Ethics

[TAX4US]

I was preparing a 2011 return. I ask for the copy of 2010 and it had a capital gain loss c/o to 2011. Inside the 2010 return I found a copy of the 2009 schedule D. It list simply as a BOAT Tracker bought 2005 sold 2009. Created loss on 2009 10K. 09 and 10 prepared by professional orginazation not he tp.

I feel that this loss should not be deductible as I cannot find a way to classify it as investment property.

Where do we draw the line on ethics had I not found the 2009 and only looked at the 2010 and I did not find or see that 2009 form?

Can I get an aggrement on that since I saw it I can't allow it.

Thanks for imput.

[BOB W]

You are making an assumption that the BOAT was NOT used in a business...???

[taxea]

You are making an assumption that the BOAT was NOT used in a business...???

Not necessarilyl perhaps the OP doesn't have a Sch C on the prior returns and knows the TP doesn't own a business. Perhaps the OP doesn't post what isn't there.

[ttbtaxes]

I'd look over prior returns then ask the client why the Tracker boat was shown as a loss on his return. It sounds "fishy" to me but you never know.

If there is an explanation that can backed up by activity shown on prior years you're good to go. If not, I would not claim the loss carry over and recommend to the client that prior returns be amended.

[Bees Knees]

If it was a Tracker Boat, chances are he/she was involved with Bass fishing and perhaps entered professional Bass fishing tournaments with it.

You can't assume anything. Ask the client about it before jumping to conclusions that previous year returns were incorrect.

[Gary2]

I suggest starting with a more neutral position. It isn't enough to say that you can't find a way to treat it as investment, because that doesn't prove it was personal. Personal use isn't the default that applies in the absence of other info. I wouldn't start by assuming the previous preparer was wrong.

[thomtax]

I don't know, from your post, all the details - but could the boat possibly be one that he was claiming as a second home? It still may or may not be handled correctly, but until you know it is a possibility.

LT

[JG EA]

And to go a liitle further - If you know that it is wrong (by asking the client questions) you perhaps have two things to do. Leave the carryover off and offer to amend 2010 if they decide to do so.

[TAX4US]

I am meeting with client later this week to discuss. I ask them also to bring in a full copy of 09 and 08 to see what this is. it will not qualify as a second residence as indicated above. Will advise as I find out.

[JohnH]

They may decide to take their stuff home to study it over, and to "let the other guy fix it" when it comes to the prior years. If so, then the next person they go to will never see those prior year returns because of what you've told them.

But if that happens, you're better off without them as a client.

[ddoshan]

If it was a business loss, wouldn't the sale be reported on form 4797 initially before carrying forward to Sch. D. At least 4797 would indicate a business asset with depreciation being accounted for.

[TAX4US]

First question to TP was: what did you use that boat for? Their answer was RECREATIONAL. Ever get used in a business? NO. Picture of it shows a tracker like I used to have. My rational is not deductible and prior returns need to be fixed. The response then was leave the c/o off and I(tp) will get old preparer to fix. What would you do now? Other than this it is a pretty straight return. Nothing fishey beyond this. No pun intended.