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Discussion:Kevin Durant

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Death&Taxes (talk|edits) said:

21 February 2014
is in need of a Tax Professional:

http://espn.go.com/nba/story/_/id/10490234/kevin-durant-oklahoma-city-thunder-suing-ex-accountant-tax-troubles

Now remember, we are only seeing one side of the story here. Mr. Elliott has not responded, if he could find a response.

Ckenefick (talk|edits) said:

21 February 2014
"In preparing a client's tax returns, a reasonable prudent accountant would have conducted a basic inquiry and sought documentation to confirm that each travel expensed for which a deduction was recorded was truly business related," the lawsuit said.

If the complaint really said that, it's shoddy wording, which makes me thing the attorney is shoddy, maybe more shoddy than the accountant. And, a "reasonable prudent accountant" would not necessarily have sought documentation. He or she may have instead explained the substantiation rules in his or her engagement letter and concluded with, "If you claim a deduction for any of the aforementioned expenses, you represent that you have the required records, receipts and documentation."

Death&Taxes (talk|edits) said:

21 February 2014
I love the fact that the agent 'found' the accountant. Always works that way.

Nilodop (talk|edits) said:

21 February 2014
Some accountants are hard to find. http://www.forbes.com/sites/peterjreilly/2014/02/19/was-cpa-tax-evader-on-the-lam-or-hiding-in-plain-sight/

Coddington (talk|edits) said:

21 February 2014
It may be shoddy wording or it may be a trial lawyer being aggressive with the standard of care and trying to taint the jury pool. If I were a trial lawyer, it would not be hard to find ethics experts that interpret Circular 230 and the SSTS to require some minimal level of factual development, especially where the characterization of an expense as personal or business requires a substantive tax determination. Regardless, the days of being able to put it in the engagement letter and rely on your client's tax determinations are probably at an end. If the Circular 230 rules on return prep are at all salvaged (via Congressional action) or a surprising result in the Ryan/Ridgeley contingent fee litigation, then we won't be able to rely on non-practitioners' tax law determinations.

Ckenefick (talk|edits) said:

21 February 2014
it would not be hard to find ethics experts that interpret Circular 230 and the SSTS to require some minimal level of factual development, especially where the characterization of an expense as personal or business requires a substantive tax determination.

And the other side would say that's it pretty common sense that you can't deduct your personal chef (assuming Durant himself, or an agent of his, threw that deduction on the books). In fact, it takes less than 1 second to figure it out.

Regardless, the days of being able to put it in the engagement letter and rely on your client's tax determinations are probably at an end.

Ok, then I guess everyone's 1040 will cost $10,000 (at least) to prepare if you're suggesting we need to audit every number.

And, I do wonder how those numbers made it to Durant's return...a lot of possibilities. Maybe Durant didn't have them on the corp's books, and preparer put them there. Maybe Durant put them there full-knowing that they weren't legit.

Death&Taxes (talk|edits) said:

21 February 2014
Was Durant incorporated, like actors?

Coddington (talk|edits) said:

21 February 2014
I'm not suggesting that. What I've read about OPR's expectations is that practitioners have to get comfortable with their clients and their clients' record-keeping. They're not looking for foot faults, so there's no need to audit every number, but they are concerned if practitioners leave substantive determinations up to their clients. If the client slips something by us, that's their problem. If we never take any steps with new clients to get comfortable with their record-keeping and then rely on their substantive tax law determinations, then it is our problem.

For example, let's say we get a new client's t/b. While we're going over it, we see that they have a rather large supply expense and very little CapEx, which doesn't match up with what we know of their industry or what they've told us during their initial interview. So we go back to the client and ask them what's being charged to that supply account? And it turns out that they're expensing everything but dirt and that they're depreciating the dirt. That's the kind of thing I'm suggesting. Similar suggestions are, if it's a round number on a 274 expense, dig into it.

Spell Czech (talk|edits) said:

22 February 2014
Is every dollar that Paris Hilton spends deductible (because her personal life *is* her trade or business) or is none of it deductible (because her trade or business is entirely personal)? Think about it a while; we can get back to this one after the Olympics wind up.

Ckenefick (talk|edits) said:

22 February 2014
I can only speak from my own *celebrity* status. Exactly 1/2 should be deductible.

Death&Taxes (talk|edits) said:

22 February 2014
Several free lance writers have told me 'everything I do is tax deductible because I might write about it.'

Ckenefick (talk|edits) said:

22 February 2014
I had this one kind Client who paid an employee $50,000 one year. On 1/1 of the following year, he extended the employee's lunch break from 15-minutes to 30-minutes, yet, he paid the employee the exact same $50,000 in Year2.

I did not understand why he would do this. Employee worked *less* in Year2, but received the *same* pay as Year1.

I, of course, raised the "reasonable comp" issue with the employer, believing that Employee was over-compensated in Year1, which would involve amending the Year1 tax returns so as remove the excessive compensation. What he said to me wasn't so kind.

Nilodop (talk|edits) said:

23 February 2014
Discussion:Deducting everything you spend

Coddington (talk|edits) said:

24 February 2014
Accounting Today, [1], just ran an interview with the new IRS Commish. On due dilgence, he had this to say:

"...[A]s a general matter, I was delighted to see the [EITC documentation] question because we really don’t want preparers to feel that they have to now go collect every document, review each document, in effect audit the return at the level an IRS agent would do. We think they need to be comfortable that there is support for what it is they’re putting in the return just as the taxpayer would be comfortable with that, but we don’t think that the preparer needs to be in the position of having certified that they’ve actually got all the documents in tow and they’ve looked at them all and they’ve in effect done the first review as if they were a revenue agent. So as long as they’re comfortable that the information they’ve got is appropriate for the return, which is what their standard has been for a long time, we don’t intend to have changed that as a general matter."

Doug M (talk|edits) said:

24 February 2014
OKLAHOMA CITY -- Oklahoma City Thunder star Kevin Durant has dismissed his $600,000 federal lawsuit against his former accountant.

The two-page filing dated Friday says only that Durant and his company — K. Durant Enterprises LLC — had agreed to dismiss the lawsuit filed by Durant in December against Joel Lynn Elliott in federal court in San Jose, Calif. The filing does not say whether there is a settlement.

Joanmcq (talk|edits) said:

25 February 2014
I'm sure the accountant did not comment because his attorney told him not to. And maybe after his E&O responded, Durant realized he didn't have a leg to stand on. Since we have no idea what kind of books & records were presented to the accountant, we really have no idea.

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