My Farrier client in 2006 modified his Ford F350 by having assorted heavy equipment including a forge, an anvil, and a propane tank for the forge s well as storage for everything a Farrier needs and an attractive cover for all of it. Original preparer deprecated 200DB 5y for most of it but for some reason treated the Forge as Listed Property and since it was the only listed property and was bought in the last quarter of the year he tripled its price or drew on info I don't have and then claimed 200 DB 5y MQ.
The way I read the depreciation section in the TTB 2006 1040 Edition all of the property qualified for hy because two thirds of it was bought in the first half of the year and none of it needs to be listed or for any other reason treated as MQ. But it looks to me as though the property would be 150 DB 7Y HY (farming) property unless for some reason the fact that it is attached to a truck is controlling.
In the spirit of changing depreciation as little as possible I am going to ask the auditor to go along with 5y and see what he has to say. By the time I have time to read replies to this the audit will likely be over but I'm interested in what people on this board think.
What I think actually happened is that my client wrote down some mostly wrong in the government's favor) estimates on a couple pieces of paper from a small pad and the original preparer took them as gospel. My client says he gave the guy everything he gave me but he admits he also gave the pieces of paper. It is very clear that the client left money on the table so he's not going to owe anything due to this audit. From the way he spent money in 06 it's a wonder he isn't broke but since then he has increased revenue and cut expenses and is now making a very good living as a Farrier, As to the rest, he had bad tax and accounting advice but I am helping him correct things. He's receptive and I am sure that by the time I do his 2009 return everything will be cool
The way I read the depreciation section in the TTB 2006 1040 Edition all of the property qualified for hy because two thirds of it was bought in the first half of the year and none of it needs to be listed or for any other reason treated as MQ. But it looks to me as though the property would be 150 DB 7Y HY (farming) property unless for some reason the fact that it is attached to a truck is controlling.
In the spirit of changing depreciation as little as possible I am going to ask the auditor to go along with 5y and see what he has to say. By the time I have time to read replies to this the audit will likely be over but I'm interested in what people on this board think.
What I think actually happened is that my client wrote down some mostly wrong in the government's favor) estimates on a couple pieces of paper from a small pad and the original preparer took them as gospel. My client says he gave the guy everything he gave me but he admits he also gave the pieces of paper. It is very clear that the client left money on the table so he's not going to owe anything due to this audit. From the way he spent money in 06 it's a wonder he isn't broke but since then he has increased revenue and cut expenses and is now making a very good living as a Farrier, As to the rest, he had bad tax and accounting advice but I am helping him correct things. He's receptive and I am sure that by the time I do his 2009 return everything will be cool
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