lynne
Arnold M. Socol wrote:
Its all a Gamble, with your name on the tax return. You better be sure first. What if hypothetical: Father bought house 30 years ago for $40,000,and son sold recently for $240,000. Economic gain = $200,000. Wouldn't the IRS love to get the short term gain on $200,000? Would you do the return showing no gain or loss and chance an ugly and depressing Audit change and most likely get sued? I'd like to see much more concrete cites, more so than Mel's which appears to be about deductibility of mortgage interest, not gain on sale. This is not nickels and dimes like deductibility of diminimus b'day expense, this may be a very substantial tax or not.I would advise client, (and I had exactly the same situation only a few years ago and could find no favorable cite, but I found a Real Estate document that had the mother'' name on it which substantially reduced the tax that I felt I could rely on to at least avoid taxpayer and preparer penalties), that this will require substantial research, I believe I charged $500 for the research. We filed the return and I got paid but client never came back, some don't get it, but I was not going to show no gain above my signature like the client wanted without being confident.What if there is an audit and you get an agent that doesn't want to be "nice" and overlook the fact that the USA is in huge debt and the word is out from the White House to collect taxes? Are you going to handle the audit gratis, or charge more on top of a nasty tax bill to your client and expect to get paid?
Tell the client you need to research and you need to get paid up front because you might not have a favorable response for client who might not want to pay you later.Arnie
