Discussion:TAX PREP FEE W/ 600 SCHED D TRANSACTIONS?

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Discussion Forum Index --> Business Growth Community --> TAX PREP FEE W/ 600 SCHED D TRANSACTIONS?


Taxman3132 (talk|edits) said:

23 April 2008
i am currently charging $715(2006). now im doing 07. is $775 to low?

Lancermc (talk|edits) said:

23 April 2008
If you or your staff have to enter each trade that is one thing. If you have an attachable schedule from the broker it helps. The fee does seem low in either case.

Taxman3132 (talk|edits) said:

23 April 2008
I TRIED to just do short-tern and long term totals. she sent it back to me when i just did the totals (that was 10 years ago). she is single 88 years old and is set in her ways. she would not let me copy the realized gain/loss schedule and attach it. the good news is that merrill lynch has a great schedule that i am basically just typing.its giving me a rather large headache right now. does not seem like its worth $750 just right now. even if i tried the pay per sched d transactions billing option on pro series($1 per line), it would still jsut be around $800-850. oh well.

Taxman3132 (talk|edits) said:

23 April 2008
oh--i am a ONE person staff-btw

CPAdavid (talk|edits) said:

23 April 2008
Just for some perspective: Last year I found a new client's copy of his prior CPA's fee schedule included with the tax return. It was one of those "per form" schedules. For Schedule D, the fee was $50 for the first 5 items. Then $6 per item thereafter.

So for your client's return that would be $6 X 600 transactions, or $3,600. Sounds like you may have some room to move upwards from $775.

How long does it take you to type in 600 transactions? Multiply that times your normal hourly realization for comparison.

I've seen clients like that when I was with a firm. They insist on all the transactions being entered into the software. You have to let them know that it will take an additional XX hours at $XXX per hour and give them a fee estimate. Maybe an extra $1,500 to her is nothing compared to the peace of mind she'll receive from having it all entered line-by-line.

This season I had a return with 40 stock sales transactions on a Scottrade statement with no cost basis listed and no gain/loss shown. I had to dig around in the purchases info (fortunately all stocks were bought and sold in 2007) to come up with the basis. It took 3 or 4 hours. I billed $600, which I think was a bit low because there were other complications, (but discounted it to $400 because it was a long-time friend with almost no income that year). I also included a friendly warning that if I didn't receive cost basis info next year there would be no discount.

That's one thing I have to credit Merrill Lynch for. They do provide basis info.

Iaklein (talk|edits) said:

23 April 2008
I've read some software tax companies have teamed up with brokerage companies where data can be imported directly into the tax software...or....data can be exported from brokerage stmnt into excel....and then excel...into your software.

What I would love to find is a softare that shows me last year's #'s right along side what I am about to enter....ex if I am going to enter mtg interest of 22,000 for 2007...i would love

to have right by the side what i entered for 2006.

the only software that i know that does that is profx and that's too pricey for me......

anyone else's software out there have this feature?

PaperworkCPA (talk|edits) said:

23 April 2008
Lacerte now shows the numbers from the prior year.

Death&Taxes (talk|edits) said:

23 April 2008
I charge one person $25 a K-1 for PTP energy partnerships and she had 38 of them. A dollar a line does not seem extreme plus a charge for the balance of the return.

Fsteincpa (talk|edits) said:

23 April 2008
CPADavid,

did you have the client/friend request a gain/loss statement? Usually you can get one online. Most brokerages can provide them unless stocks were transferred in from another venue.

As for typing in all of the Sch D transactions, I charge a fee for the form and then $2 per transaction after that. Will go up to $3 per next year with the gain loss schedule included. If none, then fee plus additional time spent will be charged.

Solomon (talk|edits) said:

23 April 2008
Suggest client use Tradelog.

Death&Taxes (talk|edits) said:

23 April 2008
As I recall, you can import from certain brokerages to Turbo Tax, but only the client can do so because of privacy restrictions.....of course, if you then use Proseries, you can import a 2007 Turbo Tax file to Proseries.

When I had lengthy stock trades to type in Proseries, I would switch to Entry Mode which simplified it since it left out the line by line calculation, but I am not sure if this worked this year.

Somehow I cannot see this 88 year old woman using Tradelog!

Snowbird (talk|edits) said:

23 April 2008
You're probably done by now ... even at my typing speed .... slow. However, in the past, I have had moderate success scanning documents into Excel ... especially if you have a clean document with good separation between the columns. This assume your software will import and Excel doc.

JR1 (talk|edits) said:

April 23, 2008
I'm with CPADavid. There's only one way to compute the fair rate. For the time it takes, how many other returns can you do and what would you charge? This isn't about a normal hourly rate, frankly. That's for August. This is for tax season rate. If I can do $1000 worth of returns in an hour, that's the rate...or as close to it as I can get. It's about opportunity cost. Remember those? Now, if you've nothing else to do, it doesn't matter. But if you're already as busy as can be, so you effectively have to choose to do this or that, you base your fee accordingly. I have a new client thing coming on board that might suck up a week of the season alone with a half dozen multistate filings on over a half dozen entities with multiple members. What's a week worth? Who do I have to fire to have the time for this?

Nancyshoemake (talk|edits) said:

23 April 2008
right on JR!

DZCPA (talk|edits) said:

23 April 2008
Agree, She wants it that way....she will have to pay. Her choice.

Scolby22 (talk|edits) said:

23 April 2008
I found some software called Able2Extract that really helped me get high volume schedule D transactions into Lacerte without all of the typing. I would scan a brokerage statement into a pdf file and then the software allows you to import the pdf file into excel. I could then import the transactions into Lacerte. I had 6-8 clients with over 100 sch D transactions and I would estimate that it took me 20-30 minutes to manipulate the excel sheet to be ready for importing to Lacerte.

Sea-tax (talk|edits) said:

23 April 2008
Just a thought, Merill lynch can export there gain loss reports to excel and if you have lacerte tax software they have a gain loss export from excel feature. I personally used this feature for a client who's ML broker had over 800 stock and bond transactions for 2007 in less than 7 months that the account was open. The transfer of the data and checking it to make sure everything was there took me less than 1 hour. It worked flawless.

As a side note if I had to enter in all those items it would have cost the client in excess of $4500. As another side note there net result from 800 sales was a cap gain of $3600 and a broker fee of $4300, got to love stock jockeys

Ken@seamann.com (talk|edits) said:

24 April 2008
I charge $5 per line, w/ a substantial discount if we can use the Brokerage House download (MOST have it available now). You still have to doublecheck each line, as errors do occur, but find it is actually much more reliable than my finger, especially after 500 lines.

Got pointed in this direction by a local college and it works great.

Death&Taxes (talk|edits) said:

24 April 2008
Had a client who as late as the year 2000 kept all his stocks from multiple brokerages in small spiral bound notebooks. He was a dentist who loved playing the market. At first he let me transcribe the transactions but then he and wife would nit-pick me to death about rounding, and they would find errors, so he began what I called the "Holy Reading of the Stocks" which would take 2-3 hours. He would read a transaction, I would type it and read it back. Naturally I jacked up the fee; he complained and I fired him after 2000, when his world of easy gains came crashing down....that was the year he would not let his wife listen in as he read off his losses, which of course, were 'planned' because now "Sherry & Diane were going to college and I want my income lower."

I told this guy who is a mucky muck at Goldman Sachs about the dentist stock picker as I did his return. He was eating a salad as I worked. He said nothing for about three minutes then said, "the stupid fool."

Taxman3132 (talk|edits) said:

24 April 2008
i ended up charging $825(up from $715). turned out there was only 575 transactions. her filing copy(i dont e file yet) was 55 pages for federal.

she is typical of most of my elderly clients--the older they get the tighter they are w/ money(except for giving it to their own ADULT children). if i charged some ofthe suggested rates($2500) she would have a cow...

TaxFlake (talk|edits) said:

24 April 2008
If it was worth your time, great! If not, figure out a per item charge for her and let her know that's what it will be next year. If you approach her on a per item basis, it probably won't seem so bad, compare it to the cost of making the trade itself, it will most likely pale in comparison. Good Luck, hope your fingers heal in time! :)

CATAXES (talk|edits) said:

24 April 2008
Lacerte's ability to import Excel really paid off this year. Client's brokers e-mailed data and I imported to tax return. Most valuable when one of my clients needed to split index options for the 40-60 short term/long term split. Generated a very impressive 15 pages of Schedule D-1 overflow. Am now considering adding a "per pound" fee.

Mbaqb (talk|edits) said:

24 April 2008
I see where you're coming from regarding the $2,500, but you're doing yourself a disservice by only charging $825. Your fee should easily be over $1,000. I understand that it should only take x amount of time to enter a line, so use your hourly rate, etc., but the fact is that if you enter that many lines, I don't care who you are, you're not a machine, you're going to slow down, get tired and the risk for error increases. Regardless of what myself or anyone else here thinks, the bottom line is that if you don't enjoy doing the work at $825 or $2,500, you've got a problem.

Jstax08 (talk|edits) said:

26 April 2008
Regarding Mbaqb....I am not sure anyone enjoys entering 600 sch D transactions..lol. Charge her for the time it takes and try to convince her to attach a summary schedule...less chance for input error and save on fees. Not sure how large practice, but have a part time/intern to enter this kinda of info.

Jstax08 (talk|edits) said:

26 April 2008
On another note, if she is 88 years old, why does she have 600 schedule D transaction...sounds like her account is getting churned...maybe

MCMCDEV (talk|edits) said:

26 April 2008
Using ProSeries, what is the best method to import the Schedule D transactions? If a client emails me the transactions from Ameritrade, can it be imported?

Lancermc (talk|edits) said:

26 April 2008
Sounds like Jstax has stumbled on to the obvious problem, we others missed. A broker churning an elderly's account. Unless there is some explanation it just sickens me that the vulnerable are taken advantage of like this. When this happens in my practice, and it does with frequency, I scream, holler, and make noise (all carefully to protect myself) to make sure the broker understands this has been noticed, and must stop. Never once have I had to escalate it, they get the message.

Death&Taxes (talk|edits) said:

26 April 2008
Good point Lance. Let's hope it's a managed account with no commissions but rather a fee. Brokerages love those; I have a 72 year old whose account is worth perhaps 3M who is charged this outlandish fee which is blown by AMT. Last year there was only one trade, and that was Tribune Company which Sam Zell took private.....rarely more than three trades a year but she gets 'watchdog service.'

Lancermc (talk|edits) said:

26 April 2008
Yes, D&T, you are right, there are reputable brokers who do this and do not abuse it.

DZCPA (talk|edits) said:

26 April 2008
2 lines work even better. 1 for long term and 2nd for short term. If IRS wants detail they will ask for it. I know this is not what the IRS directions say.

Habari (talk|edits) said:

26 April 2008
Even if you send the Sch. D as an attchment with Form 8453, you still have to evaluate the transactions for wash sales...& there would be many of them....800 transactions roughly means your client had 2 trades per day. I say round it out to $1,000.

Am curious to know if your client made a net gain on these trades. My experience with such clients is that they usually have a net loss, almost 90% of the trades are loss-making trades, & they keep on having the same record year after year. These are just cases of stock trading addictions.

Kokomo (talk|edits) said:

27 April 2008
IMHO, you have to look at both sides of the equation when it comes to pricing -- the demand side and your cost. Your cost is your opportunity cost (as JR1 said) which could be very high -- could be $200-1000 or more per hour during the peak tax season depending on if you are a solo practice or a business and if you are a newbie or someone with >$200K revenue during tax season. On the demand side of the equation, you have the client's perceived value of your service.

Based on the information on the 88 year old ladie's case, I would not work on her unless your opportunity cost is low i.e. you are not staying up until midnight to work on these low profit cases. Shouldn't accountants get paid overtime like others?

Kokomo (talk|edits) said:

27 April 2008
From a practical standpoint, I agree with DZ's comment about lumping them together. If IRS wants details then you can give at that time and charge the client extra for it. This way, you can charge the client a fee that is acceptable to both of you when you do the tax return at tax time and deal with the potential high costs later when the client would be more willing to pay.

Anarchrist (talk|edits) said:

28 April 2008
>> if i charged some ofthe suggested rates($2500) she would have a cow... <<

You should have told her that inputting each transaction would cost her an additional $1000 - $2000, or you could attach the broker's statement and it would only cost $800. That way it would be up to her and she could see what her stupid decision would cost. Instead you let yourself be taken advantage of.

Lion (talk|edits) said:

28 April 2008
How much is she paying in brokerage commissions or quarterly fees? If she's paying $4,300 like one mentioned above, then paying $2,000 or more to report the trades is a bargain.

By the way, I use ProSystem fx and love the prior year amounts right on my screen. That and other help the software gives me are well worth the price in the time and stress they save me. Cheaper than hiring an assistant. I love the easy way Profx does kiddie tax for me and exports K-1s from partnerships to the individual returns. And, the fast, knowledgeable, and US-based tax and tech support were worth the price alone to this preparer out on her own for the first time. I have a very small practice, but very complex returns.

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