Inventory

[veritas]

My post was technically correct, however I understand that you can't deduct materials until used. So semantics were in play but that's what makes things fun.

[veritas]

Not to change the subject , but What do you guys and gals do when a small mom & pop business does not keep inventory? I usually get a couple new sch c filers a year who have never been told to do an inventory account at years end.

Most of the time I try to get them to guess at a dollar value of inventory for at least year end so that by the following year I will be on track. I also explain to them how to take th inventory and why they need to do it.

Any other ideas and am I way off base?

I recall some years ago a preparer using an inventory figure provided by the client (you know the type they give the amount over the phone). He got a preparer penalty.

[JG EA]

Crazy Talk

I recall some years ago a preparer using an inventory figure provided by the client (you know the type they give the amount over the phone). He got a preparer penalty.

This is scary and crazy. Why would he get a preparer penalty? I accept figures from clients all the time on the phone.

[jimmcg]

In this era of "too many attorneys" I find it best, to avoid litigation and penalties, to have the client write it down and initial it. Learned from experience not to accept verbal communication and demand documentation in writing. If they won't do it they can walk, life is too short.

[sea-tax]

I recall some years ago a preparer using an inventory figure provided by the client (you know the type they give the amount over the phone). He got a preparer penalty.

Now Veritas cool your jets. How can a preparer be held responsible for using the information that a client provided him/her unless it was definately unreasonable . I never take information over the phone but I do have some sch c and sch e filers that give me a notebook paper with some expenses and income down on that paper. As long as it looks reasonable and I always warn the client that upon audit the IRS will want to see source documents. What is the problem?

[veritas]

I don't have jets, we are fuel injected.

I can't remember the deatils exactly in the case but it gave me a queasy feeling when I read it. Now we ask to see inventory records.