriend had her put the tavern in her name, therefore, there wasn't an intial investment of capital. Part 111 (cost of goods sold section) is where those figures are coming from in the intial post. The person who did her boyfriends Schedule C/return just gave her a sheet of paper with the following information so that I could try to make some sense out of it. For instance, Gross sales----------------19,164 Purchases---------------------------------9,220 Repair------------------------------------ 580 Supplies-------------------------------------12 Advertising----------------------------------28 Sales tax------------------------------------991 Local exp-------------------------------------46 Acctg.---------------------------------------225 License--------------------------------------630 Utilities---------haven't gotten that amt. yet? Does it seem that something is amiss? Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 19, 2008 Report Share Posted February 19, 2008 Does it seem that something is amiss? Yeah, they only spent $225 on Accounting and nearly 10K on booze. What do you expect? Seriously, for a tavern to operate for a whole year on 20K of revenue is a bit unrealistic to me (I bartended through college). At nearly 50% pour cost, they are pouring some pretty stiff drinks, and they only served about 7K drinks in a full year or about 20-25 cocktails a day. Sorry, you can't make a business go on revenue of $75 per day and have booze costs account for about $35 of it. If those numbers are just missing a zero at the end, the pour cost is still too high. They must be pulling big tips in that bar. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
income taxes Posted February 19, 2008 Report Share Posted February 19, 2008 I do the books for a tavern in western Wisconsin and based on the figures given the income and expense, would be for one month in business. Find out when the liquor license went into effect. That is what the WDR would look at. How many months did they file a sales tax return for? You think the IRS is bad, wait till the WDR gets ahold of them. Insist on seeing check ledger and bank statements for deposits. Joan Quote Link to comment Share on other sites More sharing options...
MJG CPA Posted February 19, 2008 Report Share Posted February 19, 2008 Does it seem that something is amiss? RUN!! Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 19, 2008 Report Share Posted February 19, 2008 I am considering it a tragedy of my day that jainen didn't respond. lbb This post was on quickfinder.com message board and jainen questioned the numbers. I don't see here the fact that the lady owner was given the business by her boy friend and her boyfriend gave her the numbers for the preparer. Jainen said after the boyfriend was disclosed than he regretted that his name was even on the post. LOL Quote Link to comment Share on other sites More sharing options...
lbbwest Posted February 19, 2008 Report Share Posted February 19, 2008 This post was on quickfinder.com message board and jainen questioned the numbers. I don't see here the fact that the lady owner was given the business by her boy friend and her boyfriend gave her the numbers for the preparer. Jainen said after the boyfriend was disclosed than he regretted that his name was even on the post. LOL Since the lady friend has provided service of at least her name on the titular title of this dubious enterprise, is she subject to s/e tax and associated income on the dubious value of this enterprise; or has her knight in shining armor filed a gift tax return? lbb Quote Link to comment Share on other sites More sharing options...
jainen Posted February 19, 2008 Report Share Posted February 19, 2008 >>This post was on quickfinder.com<< I usually only respond in one place. Once I replied to a post on competing boards, taking emphatic but exactly opposite positions. I was excoriated in both threads; that was fun! Quote Link to comment Share on other sites More sharing options...
JACKSORH Posted February 20, 2008 Author Report Share Posted February 20, 2008 >>This post was on quickfinder.com<< I usually only respond in one place. Once I replied to a post on competing boards, taking emphatic but exactly opposite positions. I was excoriated in both threads; that was fun! I am withdrawing from this engagement. This was my gut feeling at first. I wanted to bring this to the attention of the community. All of you are so great and wonderful and willing to give your unbiased opinion. Thanks to you all. Quote Link to comment Share on other sites More sharing options...
Alpha Posted February 20, 2008 Report Share Posted February 20, 2008 Actually we all have biased opinions that is what makes this board so great. Someone will take this client and not even question what they did. More than likely the boyfriends preparer will not have any problem with this. This boards bias is to be extreamly ethical which I really appricate. How cool. I am now a member instead of a Newbie. I feel honored Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 20, 2008 Report Share Posted February 20, 2008 Jacksorh, Don't withdraw. This is the client that needs you the most. Sure it is a mess, and they are probably lying, cheating taxpayers. But we can't pick our clients. Here is where you can do the most good. Anyone can prepare a 1040 with 1 W2 and EIC (well - almost anybody). Where is your spirit of adventure? Think of the stories you will be able to tell your grandkids about your clients who can only pay in booze. These are the clients we hate to love, but we love them all the same. Just my 2 Cents. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
JACKSORH Posted February 20, 2008 Author Report Share Posted February 20, 2008 I can't be that adventurous without any real documents. I only have a sheet of paper with the figures that the bookeeper/accountant gave her to give me. I am wondering if he is upset that he is not doing her full return, i.e. 1040, EIC, Sch. A, B, and the state return. jacksorh Quote Link to comment Share on other sites More sharing options...
AnnieR Posted February 20, 2008 Report Share Posted February 20, 2008 As an ex-Wisconsinite (Sheboygan), where there was a tavern on two of the four corners of the block in our middle-class rather nice neighborhood....come on, somebody's got to be making a profit...there was the little old lady on our block who used to cross the street to the tavern with her bucket at 8:30 in the morning to get her day started!! AnnieR Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 20, 2008 Report Share Posted February 20, 2008 Jacksorh, But we can't pick our clients. Here is where you can do the most good. Tom Lodi, CA Tom... I got rid of a few such clients years ago and it made my life and tax season much better. Yes, you can pick your clients and when you do you will make more money since the bad clients will eat up your time at a lesser profit. <_< Quote Link to comment Share on other sites More sharing options...
Ray in Ohio Posted February 20, 2008 Report Share Posted February 20, 2008 I can't be that adventurous without any real documents. I only have a sheet of paper with the figures that the bookeeper/accountant gave her to give me. I am wondering if he is upset that he is not doing her full return, i.e. 1040, EIC, Sch. A, B, and the state return. jacksorh Just curious...... Is "a sheet of paper with the figures" not acceptable as enough information to prepare a Schedule C? Maybe I am totally by myself here, but I would much rather have that, than a cardboard box full of receipts and daily cash register tapes to get my information from. (just had to throw that in) Quote Link to comment Share on other sites More sharing options...
Chrisbry Posted February 20, 2008 Report Share Posted February 20, 2008 But we can't pick our clients. Tom Lodi, CA I do and I have turned down prospective new clients. Quote Link to comment Share on other sites More sharing options...
jainen Posted February 20, 2008 Report Share Posted February 20, 2008 >>Is "a sheet of paper with the figures" not acceptable as enough information to prepare a Schedule C?<< No single sheet of paper is enough if the information on that paper is not reasonable. The story of this tavern has far too many obvious inconsistencies to be accepted at face value. Why didn't the owner consider herself to be the proprietor? Is it actually a partnership or corporate association with her boyfriend? Who paid the expenses? Why acquire a retail establishment without any inventory? Why buy so little new inventory, and then give so much of it away for free? Why are there no acquisition and start-up costs? For that matter, why are the expenses so low -- $12 for supplies? Why is the documentation so thin for such a highly regulated activity? Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 20, 2008 Report Share Posted February 20, 2008 >>Is "a sheet of paper with the figures" not acceptable as enough information to prepare a Schedule C?<< It is if you are willing to take the risk that the information is accurate. In most such cases it is probably reasonable close but usually not accurate. An income statement for tax preparation should be prepared in conjunction with a proper balance sheet for such business. Quote Link to comment Share on other sites More sharing options...
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