Discussion:Allocating Tax Prep Cost
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Allocating Tax Prep Cost
| 1 June 2007 | |
| I've pickup up a 1040 client who is in the middle of an IRS audit. The client has a schedule C, and was billed $335 for Tax Preparation, which she included as a business expense on Schedule C. The auditor is adjusting the entire amount over to schedule A citing IRC Sec. 67.
I should be able to deduct on Schedule C the cost of preparing that part of the return, with the balance being allocated to Schedule A. What is an acceptable method of allocation? The schedule C is a very small business. The rest of the return was Pensions, Social Security and Gambling winnings. Also, there are taxable gambling winnings. The auditor is disallowing as a gambling loss the cash withdrawal fees from the time machines. Wouldn't that be a direct cost of gaming that should be allowed as an expense to offset the winnings? | |
| 1 June 2007 | |
| I allocate to Sch C based on the form costs: i.e. if the fee is $335, and the client has a 1040, Sch A, Sch C, Sch SE, 4562 with 3 assets, 8829, etc, I see what my per-form fee is for the business related forms and allocate that to Sch C. | |
| 1 June 2007 | |
| there is no provision in the tax code (that I am aware of) for deducting the direct cost of gaming - otherwise you could also deduct your plane ticket to Vegas. | |
| 1 June 2007 | |
| I allocated something as well. Something like $50 to A. Many clients argue that they would do the return themselves if not for the business. Does this allow me to allocate more to Schedule C. | |
| 1 June 2007 | |
| not just A, but also B, D, the 1040 etc. All of the non-business forms.
Yes, as long as you are reasonable it is not worth fighting over. The IRS isn't really fighting over $335 are they? | |
To join in on this discussion, you must first
log in.
