My fault or someone else's?

[JohnH]

My client got a CP2000 notice. It was generated because the amounts claimed on 1040 schedule D (elect filed) did not match the 1099B. There was a co-owner on the 1099B. Both owners were listed as account owners but only my client's ssn on the 1099B. The amounts on the 1099 were divided 50/50 on each owners sched D. The automated system obviously did not recognize there were two owners thus the CP 2000 was generated. I answered to CP2000 for my client explaining the situation and I expect it will be accepted.

I am wondering if I should have included an electronic note with the return explaining the situation and if the CP2000 would not have been generated if I had.

I am wondering if the broker should have generated two separate 1099Bs for the account.

I am wondering if I should charge my client for the three hours I spent dealing with this or if it is my fault and I should take care of it for free.

What do you think?

Theres's no right or wrong answer to your question about the billing. It depends upon the client's sense of fairness, which in turn should affect how interested you are in keeping the client's business. If this is going to be an ongoing issue, then you will need to charge more for preparing their returns in the future. You could easily build the 3 hours into those future bills, perhaps spreading it out over 2-3 years.

I'd probably explain to the client that this new complexity will cause their bills to increase in the future. If they understand, then we can deal with it as described above.

If they disagree with me or question why they should pay more in the future, I'd probably conclude that they don't have a basic sense of fairness. In that case I'd throw the issue on the table by billing them for the 3 hours. If they pay and come back, we can proceed normally. If they pay and don't come back, good riddance. If they don't pay and don't come back, at least I don't have to contend with their nonsense in the future.

[smithtax]

My client got a CP2000 notice. It was generated because the amounts claimed on 1040 schedule D (elect filed) did not match the 1099B. There was a co-owner on the 1099B. Both owners were listed as account owners but only my client's ssn on the 1099B. The amounts on the 1099 were divided 50/50 on each owners sched D. The automated system obviously did not recognize there were two owners thus the CP 2000 was generated. I answered to CP2000 for my client explaining the situation and I expect it will be accepted.

I am wondering if I should have included an electronic note with the return explaining the situation and if the CP2000 would not have been generated if I had.

I doubt an electronic note would have avoided the computer matching program.

I am wondering if the broker should have generated two separate 1099Bs for the account.

I would imagine the broker is only required to generate a 1099 for the SSN on the account; I've never seen separate statements for the same account, although I don't know for certain if the account could be divided that way.

I am wondering if I should charge my client for the three hours I spent dealing with this or if it is my fault and I should take care of it for free.

If you spent 3 hrs 'dealing with this' I can only assume there were a number of transactions and you attended to each one individually in your response to the CP2000? It is your call as to whether or not you feel responsible for the mismatch. I have had no-charge 'learning experiences' of my own in my practice. In those situations the client is often quite appreciative which lends goodwill (referrals).

What do you think?

I would have reported the entire gross proceeds on my client's return and simply increased the basis for the difference IF you could support the taxpayer's contention that the account is indeed owned jointly. I would also make good notes for my file and have the client sign that portion of my workpapers.

[jimenright]

My client got a CP2000 notice. It was generated because the amounts claimed on 1040 schedule D (elect filed) did not match the 1099B. There was a co-owner on the 1099B. Both owners were listed as account owners but only my client's ssn on the 1099B. The amounts on the 1099 were divided 50/50 on each owners sched D. The automated system obviously did not recognize there were two owners thus the CP 2000 was generated. I answered to CP2000 for my client explaining the situation and I expect it will be accepted.

I am wondering if I should have included an electronic note with the return explaining the situation and if the CP2000 would not have been generated if I had.

I am wondering if the broker should have generated two separate 1099Bs for the account.

I am wondering if I should charge my client for the three hours I spent dealing with this or if it is my fault and I should take care of it for free.

What do you think?