No Depreciation Schedules

by on February 24, 2010

Today TaxMama hears from Enrolled Agent Alison Jacks in  San Francisco who brings up an important issue. “What do you think of the fact that many (dare I say most?) tax professionals do not seem to provide depreciation schedules with the taxpayer’s copy of the tax return? I pretty much blew a fuse yesterday and posted my frustration on my website ( www.familychildcaretaxes.com ) when another new client came in with a prior year tax return without any schedules documenting her carryover business depreciation.

I don’t get it, do you? Isn’t it easier to give the client all of their tax information at the time the tax return is prepared, rather than digging it up later when they ask you for it? I think it is unethical, even, to withhold this information. The taxpayer doesn’t know that they need it, but the tax preparer sure should.  This is bothering me so much, that I thought I would get your take. Am I overreacting?”  http://taxmama.com/forum/taxquips/lack-of-depreciation-schedules/

Hi Alison,

No, you’re not. In fact, that’s a good point. And I am pretty sure we are guilty of this, too.  Now that IRS does not require depreciation schedules, we simply don’t print them.  Of course, we are dealing with long-term clients and little or no turnover.

However, if a practice deals with storefront, foot-traffic-type clients, it would be wise to provide all the back-up. And anytime anyone requests a copy of the depreciation schedule, it should always be provided graciously.

But…why should you have to ask. Sigh.  You’re right. And it is often very awkward to contact a former preparer.

But I don’t think things are going to change as we move towards ever more electronic data. Less and less specific back up will be provided.

One problem I HAVE noticed, though, is that some tax professionals don’t even have any depreciation schedules. And when they get a client with previous depreciation, they just use the number from the prior year return – or nothing at all. Now THAT is sinful!

So, do you have any suggestions on how to fix this problem?

And remember, you can find answers to all kinds of questions about missing depreciation schedules and other tax issues, free. Where? Where else? At TaxMama.com.

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  • { 3 comments… read them below or add one }

    Suzan Ali February 25, 2010 at 12:06 pm

    The client should be provided with a copy of the tax return by law. The return must include all depreciation and carryforwards for the client. Not providing that information is doing your own practice and your clients a disservice. If your client should leave you and move on to another preparer that new preparer will have the most current information to help the taxpayer. We as enrolled agents must remember that our value to our profession and the taxpayers we service and how we service them is a reflection on all enrolled agents and tax preparers. Provide all the information such as depreciation, carryforwards etc to your clients, take the time to explain its importance and maybe they might see your firm as valuable and stick with you. If your clients do not perceive any value other than punching numbers, then you might lose that client. Take for example a situtation where a patient changes doctors. The new doctor will need a list of current medication, allergies, prior history of surgeries, etc if this information is not given to the new doctor in the patient chart will the patient not be at some risk? Wouldn’t the new doctor be at risk for providing less than proper care? I used this example to show that all professionals have some responsibility to whichever service to the public it provides. Please include the depreciation and carryforwards in the clients records.

    Blakely Sanford February 25, 2010 at 11:27 am

    Oh, and not printing a depreciation schedule is far from unethical. It is simply good business sense in todays economy. If you disagree, please show me one quote from a dictionary or an IRS pub that defines unethical as wasteful printing of paper.

    Blakely Sanford February 25, 2010 at 11:24 am

    There are a lot of things I could do extra for my clients. A number of clients have asked for price reductions in their fees. Not one has asked for depreciation schedules they dont read to be printed. I say give them what they ask for and let them pay for what they want. If a client leaves me and the next tax preparer contacts me the depreciation schedule is only one of the items they may need that are not printed on the return. AMT Cap Loss C/F, AMT Passive Loss C/F, Foreign Tax Credit C/F are a few that come to mind. Unless the client left me with out paying their prior years bill, I will always graciously provide the details to the next accountant.

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