Fee allocated to Schedule C, E, F

[Jiggers]

I normally allocate my fee to the various schedules on the return, such as C, E, or F.

What do you you when that business or entity is no longer there?

Client paid my fee in March 2007 for doing his 2006 return. There was some Oil & Gas Royalty on Schedule E, and my fee was $40 for the work involved.

When I am doing his 2007 return, there is no royalty for 2007. Can I still deduct that $40 on a Schedule E, with no income or other expenses?

I guess this would also apply to Schedules C and F, if there is none for 2007.

[ChEAr$]

Sure thing

I normally allocate my fee to the various schedules on the return, such as C, E, or F.

What do you you when that business or entity is no longer there?

Client paid my fee in March 2007 for doing his 2006 return. There was some Oil & Gas Royalty on Schedule E, and my fee was $40 for the work involved.

When I am doing his 2007 return, there is no royalty for 2007. Can I still deduct that $40 on a Schedule E, with no income or other expenses?

I guess this would also apply to Schedules C and F, if there is none for 2007.

any fees attributable to c or f are deductible on those schedules with balance going
to schedule A.

My billing breaks it down also for business/personal sectors

[Gretel]

I would put on Sch. E but only charge a nominal fee - if at all - for doing Sch.E that year.

[Roland Slugg]

Schedule A

I do the same for all my clients whenever possible. When Schedule C (or C-EZ), E, F or F-4835 are not needed in the following year, I allocate the fee that would have gone on one of those forms to Schedule A instead.

The above suggestion of filing a Schedule C/E/F the following year anyway, just to have a place to put an allocated fee for the prior year's return, does not appeal to me.

[taxea]

my understanding is that the allocation to each schedule is based on the income on that schedule...if it has no income how do you allocate an expense to it? taxea

[Lion]

Charge for the form...

I charge for forms, schedules, etc. So, if I charge a client $X to prepare his Schedule C and depreciation during 2008 (for his 2007 tax return), then he has a business expense incurred and paid during 2008. If he no longer has a 2008 Schedule C, I'm not sure what I'll do when I prepare his tax returns in 2009. It hasn't come up with me yet, but I'm sure it will. Many businesses have expenses of closing down, such as final tax returns, after they've received their last revenues. If it's a small number, I'll probably put it on Schedule A; but if it's a helpful amount, I'd probably put it on the schedule that incurred the expense -- after explaining to the client and letting them make the final call.

[erchess]

My two cents

I don't have a cite, but I am sure that you can have a C E or F with no income but some expenses. Therefore if I see that last year's return had one of those Schedules, I am going to put said Schedule on this year's return even if the only entry is what they paid me or an estimate of what they paid someone else for that part of their return the previous year. I include not only the C E or F but also things like the Depreciation Charges, Schedule SE, and anything else that they needed only because of the C E or F.

When I do a form that is significantly easier for me than most instances of that form I discount the fee, perhaps all the way down to zero and enter it as "Discount To Encourage Proper Reporting" or some such on the bill.

Note that tax prep fees on Sch A are subject to the two percent of AGI Limitation so I put there only the tax prep fees I have to. If I am going to make a mistake it is going to be putting too much on other Forms.

[Nashville]

Greedy

I deduct my fee on the operation where it will be of most benefit. I'm aware this is mathematically biased, and I wouldn't encourage others to do so if they have moral reservations about doing so.

The IRS expects the "personal" portion of tax preparation fee to be reported on Schedule A, which almost always means there is no benefit because of the 2% washaway. Fact is, almost all of my customers would not even be using a tax preparer if all they had was mortgage interest and a W-2. I don't file but a handful of "short forms," mostly for children.

My typical customer will have a farm, a sideline business, rental property, entity, or some other feature which complicates the return. The amount of my time spent on the "personal" portion of such a return is virtually zero.

If I were to allocate anything to Schedule A, it would be on the basis of time spent, and not on income. For example, most of my Schedule F stuff reports a loss.

[Lion]

Price of forms

I've been taking the price of all of the forms due to that Schedule C or whatever as a deduction on the next year's Schedule C, for example. That adds up nicely when it's a C with depreciation, SE tax, etc. But, I do like the idea of time. As Nashville says, most of our time gets spend on the Schedule C or whatever complex form that brought the taxpayer to us in the first place. I was planning on turning on the time clock next season to compare prices based on time vs. based on form/schedule pricing, anyway. Now I really have an incentive to track time to see if it helps move more of my fees off Schedule A to Schedules where it can do the client some good.