Can I do it?

[RightOn]

A client have to get a loan closed and the lender wants their 2013 Schedule C. But they do not have all their tax information ready. So they want their Schedule C to be prepared first and forward it to the lender.

So is it ok to just release a Schedule C to the client without the whole tax return having been completed?

[taxmandan]

If I was certain that the Sch C was complete AND the client has been a client for several years with a Sch C AND I trusted the client on the accuracy of the income/expenses on the Sch C I wouldn't have a problem giving him a copy of the Schedule C before the tax return was complete.

[Burke]

If the client has his business records in QuickBooks, a P&L for 2013 would probably suffice.

[FEDUKE404]

A very weak "perhaps"

Unless this was for a client of very long standing with you, I would probably be reluctant to do so. (And I might even refuse altogether.)

Things that could be an issue:

• The Schedule C would not show any preparer information.
• What happens if, for whatever reasons, the Schedule C "changes" after you have "prepared" it ?
• Where would this leave you if the client, with his Schedule C, went to another preparer to have his "final" tax return prepared?
• A reasonable fee increase to cover this action should be applied.
• We are very early in the 2014 tax season. A reasonable person might think such a request at this time to be inappropriate.
• I would never "forward" any client information/work product to a third party.
• I personally see more risk than reward in honoring this request.

FE

[Black Bart]

Probably.

It depends heavily on who the customer is (trustworthy?) and how important it is to keep him. But, for all the reasons FE listed, I'd write "DRAFT-PROJECTED TOTALS" in bold print across the face of the Schedule C (I've seen it done by a CPA firm and have done it myself). Don't obscure figures but write large enough that it can't be overlooked (so nobody gets any wrong ideas). Use a felt pen -- ranging between a Flair and a Magic Marker depending on how much you're going to worry about it.

The client usually won't object if the banker doesn't and bankers will generally take any halfway-decent paper to make a loan.

[Burke]

I have had this happen before. Lenders ask for anything and everything, but in the case of self-employed people, for some reason they think the preparer can personally vouch for all the income and expenses, etc. And they want the current year's info to date. Why they think this is necessary, and not for a W-2 employee, I cannot say. There is no guarantee an employee will continue to receive the same (or any) income in the current year. As I said, a P&L from the bookkeeper's records provides the information they need. No need to do a Sche C. And don't fall into the trap of certifying that the information is true and correct, which they are also prone to ask you to do.

[Nashville]

Selective Filing

This certainly does not apply to ALL clients, but many clients are just very flippant about their responsibility to file. The only time they're interested is when they are making a loan and the lender wants last three years tax returns. I've even had people come back and tell me to claim MORE income and file amended returns and even pay extra tax so they can show the bank how much money they made. Amazing that they "forgot" this income when telling me what they took in.

I suspect all the information returns are out, and by the time you can have a three-way summit meeting, the client can just have you file his return and be done with it.