Schedule C expenses

[Nashville]

Contributions Court Case - TTB

One of the recent court cases described in The Tax Book this year involved a Sch A deduction for contributions.

Appears the taxpayer took a typical deduction for charity on their Schedule A - probably a large amount. They had no corroborating statement from their church. So they went to their church and got a proper statement as to the amount they had contributed.

IRS disallowed the deduction because the statement was not "contemporaneous." A little over the top on the part of the IRS in my opinion. But the thing went to tax court, and IRS won.

[Bees Knees]

Hmmm. Since the preparer does the work and the IRS auditor simply reviews it, when I was an auditor I would have said, "Let's do the work. I will give you a couple of weeks to do that. Now about those acknowledgment letters for her contribution deductions..." About 20% of those I audited did get additional refunds, about 70% owed and 10% were no changes.

I’d say fine, I get more billable hours, my client gets a bigger refund, and you get the satisfaction of helping one more taxpayer get the refund they deserve. Oh and I’ll concede the charity issue...no where as big as those Schedule C deductions.

BTW, I know this isn't suppose to matter officially, but lets say you went through a period where it was 20% owed and 70% refunds to the taxpayer, maybe because you hit a string of CPA and EA reps who liked to argue tooth and nail over everything you brought up...all while everyone else in your office averaged 70% owed and 20% refunds...Would your supervisor simply say: "Nice job getting all those refunds for taxpayers...our job to help taxpayers get the correct refund…" Or would your supervise look a little closer at your auditing skills?

[taxxcpa]

Records destroyed

I had a client who got out of showing records by claiming they had been destroyed by a tornado that had hit his town. The tornado part of his story was right, but I'm not sure his records, if any, were destroyed.

[MAMalody]

taxxcpa - In reference to the supervisor comments, he did say that we were not to make the law, only to administer it. Let the chips fall where they may. I, personally, did not find most practitioners had to argue for their clients. Either they met the criteria or they did not. I did have some where discretion was the issue, and generally, I found that most practitioners used pretty good common sense and discretion.

[joanmcq]

I had an auditor that wouldn't budge when I had a client that was hit by Rita. The reason he still had his truck and the few records that were in it was because that was the truck he drove to evacuate. The auditor said to get records from the company then; the building the company was in took 6 ft of water. I even sent in news stories showing the town was 90% destroyed, maps showing where he lived, where the company was in relation to the storm surge....nothing.

And the people I worked for refused to petition appeals.