Same return, different outcome

[powerage]

My first season, I was told that you can give 10 different preparers the same, moderately difficult return and that you would get 10 different answers. I did read an article 4-5 years ago, where the writers of the article gave the same return to 3 different pros with many years of experience. There were 3 different answers. 1 took a deduction when another pro would not take the same thing, based on how they read the tax code. I'll try to find the article.

Anyway, any thoughts on this? I

[David1980]

Most of the differences in these news story stories come from taxpreparers that are either ignoring the rules or are ignorant of the rules. For example you could find a tax preparer that will file a 5405 for you based on the home you have owned for 20 years (without buying a new home). Most tax preparers would tell you "no way". Now it could be the preparer simply had not read the instructions for the form or kept up with tax law changes. Since anyone can become a tax preparer there will always be this kind of thing.

Some of the real common ones are allowing meals for firefighters and all sorts of expenses for cops that aren't legit.

There is also some variance that isn't from ignoring the laws. For example "gray" areas of the tax code. Also areas where there are more than one right answer. For example, do you take the standard mileage rate or actual expenses with section 179 expense for a vehicle placed in service in the year? There's consequences but neither answer is right or wrong.

[taxea]

My feeling, and I tell everyone this: if you give the documents to 10 different preparers and the returns are done correctly, the result should always be the same.

[JohnH]

I'd say if you give the same info to 10 different preparers, then depending upon the nature of the info and the quality of the preparer you may get:

1) 10 Identical results;
or
2) 10 different results;
or
3) at least 11 different results.

[taxxcpa]

Different results

Not all different results are due to errors. Some are due to selecting options. One person may maximize current deductions at the expense of future deductions by choosing to take the maximum depreciation. I generally take mileage rather than actual expense although actual might be better the first year, but not so good in the future.

[Gretel]

I agree. Just with depreciation this year you can easily have a multitude of results. Or choosing to file MFS instead of MFJ. I am sure there are many more out there.

[ChEAr$]

And if my ditch digging client buys a brand new backhoe costing, say... $ 27445, there
might even be 27,445 returns with different AGI's, although probably only 1/50 of that number
with a different tax.

[powerage]

can't find the article

From what I remember though, the problem was an employee business expense. 1 preparer did not take the deduction, 1 did take a good part of the deduction, and the other took the entire deduction. I believe it had to do with mileage and place of business. These people were highly experienced tax pros, I do remember that fact.

[DaveO]

A few years ago I had a new client bring in their taxes along with previous year return. They had W-2's, Sch "C" and a K-1 from an a1120-S along with the usual B and A items. I prepared the return and they had about an $8000 balance due federal. They were surprised at the balance due but paid the bill took the return and left. After they didn't return the efile pages we called to remind them and were told they took it back to the prior preparer and he figured $5000 less balance due. I had two other seasoned preparers look over the return and neither could find a thing to change. I would love to know what they did to change the return.

[New York Enrolled Agent]

From what I remember though, the problem was an employee business expense. 1 preparer did not take the deduction, 1 did take a good part of the deduction, and the other took the entire deduction. I believe it had to do with mileage and place of business. These people were highly experienced tax pros, I do remember that fact.

You might be referring to an article in the USA Today - 3/26/07

[Surfrider]

Same return different outcome

For about five years every March from1989 to 1993, Money Magazine ran a yearly article in which they gave about fifty preparers a scenaro and asked them to prepare a return. The results were then published in the magazine. However, the articles never described the scenaro in detail so it was difficult to see how a reader would have prepared the return. My guess is that they no longer run those articles because tax software has eliminated a lot of the errors.

[Snaggletooth]

Details

I remember those articles with 50 different preparers and 49-50 different answers. The articles were either trying to complain about the incompetence in our industry or complain about the complexity of the tax code - I never knew which. Been awhile since I've heard of this, but used to hear it every year from Money Magazine or Newsweek.

One year I did listen to the details and actually read the scenario. I don't think the results would be any more uniform if it happened today, or that accuracy in tax software would help much.

To begin with, it was an executive with partially exercised stock options, stock transactions with puts, calls, worthless stock, and whose wife operated a business and with jointly owned rental property. There were also "at risk" losses and accumulation of same for a number of years. The 50 participants were hand-picked CPAs, EAs, and Attorneys of reknown expertise. (For some reason, they didn't invite me)

I think we could take 50 of the most accomplished preparers on this board and get 50 different answers. In fact, the Magazine published what they thought was the "correct" answer but added a caveat that their tax advisors were giving opinions only.

If you would like a small sampling of such a return, last summer Bees ran a series of much smaller, focused scenarios, and let us poll the answers. He gave us a multiple choice of about 4-5 answers and I don't think ANY of these ever resulted in a common answer of more than 65%. It was good, thought-provoking off-season exercise for us. Maybe he will do it again this off-season.

[powerage]

You might be referring to an article in the USA Today - 3/26/07

That could be it, thanks! I'll look it up tomorrow.

[JG EA]

A few years ago I had a new client bring in their taxes along with previous year return. They had W-2's, Sch "C" and a K-1 from an a1120-S along with the usual B and A items. I prepared the return and they had about an $8000 balance due federal. They were surprised at the balance due but paid the bill took the return and left. After they didn't return the efile pages we called to remind them and were told they took it back to the prior preparer and he figured $5000 less balance due. I had two other seasoned preparers look over the return and neither could find a thing to change. I would love to know what they did to change the return.

It could be they learned why from you what to do. Maybe they left out some schedule C info or added some schedule A info.

Unless there was something to 179 on the C.
Or maybe the K-1 was active and there were loss carryovers that they didn't know about and the other preparer hadn't put into the tax return.
Or the K-1 was passive and it had a 179 that you property didn't take and the other preparer took it.