Equity Line Mortgage Interest

[S T]

The continuing saga of one of my tax clients.

I have this mortgage interest equity line form 1098, and I have repeatedly asked for beginning and ending balance for 2007 which I finally recieved, then asked for how the money drawn was spent.

I continually receive this vague answer, that some was spent on some legal expenses for the close down of a S corp, some was spent on rental expenses, and then the rest spent on paying personal bills, and vacations, etc. However, the client will not give me the breakdown of the amounts.

So what is a preparer to do? If the information is not correctly received, and we can't guess, just show the mortgage interest on Schedule A, and then disallow as personal interest non deductible.

I have no figures, and the client will not furnish them, I have requested and requested and now am at my wits end. I am not a magician!

I am tired, frustrated and I need to finalize this return!

Sandy

[David1980]

When they haven't given me the information needed to prepare the return property I generally prepare the return based on worst-case facts and present it to them, explaining that it could change to their benefit if they get me info. It's amazing how quick even the most stubborn can be to do things like get basis for stock when you report it as all taxable.

[abby]

on their residence under 100k?

Hi Sandy,

Is the loan on the personal residence under 100k? If it is, I would enter it as all subject to AMT, and if it's over 100k, then that percentage that's over as non-deductible personal interest.

Sounds like you were hoping to elect to trace some of it to business/rental expense, am I reading that right? I agree that without clearer information, that election cannot be made.

[S T]

Over 100K Limit

3rd Loan on Personal Residence. They are already over the 100K limit, so I was trying to trace. Mixed use and monies going in all directions.

Sandy

[Bees Knees]

I agree with David. I don't waste time begging clients for information. I lay it on the line and let them know they get nothing if they do not cooperate.

You are simply too nice, Sandy. You are like my wife who is constantly "mothering" her clients, going way beyond what she should be doing. Her clients call her "Mommy Sue." We should start calling you "Mommy Sandy." The problem is you waste too much time when you do that.

[S T]

Tell me about it

Boy, don't I know it, and then those are the clients that want everything yesterday.

Thanks,

Sandy

[BHoffman]

From a Former Mommy

Hi Sandy - I used to mommy my clients and got very tired of it. I started making them accountable for getting me the basic information they certainly should be able to provide.

One way that worked very well was to give them simple worksheets to fill out. I let them know I couldn't finish until they turned in their homework. If it wasn't correct and complete, they kept getting it back. Those who were either too dodgy or too inept to fill out a simple worksheet make awful clients anyway, so that helped me decide who to "weed out".

So, I kind of went from Mommy to Teacher Sure pays better and a whole lot easier on the nerves.