RitaB

12 minutes ago, Richcpaman said:

I like Edsel's answer above.  When he starts a farm, Biz or Rental, then he can depreciate his basis.  Until then, he has to pay tax on the grant. 

I agree.  His basis is $37,000 after he pays the tax on the grant money.  Agricultural fences are normally depreciated over seven years in farm businesses.  And he does not have a farm business until he has a farm business.  If you find out he already does have a business, the $37,000 belongs on the appropriate schedule or form:  Schedule E, Schedule F, Form 4835, etc.

14 hours ago, TAXMAN said:

TP owns about 42 acres. No farming or business run on property. TP received ok to construct fences along drainage ditches and water runoff ditches. TP in the future wants to graze cows on property. TP spent 37k out of pocket to erect fences. Applied for and received grant money to reimburse. Problem is Depart of Agriculture issued a 1099 for the amount. How would you show this on return? BTY IRS transcript does show this 1099.

Line 21.  The Department of Agriculture (we) gave him $37,000 in "other income".  Just like winning a prize at the county fair only more like winning 37,000 prizes.  Also like having $37,000 in credit card debt cancelled.

1 hour ago, Randall said:

Why does the letter say send 1040X and write 'CP2000' on top?

 

Yes.  Great question.  I'm looking at a CP2000 right now and under "Next Steps" it says, "If you are making other changes, we recommend you file an amended return (Form 1040X), write 'CP2000' on the top of and attach it behind your completed Response form."

I have read a lot of discussions where tax pros were unbending on the never file a 1040X in response to a CP2000.  I am convinced there are times that it is absolutely necessary, and if it causes more work for IRS that is absolutely not my concern.  I'm not going to try explain changes and hope they figure the tax correctly.  No way.  Plus I either have to do a 1040X or redo the return to know what the tax is myself.  Might as well show IRS and not be sitting around for months hoping for the best.

1 hour ago, Richcpaman said:

This is always the problem with personal property being the "win"  What is it really worth?  The state says $1,300.  But, that may be a MSRP, and not what you CAN buy it for.  It might be $400.  Take a deduction for the FMV difference.

It is a real problem on the game shows.  The MSRP on the HI vacation is $15,000.  But you can book it the same week for $7,500.....

Absolutely.  In fact, she said the RETAIL price at Macy's and Nordstrom's is about $600.  I told her print proof that it's the exact same purse and I'll adjust Line 21 so that you pay tax on what the thing is really "worth".  She really is quite sharp.  I was afraid to tell you I saw two unicorns in one day...

Hahaha I just got off the phone with a lady that won a purse from TN Lottery, valued at $1300.  She asked me what the tax would be before she sent in the W-9.  She was smart enough to know she wasn't sending that form in if she couldn't make anything reselling that purse.  I almost cried.  I may need mental help myself.

On ‎7‎/‎15‎/‎2017 at 6:19 PM, Cathy said:

Looked for the "Edit" button but couldn't find it....was going to "fix" my first reply and hoped no one had read it....oh well!!!

If I had a nickel...    

I did hear something in a ethics course, I think from APlusCPE, that still seems profound to me.  The presenter said, "Never underestimate your client's intelligence.  Always underestimate your client's knowledge."  That's so good.  We often have situations where the clients know zero, but they're not stupid.  We just need to be good teachers.

Most other courses make my ears bleed and I think oh, come on, just do your job and treat people well and record a credit for me already.

On ‎7‎/‎13‎/‎2017 at 6:03 AM, Edsel said:

Remember, most partnerships do not last very long - often beginning with two dufus-looking guys showing up in your office and saying "Duh...we're sorta partners" and six months later they hate each other. 

The last one I suffered through was a retail venture with two high maintenance bored ladies.  I discouraged them from setting up a partnership.  A lot.  But they acted like I would do the bookkeeping, so how bad could it be?  Well, guess what?  High maintenance bored ladies need manicures and stuff like that more than bookkeeping as it turns out.  Pssshh. we have a computer we'll just keep these little ole books do you love my glitter nail?  Yes, six months. 

The "we're sorta partners" dufus guy came in about a month ago asking about bookkeeping fees.  He was all of 120 pounds, and they were opening a security agency.   He looked like he's never had a bank account.  You know that look.  And you know, 120 pounds.  I wanted to give him half my sandwich.

Sorry I'm all booked up, but good luck!  I hope he was the brains of the outfit and the other guy at least weighed more than me.

3 hours ago, RitaB said:

And I bet they don't.  So we all look like incompetent schmucks compared to the preparers who advised all their clients owing SRP to ignore the question on line 65.  And some days I feel like one, too. 

Line 61.  See, that was a schmuck thing right there.

12 minutes ago, Abby Normal said:

We are in the limbo of the IRS saying you can file without self-assessing the penalty but the IRS may assess the penalty for you...

And I bet they don't.  So we all look like incompetent schmucks compared to the preparers who advised all their clients owing SRP to ignore the question on line 65.  And some days I feel like one, too. 

1 minute ago, Abby Normal said:

That's so meta to quote and reply to yourself.

So much to say.  So little time to edit. 

10 minutes ago, RitaB said:

If I had not known about the new deadline, or if I knew about it and failed to get them an extension, yes, I'd pay the penalty.

Then I'd fall on my sword and do my best begging for waivers.  Absolutely.

Well, I'm not experiencing this problem either.  Thankfully.  I did have three partnerships that I warned by e-mail in January about the new deadline, printed their acknowledgements of the new deadline and intentions to file on time, and then I got them extensions.  Got the returns done around April 1 as usual.  

I don't think clients filing late should count on penalty waivers.  I'd say pay up and hope for a refund.  

If I had not known about the new deadline, or if I knew about it and failed to get them an extension, yes, I'd pay the penalty.

On ‎6‎/‎21‎/‎2017 at 8:15 PM, SaraEA said:

To me, it just seems wrong that someone who cashes in old bonds with, say, $50k accrued interest, will not have to pay taxes on that amount because they didn't report it when they should have and the IRS didn't catch them. Thoughts?

I agree.  And I feel this way about anybody skating on debts they owe.  It's a real kick in the teeth for people who do what they are supposed to do and when they are supposed to do it.  Someone pays for those who don't.  Every time.

46 minutes ago, Abby Normal said:

$25

$24.  But my house cost $99.13 a foot and yours cost $426.83, so I get that you have to charge more. 

12 hours ago, Catherine said:

Even more so when it's competition with ZERO repercussions for the bad/unfair competitors.

Yes, I see this as the biggest problem I have in business.  It's frustrating.  I got 15 new clients this year, newcomers to the area, all with errors on their 2015 returns.  Yes, all.  Only one has received a letter, and her problem was a 1099-R that was left off the return.  The 1099-R was missing from her paperwork, however, she did include a brokerage statement that showed it.  I might have missed that one, too.  The other errors were from carelessness or intentional fudging or lack of expertise.  And you know what?  They will never get a letter.  It's easier to be careless, or fudge, or be inept.  They can charge less because they "work" faster.  And if they're REALLY into fudging, they can charge more.  The honor system is tough on honorable people sometimes.

3 hours ago, Catherine said:

As long as YOU are happy with what you are making - and you can pay your bills - it kinds doesn't matter what you make.  However, do NOT sell yourself short and undervalue your services just because you are "doing OK."  

Oh, I never said I was satisfied with what I make.  I know I'm worth more.  But you can only make what people will pay.   If you can't get the client, you don't get any money.  I'll take decent money over no money.   And I make very decent money.   No, I don't take every job.  I turned away a bookkeeping client last week because I figured it would be a hassle every time I turned around and they would be in business about twelve long, miserable months.  Six if I was lucky.

There are too many preparers (here anyway), and the risk of getting caught preparing crappy returns is, well, about zero.  You can charge what people will pay you to solve a problem.  If crappy returns are not a problem, and If a great number of people actually prefer a crappy return, well, it's crappy for your bottom line.  Plus, it doesn't take a genius to do taxes anymore, they say, so there's that.

You know what would happen if there were twice as many doctors, and twice as many lawyers?  Yep.  Medical care and legal work would cost less.  It's just what happens with competition.  

47 minutes ago, Lion EA said:

 Remember I'm in pricey Fairfield County, CT

That is absolutely something to consider.  It's definitely all relative.   I did Google searches for median home values in Fairfield County, CT and Crossville, TN.  The top hits show that the numbers are $535,600 there compared to $90,800 here.  

It's different here - I love my low cost of living town, and I don't struggle.  I do love to work, and I do like to get the business I want. 

My house cost $342,000 and it's paid for.  I'm doing ok. 

7 minutes ago, BulldogTom said:

Stop it.  Just spending an hour with you would be worth $225.  If he is too cheap to pay what you are worth, let him go.  You offer more than just filling in the amounts, you offer your expertise, your time in the off season, a reliable professional to give good advice all year and planning for future years.  If this guy can't see that, it is his loss.

Tom
Newark, CA

This is why I love you, Tom.  Yes, I'm as good or better than whomever told him $185.  But he couldn't tell that from a ten-minute conversation.  None of them can.  I didn't even get a chance to hug him.  They don't know what they don't know.  Maybe he went to Tammy's X-Treme Tax Returns and she put 60,000 miles on Form 2106 or totally missed a mutual fund sale, and he'll get audited, and I'll see him again...  Thanks, I'm talking myself into not kicking myself, Tom. 

22 hours ago, BLACK BART said:

That's my philosophy too -- even if it did take four or five hours.  $275 dollars is $275.  After all, what am I doing after tax season that's so pressing I can't make up the lost time (playing Sol for a couple of hours doesn't pay nearly as well).  Only thing that might make me not do it is the "minister" portion (those "C" guys are supposed to be traveling evangelists and most aren't).  IRS likes to force 'em to switch to W-2 status and kill off their (big) mileage expense.

I am still kicking myself over bidding too high on a guy that came in February, BB.  He was very disorganized, had several mutual fund sales, retirement, W-2, wife had SS benefits and retirement, eight or so entries on Sch B.   Not a difficult return for a tax person, impossible for a DIYer.  I padded it a little (for me, I know, not for most of you) and told him $225 and didn't see him again.  He was well dressed and had a good job.   It would have taken a little time getting him set up, but the returns would have been much faster in future years.  A good client.  No begging for accurate expenses and all the income, no proving these are your kids, etc.

My 20-year client called this week, gonna sell her rental, adjusted basis about 20,000, for 90,000. 

Congrats!

"I'll just make enough to pay off the heat and air unit I think.  Just wanna know if that'll cause me to pay back SS benefits."  

Ummm.  (I seriously had to sit there a minute, thinking, this is your one and only concern right now??)

No, you'll get to keep em, but they'll be taxable.  And I will be mailing you a pretend return so you can see how much of your heat and air conditioning money you best save up for yer tax bill.  Love, Rita, EA (Even After 20 years they think if they say they didn't make anything my job is to tell IRS that.)

24 minutes ago, Christian said:

I appreciate all of your feedback. I feel comfortable with what I charged. While he keeps good records it always comes in by mail in a large jumbled pile at the end of the season due to the fact he has to wait for the amended 1099 forms from his brokerage accounts. I forgot the K-1 form from some fund he has. It takes easily 4.5 to 5 hours to address all of this plus he mails them. If he ain't happy he can just take a hike as I am too old in the tooth to fret over clients like him anymore. 

Oh, see, I was guessing this took a couple of hours, tops.  I absolutely would charge this much for 4.5 to 5 hours.   Your teeth are neither old nor long. 

Oh, I've been hugging all wrong.

39 minutes ago, taxxcpa said:

Once someone asked me how much I charged.  I gave him an estimate and he said "That's pretty steep.  Last year I only paid $15."  I recommended that he stick to that highly qualified tax preparer.

One came in to pick up a text book my daughter was selling.  She asked what I charged and told me she paid $10 for prep last year in the next breath.   I wouldn't even waste my time giving her any price at all.  I told her to stick with him, see ya, bye, enjoy the book. 

23 hours ago, Christian said:

A client took exception to the price of his return so out of curiosity I'd like to hear what some of you think. His return is a Form 1040 with the following attachments.

Schedule A, Schedule B, Schedule C (he is a part time minister),Schedule D (two investment accounts),Schedule SE, Form 8948, Form 8949 and of course, his Virginia state return. I priced this return at $325.00 (bear in mind I am not a CPA or an Enrolled Agent) but still feel I did not over charge him. Any input would be appreciated.

Since you didn't say anything about the client being disorganized, having an inordinate number of entries on B or 8949, or otherwise a pain, I'm going to say I can't charge this price here in rural TN.  But I am not THERE, where you are, so this information is not really helpful to you, but hey, I like talking to you all.  I think you'd have a much better handle on how you compare in pricing by calling some preparers around you.  I know we on this Board all EARN more than we make, but until IRS makes it really important to file accurate returns, we are stuck with charging what we can make. 

Maybe this client is one of those who are never happy, but the perception he has is that this price is too high for him, and he will go elsewhere if there is a less expensive alternative.  That's the way that cookie crumbles.  It's one thing to know your worth, but it's quite another thing to watch business go down the street.  I personally would rather charge $275 and HAVE a client than know I'm worth $325 but be sitting here watching the client parked over at Tammy's X-Treme Tax Returns.  Tammy is not going to the store for me.