MAR 11, 2019 Posted in Budget, Accounting

A Letter You Never Want to Receive

In addition to saving our clients on taxes, we provide peace of mind that their business and personal returns are prepared correctly. Many of our returns are reviewed by two CPA’s before they are filed. I have previously written a few examples of tax savings but one of the best benefits of hiring SRG Advisors, LLC is knowing that we do things right. Here are a few examples of prospective clients whom we noticed had not had their taxes prepared correctly in years prior or worse, who we could not take on as clients because we didn’t feel that their business practices were necessarily... kosher.

Audit Risk A:

Prospective client worked as an independent contractor for two or three companies full time. All his earned income went to a consulting company he owned. Upon review of the consulting return, the net income for the company was almost zero each year. While this could happen, you would not expect someone to continue working full time and not make any money. We reviewed the prior expenses and noticed that almost half his expenses were booked to travel. We inquired about the travel and were told “I travel to the Bahamas for work.” This could make sense for certain businesses but not for this particular consulting company with clients based solely in the USA. We asked the prospective client a couple hypothetical questions. #1: If an agent were to audit you, would you be able to provide your work calendar to justify your business meetings in the Bahamas? and #2. Leon's favorite- "How do you look in orange or stripes?"

Audit Risk B:

Prospective client was a new real estate investor and did not fully understand the tax implications of real estate investing. He hired an EA, Enrolled Agent, to prepare his returns. After discussing each of Client B’s four real estate properties, it seemed that there were significant errors made in the prior year’s preparation. A piece of land with no building that he had purchased for $600K the prior year, had prior depreciation of over $70,000. To simplify that one, this client took a tax expense (loss) of $70,000 while he was entitled to a tax expense of precisely ZERO! Taking into account errors on his other three properties, the total estimated additional taxes, if prepared correctly, could have been close to $50,000 (not including interest and penalties).

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There are many significant and complex tax deductions and credits for businesses in all industries. However, many businesses and their accountants are unaware of these savings and the tax returns are never given appropriate attention or a second look. Contact SRG Advisors today to have a highly trained and dedicated member of our team review your returns!!! SOS! Second Opinion Services