Help me plan for potential pitfalls

[ChEAr$]

As the (Tax) World Turns

We shall wait with bated breath for your report after Tuesday.

I mean really. This one sounds good!

[erchess]

Bated Breath

Once upon a time there was a cat that was hungry. She was so hungry that she ate a whole pound of Limburger Cheese. She was so hungry to begin with that she was still hungry after the cheese so she went to the nearest mouse hole and waited with baited breath.

[ChEAr$]

I'm happy to know

Once upon a time there was a cat that was hungry. She was so hungry that she ate a whole pound of Limburger Cheese. She was so hungry to begin with that she was still hungry after the cheese so she went to th nearest mouse hole and waited with baited breath.

that some people actually know the difference between bated and baited breath! (grin)

[erchess]

Meeting Today Went Well

This is a lady who keeps everything and keeps it filed so that when she wants something she can come up with it easily. She also seems to have gone to a different tax professional every year of her life. I have also never encountered a person who understood less about taxes. Oh where to begin.

Every year as far back as I looked she has had a F 2106 with substantial expenses that carried nowhere because she did not itemize.

The rental property was also her main home while she had it. What she did was rent rooms in the house. Every preparer seemed to have figured the rented space differently but the one last year had written down her calculations. They were mathematically correct and the client said that they were based on accurate room and home dimensions so I followed in this person's footsteps.

The income from her job was of course easy to do and in talking to her it was clear that she could not profitably itemize.

The home was not actually sold until Feb of 08 according to the paperwork even though in her mind the deal was made in December of 07. They just didn't sign any papers until Feb of 08. So I patiently explained that in the eyes of stuffy people such as work for all government agencies that is when the sale happened. It also seems that no depreciation has been claimed but she said she would go along with what I said. What I said was that the sale would have to be broken up for tax purposes into a sale of a residence which would not yield taxable income and the sale of a rental property that would yield taxable income. Since she has become disabled and will have next to no income for 2008 I suggested that she call me in January of 08 so I can work out the return and then we can figure out how she will pay what she owes. I am thinking that she is a candidate for an OIC but i did not tell her that.

The Schedule C loss she was expecting to take started out as a NOL in 2001. I did not ask to see 2001. The earliest year I looked at was 2005, where the preparer had accepted an NOL Carryforward, used it all, and reported that there was no more. That amount squared with what my client thought she was entitled to take only over more time. Apparently my client had not understood 05 and she told the 06 preparer that she could report a business loss. The preparer cranked out on a computer a Sch C with exactly one number, which was a bigger loss than my client said she had intended to claim. That year's preparer is the only one she has used with whom I am familiar, and I know her only by reputation.. She has a reputation for being flaky at best. Anyway I convinced my client that the safest thing to do for 07 was to not try to claim further losses from this business that she abandoned in 2001.

Here by the way is what I know of my client's history. For years she supported herself working as a home health care aide. She worked for a firm as an employee and she had private clients. She reported profits from the private clients and deducted no expenses other than mileage and she had a log of all her mileage and a proper understanding of what was and was not deductible. She briefly tried to run a one bed tanning salon out of her home but she abandoned it because it was unprofitable. She gave the tanning bed away to a charity which raffled it off. She rented rooms in her house. For a while she was married and then she divorced st some point.. In 2007 she developed Agoraphobia and decided that she could no longer leave her home. She sold the place although she now wishes she had not. She sold it because she could not go out to mail things and buy stuff and it didn't occur to her to have the tenants do that in exchange for rent reduction or pay someone else to do that. She now lives in the home of an old male friend and is taken care of jointly by this friend and her ex husband who resides in a trailer in the back yard of the friend.

[JohnH]

Apparently

So apparently I owe your client an apology for all the unkind things I speculated about her situation. I hope you can get the OIC to work for her - sounds as though she could use a break..

[ChEAr$]

Well John, I can't be so charitable, even at this point.

Erchess just mentioned that she went to a different tax pro every year, so I would be surprised
if she became a returning client.

Call me cynical..... (grin)

As I tell my clients, call me anything, but just call me!

[erchess]

Different Professional Each time

She felt correctly that each of her previous returns had been done incorrectly. She has already referred me to a friend. I think she will be a permanent client. For one thing she trembles at the bare suggestion of leaving her home and I am one of only two guys in the county who routinely go to client homes.The other guy is not in the phone book and she won't hear about him from me.