Audit

I have a client who has been audited for 2003 tax return - I did not do his 2003 return.

This client has parkinson, has been retired, and can not do anything for years. He was working as an agent before. So he has some retirement income coming from insurance company that he worked for.

Past preparer showed income from Insurance company - $42,000 - as other income on page 1 of 1040 (not on sch "c"). IRS thought that it is self employment income and so client should pay SE tax (5,340 Approx.).

I disagree. He can not do anything and there for this his annuity/Pension income. Tax preparer should have shown on pension/annuity line, right?

How can I help client and on what basis?

I will prepare his 2005 tax return. I want to make sure that I do it properly.

Thanks!