jainen

>>I could never be a CPA<< I wasn't thinking about it, but if they can pull in that kind of fee I'll have to reconsider. Now, it does seem perfectly reasonable to me. If they had been able to get the fix quickly, the cost would be minimal. But since they had to keep arguing with FTB for many months, naturally it ran up a bigger bill. What form was it, by the way?

>>testament to the marketing ploys of the past<< Yeah, that's what happened to Pogo. He got co-opted by environmentalists, who felt he was a better spokesperson than an anti-war alligator. I missed #12, having abandoned team sports after I lost my Y.A. Tittle out in the breezeway when my one and only "leaner" was knocked down. I remember when Wonder Bread only built strong bodies 8 ways--much later I learned the "wonder" had nothing to do with adding 8 or 12 chemicals to our food, but to a balloon race long before my time. Speaking of chemicals in food, I also remember when Dentyne prevented decay and the sugar-free lobby shut 'em down, ironically so because their cyclamates turned out to be worse than sugar!

>>We have met the enemy and...<< Pogo did NOT say that. It was his friend Albert.

>>a potential conflict of interest MAY exist<< This isn't a "potential" conflict of interest, it is a real-world one. But that isn't a problem--any salesperson or broker has such a conflict as a dual agent. There is no ethical violation because the relationship was clearly disclosed. If you provided more than normal technical evaluation of alternative solutions, you have a right to charge what was agreed to. Of course, you will also disclose the payment to your current employer so there is no taint of a bribe or kickback. Overall it sounds like you are doing an excellent job of matching buyer and seller. The buyer is getting a hard-to-find bargain and the seller is getting a good deal too. Everybody should be happy, and you deserve to be compensated for everything you did to make it happen.

>>those records are outside the range of documents that you have access to<< I just meant use the document request to light a fire under the clients. For some reason, people tend to think the IRS is not serious on the grounds that they haven't done anything wrong (as if that was relevant). The auditor doesn't really expect you to produce the shareholders' returns at the first meeting--he is just fishing. Simply say the shareholders have engaged other counsel who should be contacted separately. In representing the entity under examination, you have no reason to know if they have even filed. Say something awkward about how capital accounts are not your strong point but you will do your best if it comes up in the audit. That should be the end of it (unless, of course, this audit is actually the background to a developing criminal case). By the way, Bulldog Tom says you will be working nights but even so I doubt that you have time to prepare for this audit. You don't even know what you're looking for yet, and it's a good guess that your clients won't tell you. That's why you should move the meeting to your own office where you can go over joanmcq's cash flow and OldJack's summary and make the auditor narrow it to specific issues. Then request another 30 days to get the rest of the information. You want to run the calendar on this because he is naturally anxious to settle before the end of the year.

>>the personal tax returns of the shareholders. << You can use this demand to convince the clients that this is a seriously deep and far-ranging field audit. They are not likely to escape without at least some changes, so have a soul-searching meeting to decide what they are willing to give up, what they must keep at any cost, and what they absolutely don't want the IRS to even think about. Might as well start with those commissions that BulldogTom is worried about. Make sure you can DOCUMENT that the salesmen are not employees. I would budget about five hours just to research that point alone. But that's a quickie compared to what joanmcq is advising. If you can offer the auditor a cash analysis that will stand up to random spot checks, you will probably be able to keep the audit under your own control. If you can't do that, the employee status might make a good fall-back position. With careful teasing, the auditor might be so pleased to win on that big point that he will only take a token look at the books. As a standard tactic, try to get the first day of audit in your own office. You don't want IRS snooping around looking for more things to ask about like how come all the employees drive Corvettes. Once you get the scope of audit tied down, you will know how to prepare the workplace for inspection.

>>a laundry list of documents requested<< If you tell us a few of the key issues, we might be able to give you some ideas about how to approach them. For example, just because the IRS is fishing for documents doesn't mean you should turn them all over right away.

>>I don't agree with his politics 400% of the time<< Please recalculate that. Why, just yesterday (in KC's political thread A Good Article) I honestly said I agreed with President Bush. / jainen

>>we wonder how many are losing their homes and which new law might or might not apply to them<< And don't forget that OLD law that is starting to kick in. When their property value drops, they lose the deduction for interest on non-acquisition debt.

>>you offered them a discount... you had taken that discount back. << It was not the hospital that took back the discount. Rcooper took back the payment that supported the discount. The bill was ultimately paid by insurance, to whom a discount was not offered. To say that $250 represents the time value of money is nonsense. It represents the losses and administrative costs of delayed collections from individuals. Interest rates are no more than 5%, while such losses and costs are closer to five times that. In fact, even the cost of complying with the laws concerning insurance payments is probably at least 5%. So when Rcooper's early payment was canceled, so was her discount.

>>The auditor did say that she had a business<< Whatever the auditor may have SAID, her ACTIONS call it a hobby loss since there is no other legal basis for the adjustment she made. It's important to note that IRS is playing hardball--the auditor started with NO expenses. Obviously she can't support that even with hobby loss rules, so she wasn't giving away too much by offsetting all the income. Her only real compromise was to let your client avoid the 2% haircut on Schedule A. You haven't told us what sort of business this is or the nature of the expenses, but obviously the examination report is wrong on the face of it. The question now is, what realistically can you do about it? It's worth calling the auditor one more time, saying your client is prepared to sign the proposed changes but doesn't understand the calculations because there is no dispute that this is not a hobby. If she grants you another appointment, come prepared with NEW documentation so she can justify changing her mind. You might at least get some of the less controversial expenses back in. She is not likely to throw out Schedule C entirely, but Appeals might. The IRS is concerned about potential abuse with Schedule C losses that don't represent a viable business. If Appeals continues to hang tough they may call it a hobby, and since your client didn't claim any Schedule A hobby expenses she'll get nothing. You can probably beat the Schedule A issue in Tax Court, but that's a lot of work to end up worse off than you are now.

>>all expenses well documented<< Although you were able to show that the expenses were incurred, apparently your records did not satisfy the auditor as to their business purpose. There is a general rule that expenses should be proportional to the income, especially after several years. Quite a few people have gone to court over this question so you have plenty of material to research. You might start by claiming the auditor was too arbitrary in simply matching total expenses to total income, which I don't think is much supported by case law. Then address the specific expenses, either with key examples or by category, documenting how each contributed to a bona fide expectation of profit. This level of research and analysis takes a lot of time, so make sure you have an engagement letter and a retainer and that your client is committed to paying for your work. Before you file your appeal, however, consider the possibility that the IRS will blackmail you with its original position that none of the expenses are allowed. I mean, it kind of sounds like the auditor was giving you a break, compromising the details to get the case closed quickly. You may have to take this all the way to Tax Court, where your chances would depend on the kind of arguments that IRS lawyers are very good at.

>>I am ready to write everybody a check for $250, no questions, no arguments.<< Please accept my sincere apologies. I thought you were trying to get somebody to give YOU the $250. Naturally, if you had paid it in the first place we wouldn't even need this discussion.

>> Can they elect to expense $250,000 under the 2008 rules<< Are your referring to IRC Section 179(a)(7)? "In the case of any taxable year beginning in 2008 the dollar limitation under paragraph (1) shall be $250,000."

>>what is recommend for a situations like this (tenants that like sue)<< Hire a qualified property manager to screen applications and monitor the properties for circumstances that make him vulnerable to legal complaints. Also he needs to beef up his insurance. If he feels a need to isolate the properties in individual corporations, he must be worried that a tenant can hit him for more than the specific property is worth. Why? What's going on over there? Well, to answer the original question, state law controls how much liability protection LLCs and corporations can give an individual. Often it is not nearly as much as the popular books suggest. That is because the FORM of title is less important than the way the activity is conducted, and individuals are notoriously sloppy about the legalities. So hire a qualified lawyer too.

>>employees sometimes actually spend time doing personal things, like posting on message boards<< Who's got time for that? I'm too busy researching tax and accounting issues!

>>I actually submitted the question to them Thursday<< I'm glad that you followed the advice I gave you the day before. I can't decide if I am appalled or amused at the concept so passionately endorsed in this thread, that a patient should be able to make a side deal with a hospital to pocket insurance money by submitting a claim for more than the actual costs. I urge you to follow through with your question to the commission. I'm sure they will answer after they stop laughing.

>>Is a QI needed for a 1031 exchange<< A qualified intermediary is NEVER needed. It is simply one of several safe harbors for structuring the exchange. If you use a Q.I., the IRS will not question the validity of the transaction (at least concerning how the money and titles are transferred). If you use some other arrangement, I strongly recommend you get professional advice for the legal and tax implications. Nobody can give you a reliable answer without reading all the contracts and supporting documents. One of the potential problems with what you describe is that the settlement companies are probably acting as your agents. Although you choose to have one send the money to the other, you could at any time change your mind and simply keep it yourself, a form of constructive receipt.

>>PPC materials are expensive<< Ask your local chapter about practicing in your state. Here in California many, many CPA's consider the educational requirements too steep to support "a couple of audits and reviews." It's kind of a specialty niche.

>>It should be paid to the school ins co<< I even disagree with this. Let's make up some numbers. Say the undiscounted bill would be $10000 and the primary insurance will pay 75% or $7500. The policy holder is responsible for 25%, or $2500, but your interpretation in this thread is that the price will go down $250 with certain payment arrangements. Why should the supplemental insurance get that whole $250? If the hospital has agreed to accept $9750 in full payment, then the primary policy only needs to cover 75% of that price, which is $7312.50. The balance charged to the supplemental is $2437.50. It would seem therefore that the supplemental only overpaid by $62.50 while the primary overpaid by $187.50. (Whatever the patient overpaid has of course already been completely returned.) Well, I think that's a ridiculous scenario, not least because the patient took back the payment that would have generated the discount.

>>you get a check from the company whether you spend it fixing your car or at Vagas<< Oh, great comparison! For insurance purposes rcooper's daughter should be considered as personal property, so I guess the damages reflect the loss in her fair market value. (Apparently the claims adjuster didn't think her injuries were too serious because otherwise they would have just totaled her.) I'm also relieved to learn that hospitals have found a way to finance operations by borrowing from patients, albeit at a high APR. As for the hospital agreeing to pay a kickback -- I'm sorry, I meant a "cash discount" -- from that insurance money, hey the insurance company was going to pay it anyway, so who cares, right?

>>The hospital had $250 extra payment... they did not honor their own agreement<< Those are not the facts in rcooper's original and subsequent posts. The hospital received only its standard fees (probably set by negotiation with the primary insurance carrier). The primary paid the part it was supposed to and the supplemental paid all the rest. The only thing "extra" was rcooper's advance which she later took back. The hospital never had an agreement to give the supplemental insurance company a discount; in fact, such a discount would probably violate the agreement they DID have with the primary. Insurance is highly regulated and no hospital will risk their major contracts and Medicare eligibility over a $250 discount. They are always cautious of potential insurance overcharges that pass through a patient's hands. Although there can be innocent explanations, this remains one of the most common fraud patterns. While it may seem unfair to charge different amounts depending on who is paying, this is standard practice in many industries. It reflects the cost of doing business over and above the cost of specific products and services, a point I have repeatedly tried to make in this thread.

>>use of my money had value<< Please don't trivialize this; it is not about investment earnings. The purpose of the discount was as I said to reduce administrative costs. Paying them twice should be better than not paying, but accountants don't necessarily think that way. Usually the price for insured medical care is already discounted for a similar purpose, i.e., administration costs more than the medical care itself. The hospital did NOT assess "a new charge," as you can see for yourself from the EOB you attached in support of your own insurance claim. If you don't care to call your insurance commissioner, at least tell your insurers. The fine print requires you to identify any suspected overcharges, as well as to turn over any monies you recover from this claim. Do you want to short your daughter's medical provider so the insurance stockholders can get a bonus? The reason the school's supplemental insurance only wants the EOB instead of an invoice is just that they are covering the whole obligation for you. In that sense, your discounted invoice is irrelevant because you owe nothing at all anyway. If along the way you do lay out some cash you get 100% of it back. You don't, however, make a profit on the deal--only the hospital and the insurance companies do that.

>>changing my already paid in full bill was not right<< I have no opinion on whether it was right, but YOU were the one that changed those terms of payment. Take it as an insult if you must, but you never gave anyone that $250 so it never existed to be refunded. Instead, YOU used the EOB (which you knew was inaccurate as to your damages) to tell your other insurance company to include it in their payment, and even willingly forwarded such payment yourself. You can check this out very simply by giving your state insurance commissioner a call. People do get prosecuted for arranging extra insurance payments while pocketing the difference. I'm not saying you intended a fraud, but the result of your claim would be exactly the same. And however sensitive you were to the use of that term, I assure you the hospital is a thousand times more sensitive to it. You refer to lost earnings and mileage as a response to joan's observation that the injury was 100% covered, but those have nothing to do with either the hospital or the two companies. Maybe you have a case against the other player, the coach, the team, the school, and/or the league. Unfortunately, in our overly-technical legal system that's a completely different matter.

>>The hospital lost nothing<< The hospital agreed to accept certain payment for medical services. There was nothing obscure about the discount--it was for avoiding additional, non-medical administrative costs in billing and collection. But that's not how it went down. The patient's family later asked that the early payment be rescinded and replaced with something more complicated. How do you conclude that the hospital reneged on its offer? The hospital returned what the family paid. It did not return the $250 credit that they did not pay. If you think the hospital should give them a cash refund based on what the family made the insurance cover, that does indeed look like fraud.