Air Conditioning business income

[POCAHONTAS]

client has an Air conditioning and heating business, brings in his last year's return which was prepared by another preparer,

His 2008 return as below
His Gross income $119,059 after all his expenses his net profit is only $1,154.
Wife's income $16,675
his itemized deductions $16,804
his rental shows a loss of (880)
his AGI $16,949
has one child which qualifies him for EIC etc and thus his refund if $5,511
he is based in California

my question is:-
Is it possible in California to have Gross Income of $119,059 and net only $1,154 as an air conditioning and heating business? I know the economy is not good but to me this seems a bit unreal??

[Gretel]

No experience in CA, but I would first look at his depreciation (maybe Sec. 179) and his auto expenses or any other extra-ordinary expenses. If in doubt, I also would want to see earlier tax returns.

[S T]

Hvac

Pocahontas,

I have two HVAC business clients in California - they each operate differntly, one does more installs with some service/repair calls, the other does mostly service calls and repairs.

What is the business entity? - both of mine are S Corps

Can you have access to the prior year accounting to see what is being deducted? and then of course 2009 accounting?

You can PM me for more questions if you want.

Sandy

[MariaR08]

I would definately look it over twice, if not three times! However, yes, the business could have had extraordinary expenses that year - including the Sec 179 depreciation, maybe bad business debt? etc.

Either way, if you are preparing the current tax season return... you are not responsible for that prior year.