Why me, "pulling my hair"

[ILLMAS]

One of my client does tax return for her family members and friends and I prepare thiers. Any she passed a tax return that involved a sale of property, but she wasn't too comfortable finalizing it, I said if the client pays my hourly fees I will take on it, I would just look over the sale of the property.

Scenario:

Husband and wife bought a home 11 years ago, however both had bad credit so they bought house under the husband sister and husband name who report the house on her tax return as a rental property, they were putting some bogus rent for 11 years and were deducting all the expenses you can think of and I only see one year, I don't want to know more. The house was sold in 2008 and there was a gain on the sale, another tax preparer had prepared the return but the tax on the sale was a refund (considering losses from rental properties and very low wages) huh??? I interviewed client via phone first and I told her, based on what you are telling me there has to be something wrong, based on the cost of the home and the sales price, there is a significant gain, so they faxed over the tax return prepared by other tax prep. I had to re-enter everything based on what they gave me and I also came out with a the same refund, so I called the TP let them I got the same results but there is something wrong with the accumulated depreciation, the report you gave is only for one year, so I prepared a depreciation schedule to estimate the depreciation for 11yrs, you wouldn't believe this but their gain grew by a lot.

Now for breaking the news:

Me: So you lived in this house for 11 years and your sister-in-law was reporting it her taxes a rental property?

TP: Yeah

Me: Don't get offended but why in 11yrs you didn't changed the title to you and your husband?

TP: We were not planning on staying here long

Me: Ok, well as I mention to you I estimated the accum. depreciation and your gain was so much $$$, and your tax due is $$$ for the fed and $$$ for the state

TP: What @#&!@!!! the other tax preparer said there was a refund due and you even said that too.

Me: Wait a minute, I right of way told you even without seeing the tax return prepared by the other tax preparer and based on the numbers you gave it would be impossible not to owe taxes for that type of gain.

TP: So you are saying the other preparer doesn't know what they are doing?

I was calmed when I said this

Me: I never said anything about the prior tax preparer, don't put words in my mouth.

TP: I already paid the taxes

Me: Oh yes, when

TP: At the closing

Me: Are you referring to the property taxes?

TP: Yes, I paid a lot

Me: You are responsible for that anyways.

TP: I should sue my attorney and real estate agent for lieing to me.

Me: How did they lie to you

TP: They told me I wouldn't pay taxes because it was my residence

Me: But that is true, that's not a lie, were they aware of how the home is reported on your sister-in-law return as a rental property, probably not.

TP: But I do have a personal residence so I shouldn't be taxes, I took the proceeds for the sale bought another one.

As most of you are tired of this never ending crap, I wanted to shoot myself by now.

Me: So did you leave some money aside to cover the tax due.

TP: No, I was desperat to sell the house so I gave the buyers a 8K credit towards their down payment from the proceeds, rest was used towards the down payment.

Lady you have to be kidding me, I wanted to smack her over the phone

Me: Borrow the money to pay the tax, refiance your house, sell your house, do you have a 401k, you need to pay taxes (I was pissed off by now)

TP: But is there help, I seen some commercials on TV that if you owe money to the IRS they can help you

Me: Give them a call

Me: You know that you are in a situation where your sister-in-law is liable for this, so it is now up to you however you want to resolve this.

This call lasted more the 1 hour, TP was accusing everyone of lieing to her and wants for me to feel bad for her, giving me more BS, she had the nerve to ask me not to charge her that much, I don't think so. This can be considered a rant too

[rfassett]

I may be missing something (which is very possible at this late date and early hour) but I don't think this is even a transaction for the person that you are talking with. The house was in the inlaws name? The sale should be reported on their return - no?

[taxxcpa]

I may be missing something (which is very possible at this late date and early hour) but I don't think this is even a transaction for the person that you are talking with. The house was in the inlaws name? The sale should be reported on their return - no?

I agree. If the title was in someone else's name, it would be their sale.

I've always heard "He who sells what isn't his'n goes to prison."

[Terry D EA]

I may be missing something (which is very possible at this late date and early hour) but I don't think this is even a transaction for the person that you are talking with. The house was in the inlaws name? The sale should be reported on their return - no?

MAS did acknowlege this was a liability for the sister-inlaw. You need to send this one to HRB

Terry D,

[JohnH]

Any time someone jumps to the possibility of suing someone else for their own stupidity, I head for the exits. Especially when that stuff comes out early in the conversation. They're just looking for an opportunity to cash in.

When their mind works that way, I assume it's just a matter of time before they will be looking for ways try to get me involved as well. People like this are nothing but trouble, and the worst thing you can do is accept money from them for services rendered.

[RitaB]

Any time someone jumps to the possibility of suing someone else for their own stupidity, I head for the exits. Especially when that stuff comes out early in the conversation. They're just looking for an opportunity to cash in.

When their mind works that way, I assume it's just a matter of time before they will be looking for ways try to get me involved as well. People like this are nothing but trouble, and the worst thing you can do is accept money from them for services rendered.

I was thinking the same thing.

MAS - take very accurate notes. People like this are a problem (yeah, I know I'm pointing out the obvious.)

2007, client took out his entire IRA, plus sold a rental property at a big profit, then tried to tell me I said it would be OK to take out the IRA since he would have a loss on the sale of the rental.

My response to him: "Well, I document every phone call, and not only did you NOT call me prior to withdrawing the IRA, if you had, WHY WOULD YOU TELL ME YOU WOULD HAVE A LOSS ON A PROPERTY YOU SOLD FOR $250,000 WHEN YOU ONLY PAID $180,000 FOR IT?!? (Not to mention recapturing depreciation.)

Client: "Oh. Uh. Oh..." That went on for a while.

[JohnH]

The problem is, you can never document things well enough to stay out of trouble with someone who's looking out for an opportunity to make a quick buck off someone else. You'll spend all your time doing CYA, when that should be billable time on good, decent clients.

[RitaB]

The problem is, you can never document things well enough to stay out of trouble with someone who's looking out for an opportunity to make a quick buck off someone else. You'll spend all your time doing CYA, when that should be billable time on good, decent clients.

Yes, I agree with that, too. If I were MAS, I'd be letting this client move on.

And, I don't document EVERY phone call, but anytime a client calls for advice about a money move, I sure do. It takes time, but even the good clients forget what they told you, forget what you told them, etc. I'm pretty anal about that stuff.

[ILLMAS]

Thanks everyone, the money on this return is not worth the headache!! Sending this client to curb!!!

[RitaB]

Thanks everyone, the money on this return is not worth the headache!! Sending this client to curb!!!

Feels good, doesn't it? Best thing I ever learned to do: fire people that waste my time and energy. I probably would still be putting up with some of them, if it were not for encouragement from people on this board.

[Bart]

And, I don't document EVERY phone call, but anytime a client calls for advice about a money move, I sure do. It takes time, but even the good clients forget what they told you, forget what you told them, etc. I'm pretty anal about that stuff.

This year I have started asking my questions by email. I save all the emails and that way I have proof of what they told me.

[Margaret CPA in OH]

I also do that. Additionally, whenever I am called with any details, I ask the client to write it in an email or document and fax. I use the reason that I often transpose figures and/or misplace notes but always keep emails and faxes in their files...which I do in their electronic folders.

I do have those triple copy message thingys but have used them rarely.