Last week we arranged our last attempt to solve our clients tax issue before going to appeals. We arranged to meet the manager on the case at the IRS office. Went suprisingly well, the lady was much sharper than we feard (almost too sharp at parts). Our clients came with us to this meeting, which can always be fun.

We carefully met first before the IRS meeting, so we could prep our clients on what to say and what not to say to the IRS. As always, half of what we said was forgotten, but the client did over all a good job presenting their situation.

To recap the situation, client had 50K of expenses to purchase a specifically identified business in a foreign company. We were arguing that this met code sections 195 and 263. WE had revenue ruling supporting this. Initially IRS position was that it was all personal expenses because they were arguing that it was not a specifically identified business.

Highlights of meeting - IRS gave in on specific business, I kicked client under table during their spiel portion when they began mentioning the fact that family was with them on trip as management positions, IRS offered travel expenses and legal/professional (about 30K worth), in the end IRS told client "Now your CPA is about to tell you to be quiet, and you should listen to them", in the end though the IRS gave us an escape valve on the other 20K of expenses based upon us providing them written proof that the client had been required to pay the expenses as part of the deal to purchase the business.

Our client delivered that document to me today. End result, the IRS will accept the return as originally filed, and we hit a home run. Which is good, because there was other issues the IRS could have attacked on (which the agent alluded to), but chose not to. It is nice to be recognized as professional by others.

Well, today I realized that one case I was working is going to have to go to appeals. You know that will happen when the revenue agent quietly tells you his supervisor is going to take a hard stance, but that off the record he thinks you have a strong appeal case. I have a client who went to a foreign country, identified a specific business (with an offer letter), and began due diligence. Now normally I would expect that this would be a fight over whether or not it was 195 or a 263 (code sections)piece. Which is important since that effects the time period over which the types of expenses can be expensed. In this case, since the deal fell apart, I didn't care about this fight since either way I would get it all. Instead they have decided to follow a very old revenue ruling, and are pretty obviously misreading it. The old revenue ruling says, essentially, that preliminary investigative expenses are a nondeductible or capitalizable event.

The issue here is that we differ on whether this was expenses on the preliminary investigation. AS the client had an offer letter, and all such expenses were at the site of the company they were going to purchase, I don't see where the IRS has a leg to stand on, and I intend to wipe the floor with them in appeal. I am particularly looking forward to using as part of my justification quotes from the very document they are using to defend their position.

I am just saddened that I am going to be forced to go to appeals on this, which will cost my client additional funds.

Ah, another working day.  Today my day started at 6 AM, getting up so that I can get the food and drink for a 7:30 AM networking function.  I then have a 9 AM IRS audit to take care of, a noon rotary club meet, a 2 and 4 PM client meetings, and then some networking functions tonight.  And somehow inbetween I need to do about 5 hours of projects I want to get finished today.  Ah, just a long day.  Hmm, this is a whiny blog, I suppose I am allowed that though.

Well, I am finally emerging from my common tax season fog.  Second with my own firm, and life is definitely grand.  I think next year I must arrange to take the week after tax season off and away from the firm.  Historically I have always worked the week after tax season, as it is a quiet period usually.  But I must say that having my own firm is a lot more work then simply working 60+ hours a week as someone's employee.  Definitely should have checked out for a week.

 

Big news on my end, my fiance and I have finally set a date, September 23, 2007 will be the joyous date of union of our clans and property.  I hope my friends all wish us well on our upcoming merger.  Now to get the legal documents over to her family and begin the dowery negotiation (wait a second, shouldn't I have done this before finalizing date, uh oh). 

 

I have still not determined what exactly to use this blog for, so I suppose I will use it for a variety of purposes including updates on my life (properly obfuscated of course), amusing anecdotes, homage to the magnificence of the tax code and accounting in general, and other miscellaneous errata.  If anyone has any suggestions for uses of the blog, I will happily take them under consideration.

I have the luck of having scheduled yesterday free of meetings, and today mostly free of meetings (only 3 meetings, from 11 to 3 PM.  Which means I will be free to work for about 9 hours on projects.  Nothing better than feeling the work getting done.

8:05 PM on a long bus to worksville,

The time of a CPA when the night hours hit.

 

Soon it will be 8:06 PM, and time to check another balance.

Gotta review these ledgers, tie out those balance sheet accounts.

 

You have to start with Retained Earnings (or equity for those partnership dancers),

Because if you don't prove your starting point, how can you know how far you have run.

 

Then you wander through the fields of assets,

Proving the bank reconciliations, tying out fixed assets,

For our accrual sisters, prove the accounts receivable.

Knowing the numbers both ending and beginning.

 

Then you have to switch to the liabilities. 

Reconcile the credit cars. 

Tie the loans to your Amortization Schedules.

If you are a real accrual sort of fellow, check your period ends for the accruals.

 

Then it is time for the scanning of the P&L items.

Mmm, capitalization, long lasting pleasure that ties back to the balance sheet.

What is the life, you say, and the method?

Only the tax man knows, but maybe your statements are GAAP instead.

 

Have you notated the variances, and found the extraneous information.

Don't forget to document, index, and reference.  Proof is in the pudding laddies.

 

Then, once the financials are done, the M-1 dance begins.

 

All in the life of an evil cpa.

They aren't just cute like everyone supposes...
They got them hoppy legs and twitchy little noses.
And what's with all the carrots?
What do they need such good eyesight for, anyways?