Tax Professionals' Own Returns

[erchess]

Is there any sense that the IRS is any harder on our own personal and business returns than on the ones we prepare for clients or the ones people prepare themselves? What raises the question for me is a tax court case reported in NATP Tax Pro Monthly for Feb 08 on page 5. The taxpayer is a CPA. (The article doesn't say how much if any of his business is related to taxes but he would be an unusual CPA if he does not do a lot of tax work.) He had 23K profit as a CPA on Schedule C and his wife had approximately $43K of wages. He also filed a Sch C for himself as a professional gambler, on which 83K of winnings was zeroed out by 83K of losses. The IRS and ultimately the Tax Court held that his investment of time and his recordkeeping indicated that gambling was a hobby not a business for him. He therefore had AGI that cost him the Child Tax Credit and caused his itemized deductions to be limited. The article is silent on the question I most want answered. Did he pay a heavier penalty for his actions than he would have paid had he been an amateur who either did his own return or paid a professional to do it? (For purposes of this discussion let's ignore the possibility that his professional would have reimbursed him in some way or even had to give him more than he lost.)

[taxea]

Tax Professionals' Own Returns

your question has not been my experience...the CPA was not audited because he is a CPA, he was audited because of how he prepared his return. taxea

[bertrans]

your question has not been my experience...the CPA was not audited because he is a CPA, he was audited because of how he prepared his return. taxea

Agreed. The only area in which the TP's profession as a CPA may have made some difference would be in the assertion of the Accuracy-related penalty [negligence penalty]: the IRS would have argued that his professional background (IF it involved taxes) created a higher bar.

[thomtax]

It also sounds as if his gambling is what did him in, along with trying to get ahead of the game by the way he filed it.

LT