Trying to convince client personal gifts not ded.

[jeff501]

I have an elderly client who gave cash as gifts to several members of her family in 2007(approximately $10,0000 each) and wants to take a deduction on her personal taxes. I tried to explain to her this can't be done other than to reduce her estate but cannot convince her of this. Did a very quick search on the web for an explanation but couldn't find anything I could show her.

Does anyone know of a site where I can print something off to give to her that spells this out? She's a nice lady but is totally convinced she can do this. I'm hoping if I can show her something she will accept things but with her investments she owes about $2,500 to the feds and $800 to the state.

[KBTS]

IRS Website

Try this link and then click to download Pub 950. Page 3 of the Pub. specifically states there is no income tax deduction for a gift.

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

[jeff501]

THANK YOU for the link. I appreciate the response to my question, got the page printed and will include with her taxes. She's been very nice in our conversations but someone she knows told her she could deduct gifts and that's all she would believe.

[LawrenceGR]

Myths and Fairy Tales

I'm posting this here it could however be posted in many places. Don't you just get tired of people who heard it for the mailman, Milkman(I'm dating myself) or any other Tom **** or Harry about what is deductable and what is NOT? I tell you sometimes I just want to tell people "What He## do you need me for, if you already know so much" and then they get downright hostile when you tell them "It is but..." Thank you all for letting me go off.

[jeff501]

I get a few each year that know everything there is to know not just about taxes, but also about how to achieve world peace, solve the energy crisis, etc. Always love those people.

[Jiggers]

Gifts to others

Or other things clients want to deduct.

I ask them where I show it on the tax return.

I pull out a 1040, Schedule A, whatever form that would be on their return.

I show them that there is no place to deduct that.

[Zee]

Argggh.......!!! I hate it when that happens. Honestly, if a client is going to insist they're right & you're wrong, you probably don't want them as a client. You should bill her for the extra time & effort it takes to provide research documentation on something you already know.

[Jesse]

Can you please find me a cite that specifically states that the typical Hot Water heaters that you purchase from Menard's or Home Depot are NOT eligible for any of the energy credits.

Today my client, who has insisted by a phone call every other day, that all her neighbors, cousins and coworkers are receiving some type of credit for the water heater they purchased at Menards brought in the receipt and again insisted that there is a credit she can get. I finally, very calmly, as I handed her her papers, told her that she needs to take it to one of their preparers becasue I want nothing more to do w/ it!

As she left I sure felt relieved, I just hope she doesn't come back tomorrow because she can't find one of their preparers, but then maybe I can suggest Turbo Tax because they gaurantee the numbers are correct - she could just pretend it is one of the tankless varieties.

[Jiggers]

Water heaters

See TTB, page 11-11.

[Zee]

Can you please find me a cite that specifically states that the typical Hot Water heaters that you purchase from Menard's or Home Depot are NOT eligible for any of the energy credits.

Today my client, who has insisted by a phone call every other day, that all her neighbors, cousins and coworkers are receiving some type of credit for the water heater they purchased at Menards brought in the receipt and again insisted that there is a credit she can get. I finally, very calmly, as I handed her her papers, told her that she needs to take it to one of their preparers becasue I want nothing more to do w/ it!

As she left I sure felt relieved, I just hope she doesn't come back tomorrow because she can't find one of their preparers, but then maybe I can suggest Turbo Tax because they gaurantee the numbers are correct - she could just pretend it is one of the tankless varieties.

You probably already know this (I didn't) because you mentioned "typical water heaters" in your opening sentence.

There is a $300 energy credit which expires 12/31/07 for certain gas or propane "tankless" water heaters. They aren't your typical water heater and sell for $600-$1600 or more installed.

[Jesse]

You probably already know this (I didn't) because you mentioned "typical water heaters" in your opening sentence.

There is a $300 energy credit which expires 12/31/07 for certain gas or propane "tankless" water heaters. They aren't your typical water heater and sell for $600-$1600 or more installed.

I have a chart of the different qualifying products which I indeed show and point out the word "tankless" - doesn't sink in because their neighbor told them they got credit for the same Menards $360 water heater that has a tank!

See TTB, page 11-11.

There needs to be a "Water Heater confusion" column.

[Zee]

I have a chart of the different qualifying products which I indeed show and point out the word "tankless" - doesn't sink in because their neighbor told them they got credit for the same Menards $360 water heater that has a tank!



There needs to be a "Water Heater confusion" column.

I was sure you did. I found the chart (I think) after reading your post. It's hard to imagine why a client wouldn't accept that explanation, but it happens all the time.

[David1980]

Best answer for "Why did my neighbor get that deduction?" is "Because your neighbor had a less experienced preparer and if audited will have to pay the tax and penalties."

If they still don't like it, tell them to take a hike... there's some out there that will shop around til someone does what they want and might as well not waste time trying to convince them otherwise.

[geekgirldany]

Several times I have had to show the customer in The TaxBook what it says about the deduction.

I had one the other day. His previous accountant was deducting mileage out of the S-Corp. Not doing a mileage reimbursement. Customer stated that the tax return had always been filed that way. Even the next accountant he moved on to did it that way. I told him they were wrong. I got "well they must not be that wrong she was a CPA and he was a EA". I then showed him in the taxbook where it states the standard mileage method can not be used by corporations.

[Black Bart]

...the typical Hot Water heaters that you purchase from Menard's or Home Depot are NOT eligible for any of the energy credits.

They're not???

Gosh -- and the Lowe's clerk I talked to the other day (he's my tech tax reference source) positively swore that they are. Hmm, maybe he was tanked when he said that. On the other hand, I have yet to talk to the appliance/insulation salesperson whose merchandise was not 100% fully qualifying tax-deductible.

...one of the tankless varieties.

Very true; ours is a tankless job.