audit tips?

[jainen]

take actual expenses

>>once you use actual, you must stick with actual<<

I'm sure you said it VERY NICELY, but you were still wrong. On the other hand, the auditor didn't know you were wrong so you scored some points making him back down.

If you use standard mileage method in the first year, you can switch back and forth in subsequent years. You are only locked into actual expenses if that is what you start out with.

However, the depreciation calculation for actual expenses is different under the two scenarios. If you elect out of MACRS by using standard the first year, you must use a pre-1981 method in any later year that you take actual expenses.

[Black Bart]

Congratulations and well-done, Possi!

I'm sure that's what our illustrious colleague, jainen (AKA His Noted Knowingness), means to convey in his own unique and rather direct manner (his demeanor is similar to California's Governor Moonbeam). And, I concur with his conclusions -- it's the safest thing to do -- as I'm certain he's certain about mileage and MACRS (and probably Cohan too).

I'm glad you got a good, solid punch in with the auditor, making an impression with your client. Nice morale-builder, isn't it? But, even if you hadn't scored any points at all, it's nice just to have been to one and you won't feel so vulnerable in the future. When the next client asks "what happens at audits," you can say "Well, they do this...and they do that...." with the air of an "old hand."

Nice going.

[Possi]

forever learning

I have learned lots from this audit.
I was so convince I was right, the auditor thought it, too. So.....
"If you can't dazzle 'em with BRILLIANCE,
... baffle 'em with bulldung..."
Thanks Jainen, for straightening me out, and Thanks Black Bart, for the attaboys!
I do feel much better for having done the audit. Kind of like a root canal. The anticipation is worse than the actual experience, and I feel so much better afterward.
blessings,
~p

[jainen]

Attaboy

Attaboy, Possi.

[S T]

Job Well Done

Congratulations Possi!

Sandy

[Armando Beaujolais]

I did not faint or throw up.
~possi

I know what you mean. I hate it when an audit gets to the point where you have to use the old "faint" or "throw up" routine.

Good job! Thanks for giving us the play-by-play. We were all rooting for you. Score one for the good guys.

[Bees Knees]

I questioned the agent about using home office percentage based on # of rooms or sq footage, and he said "we always use square footage." Since this was a point he told my client I was dead wrong on, prior to our meeting, I had to address it, so I asked, "do you 'always use it' or is that the absolute way to measure? I understand that as long as the rooms are 'about' the same size, we are allowed to use rooms."
I don't think I got a straight answer, but I also believe we will be able to use my percentage.

When auditors say stupid things like that to me, I say, "Well then why does IRS Pub 587, page 6&7 say I can use the number of rooms to figure the business percentage rather than square footage?"

Then I let them squirm as they try to justify why they just contradicted the Pubs.

[Possi]

lessons learned

Next time, I WILL!
I should have been better prepared for that precise issue. That was "my bad."
oh well, lesson learned...
ahhhhhhhhhh