Partnership 1065 and K-1 Questions

[veritas]

My Pastor does his own taxes. He told me he uses Turbotax and it is really easy. Now I use Lacerte and I know it is not that easy.

I'm thinking next time I see him I'll tell him I'm not coming Sunday cuz I got TurboSermon.

[BOB W]

Cute... real cute

... you cracked me up..... love it .............

[Safire]

I changed my own oil one time, it was real easy.

I drained all my fluid out, which looked a little bit funny, then I put 4 quarts of oil into my engine. I drove to Walmart which was about 4 miles away and on the way back, I heard this funny noise I had never heard before. I was so proud of myself though for doing it own my own! When I showed my husband the oil I had drained out and told him about that funny noise, he just shook his head and said, "Show me where you drained that from."

You guessed it, I drained out the transmission fluid. Toyota trucks really ARE tough.

[BOB W]

Jillsy.... Are You Still

Out There????????

[Brian EA]

I think she is ready to kick somebody's butt.

Just kidding

[Unregistered]

Jilly -

"If I choose to go and seek an accountant's advice, that is my business. I don't think I did anything wrong in seeking some quick advice here and admitting that we are trying to make a small business grow and would like to save money whenever possible. Besides, I've heard plenty of horror stories of accountants running off with people's money or screwing up their tax returns. So I don't necessarily want to give a total stranger complete access to all my personal and business records, especially if that person is as much of a jerk as you obviously are."

I'm sorry that you have "heard plenty of horror stories". I know of no accountants locally who have "run off with people's money". This would be virtually impossible to do unless you gave the person authority on your bank accounts, which I recommend never happen. Screwed up tax returns do sometimes happen, but that's why you find a reputable professional with current Errors and Omissions insurance, and you require them to show you a copy of the insurance if it helps to settle your fears.

I really don't want a complete stranger to know my medical and psychological history, but that gall bladder surgery my wife had a couple of years ago would have been really difficult to do on my kitchen table. But, hey, I could have saved a few bucks doing it myself.

I don't want to demean you, nor do I think anyone else wants to. And, I believe you most likely are an intelligent, educated individual. But, SO ARE WE! And, we are educated in tax law, as you most likely are educated in some other field. I wouldn't take on a 1065 if I didn't have specialized training, and I don't think you should either. Hell, I didn't take on a 1065 for several years after I finished my formalized education because it is a very difficult process with specialized knowledge required.

This forum is for tax pros to bounce ideas off each other and really isn't for free advice for many of the reasons given. Each individual situation is unique and their is no uniform fix all for any situation. Please take our advice, file an extension for the 1065 and the partners' returns. Finish the preparation and pay a tax pro to review the return. Even at $150 an hour (top of the line fee, not mine) you'll most likely only be out $150. It doesn't take that long to find the kind of errors we are afraid you are going to have on your return if you do it yourself.

JoshInNC

[Black Bart]

Two-edged sword

[QUOTE=jillsy]

I don't appreciate your arrogant attitude.

I've heard plenty of horror stories of accountants running off with people's money or screwing up their tax returns.

Now I see what this site is really for. It's mainly a forum for accountants like you to come and try to scare people by telling them they're too stupid to do anything on their own and they absolutely MUST turn everything over to an accountant and blindly do what they say.

QUOTE]

How can you can legitimately claim that we are an arrogant group? What about your attitude? You've listened to almost everyone here plead with you not to assume that we were trying to "scare" you into going to a tax pro and giving you their best opinions and advice solely for your own welfare. And, now, in your sentence above, you have arbitrarily pronounced us and the whole site as a bunch of "scare scam artists." How do you suppose that sounds to us?

I really don't see how any responding posters could have been more gracious and accommodating than Armando, Lion, Josh, and others. Bob W. was just a bit more blunt, but he was still sincere. They're telling you that you there's a real danger of costing yourself lots of money and making an insoluble mess by doing what you're doing. You want to save money and don't want to hear that. That's okay--it's your prerogative and your money, but how'd you like it if we walked into your business, you tried to tell us what you thought the best route to go was, and we told you to go jump in the lake because we'd heard plenty of horror stories about how guys like you in the XXX business ran off with people's money or screwed up their XXX's?

P.S. If you really want to see a screwed-up tax return, just ask anybody on this board for his favorite anecdote about a client's completely crazy self-prep blunder (charging an automobile to "miscellaneous expense," etc.).

[jillsy]

Thank You All for Your Responses

Yes, I am still out here. Thank you, Bob W, for your follow-up response. That was big of you.

Despite what you all may think, I am not totally against seeking any kind of professional accounting advice. I also would not try to do surgery on myself or a family member, and I don't even bother trying to perform my own car repairs/maintenance. As I told JoshinNC earlier, I don't picture a professional accountant agreeing to work for me on a sort-of consultant basis. I am confident that there is a great deal I can do myself and would just want someone to help with the more complicated issues.

I also wasn't trying to get free in-depth tax advice. I know you all work at your profession for a living. I was only looking for some hints or a point in the right direction. I would gladly pay someone I could trust a fair amount for an hour or two of their time to help me through a few rough spots.

Most people I know who use accountants use them on a full-time basis, not just at tax time. They simply turn everything over to them and really have no idea what their accountant does. I am too much of a control freak for that. I need to have an understanding of what's going on; I'm not just looking for someone to take over.

Years ago, I went through a divorce and was determined I wasn't going to lose all of my savings to a lawyer as I'd seen others do. So I downloaded the NYS uncontested divorce packet to get me started and went to the law library to get the rest. I was lucky enough to find an attorney who was willing to act as a consultant and she filled in the blanks and went over my court papers before I filed them. I ended up going up against my ex's lawyer and still got everything I wanted.

Now that I have a business, I would want an accountant willing to act in a similar capacity. However, it's hard just to find someone you can trust, let alone someone who is willing to work on an as-needed basis. There are tons of accountants listed in the Yellow Pages. How do you know which ones are reliable? I went to college with some people who were accounting majors and weren't that bright, and possibly not that honest either. How do I know if I'm getting the guy who studied hard or the guy who slept through all of his classes? By the way, thanks JoshinNC for telling me about the Errors and Omissions insurance. I didn't know about that and it's definitely helpful information to use in trying to find the right accountant.

Our business is quite small at this point so our 1065 really is relatively uncomplicated. There are only two of us. We didn't borrow money to get started and we run out of our home. We don't have any foreign partners and our expenses are pretty basic so it's not that difficult to figure out where the various deductions belong. Also, we meet all three of the requirements in item 5 of Sched. B so we don't have to fill out schedules L, M-1, M-2, or item N on our K-1 schedules. We keep good records and categorize all expenses and income, and we keep track of our capital accounts. I realize that the IRS doesn't allow ignorance as an excuse if we make an error, but I also dont' think any error we could make would be bad enough to get us tossed in jail or something that drastic. I certainly would not want to be audited, but I think our records would show the IRS that we have done everything in good faith and the worst case would be our having to pay back some money with possible interest/penalties. With the sums of money we are dealing with at this point, that's a risk we are both willing to take if we can't find an accountant willing to work with us on our terms.

Yes, I know you all think I'm crazy, but I've been a skeptic all my life and there's no changing that now. I do appreciate and understand the advice to seek professional help. There are some who could have been a bit nicer about it, but most seemed to be sincerely trying to help. We have gone over our forms and records thoroughly and really only have a couple of areas we would possibly ask a professional about. We will see if we can locate someone this week, and we may also call the IRS business tax help line to see if they can help.

Thanks and good luck to all of you this tax season.

Jillsy

[veritas]

Jillsy,

I enjoyed reading your post. We all hope you are very successful in your business venture. I also think it is smart for the owners' of a business to take the paperwork side seriously. I have had many clients tell me "I did not go into business to do paperwork" which I believe is an excuse because they don't understand or are lazy.

However that being said I would hope you put as much effort into making your business grow and prosper. I heard one that the main purpose of business is to make an obscene profit. This is where your every effort should be. So learn what you can but learn to delegate.

[taxmandan]

Jillsy,

There are some of us who will work with a business client on their terms, all of the bookkeeping, some of it, none of it and just the tax work. Interview as many accountants as you have to in order to find one that fits your style, they are out there. Try to find an accountant who has other clients in the same industry as your business, each industry has it's own odd little twists and peculiarities in the tax code and it's best to have someone with experience in that area. And oh yeah, wait until after tax season to set up interviews, we all will have more time then to talk with new clients.

[Unregistered]

agree with everyone else

there are accountants out there who will work as a consultant/part-time CFO for you, no matter how small your business is. I have an LLC based out of Long Island with offices here in NC that I do consulting work for on an as needed basis and it works out very well for them. Please don't lump all accountants in with your college buddies, as most of us on this board are genuinely interested in providing our clients with as much information/assistance as possible. Otherwise, we wouldn't be on this board as much as we are. In interviewing an accountant ask about liability coverage, qualifications, whether they have other clients in your profession, get references and CALL THEM. somebody out there will be more than able to assist you and your partner.

Good Luck!

JoshInNC

[taxmandan]

there are accountants out there who will work as a consultant/part-time CFO for you, no matter how small your business is. I have an LLC based out of Long Island with offices here in NC that I do consulting work for on an as needed basis and it works out very well for them. Please don't lump all accountants in with your college buddies, as most of us on this board are genuinely interested in providing our clients with as much information/assistance as possible. Otherwise, we wouldn't be on this board as much as we are. In interviewing an accountant ask about liability coverage, qualifications, whether they have other clients in your profession, get references and CALL THEM. somebody out there will be more than able to assist you and your partner.

Good Luck!

JoshInNC

Circular 230 rules preclude giving anyone references to contact. I would never give out client's names or phone numbers to anyone. I know that may make you wary that I'm hiding something, but it's all about confidentiality of client information. And that is something you would expect from your accountant, lawyer, doctor, etc.

[Unregistered]

I did not know that

I will have to read up on that, but I find it difficult to believe that we cannot provide reference contacts for potential clients. Not to say that you aren't right, just never heard that before.

do you know right off hand what section of the circular that is covered in?

JoshInNC

[Black Bart]

Part-time consultant

it's hard just to find someone you can trust.

There are tons of accountants. How do I know if I'm getting the guy who studied hard or the guy who slept through all of his classes?

Yes, I know you all think I'm crazy. We will see if we can locate someone this week

and we may also call the IRS .

Jillsy

Nobody thinks you're crazy. Obviously, you've survived some tough times and are very interested in building a successful business.

As to picking the right accountant, it's sort of like picking the right doctor. It's very important and you wish there was a good doc--bad doc list available, but there isn't. It has to do with luck more than anybody likes to admit. Still, the best approach is to just talk to someone in person. If you're as much a judge of character as your letter seems to indicate, then you should be able to weed out the phonies in short order.

Call IRS? They have some very smart people and very dumb people working for them. Again, that's mostly the luck of the draw. If you don't like their tone, etc., hang up and call back. You'll get a different one.

Good luck.

[BOB W]

Jillsy.....

....I'm glad to see that you are still around. If you re-read your opening thread and now apply your new-found knowledge, you will see why I responded the way I did.

One of the responders gave you some good advice about devoting your time to generating income instead of taking care of history. Accountants generally are the historians and the clients are for generating history. When you reverse that process, you become doomed to failure. Forward thinking and having a plan is where your time is best spent. I don't have a client that feels that my fees are a burden to their business. I free them up to take care of their growing business.

There has been occassions when a struggling new business comes into my office and I adjusted my fees to accommodate them, with the understanding that my fees will increase as their business grows. I now have a vested interest in this type of client and if I see that they are not trying as hard as they said they were, I'll send them on their way.

You should try to locate someone that will do the same. They're out there. My guess is 95% of accountants can be trusted to do the right thing for you 100% of the time, you just have be in the right frame of mind to let them.

Going one step further, I have had clients that wanted to know everything. They even went so far as taking some courses in accounting and taxation. After they learned the fundamentals, they came to me and said, "I had no idea that what you do is so complicated". I said, "It took me 25 years to know what I know and I still don't know all that I need know. That is why I have a refference library, go to annual seminars, maintain my internet connection for fast research, and spend many non-billable hours keeping up with tax law changes, and not least of all, using this web site and having "The Tax Book" at my side at all times. So when someone like yourself comes on this board and raises questions like you did, I say to myself, "how will she/he ever get it right". And I know the answer- she/he won't....... no matter how sincere they may be or how hard they try.

Anyway, good luck!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!