Don't Throw Anything Away
by AccountingWeb on
This note came to me from James Chapman, EA as a lesson we can learn. The scenario he describes is not unusual. Of course, this would never happen to your clients! Or would it?
- Situation – in 2001 client was MFJ. Client’s husband sustained a large loss in the stock market. They started deducting $3000 per year with the remainder rolling over to the next year through TurboTax. In 2003 the husband dies. The client continues to use TurboTax to do her returns each year. The software continues to deduct the $3000 per year and roll over to the next year the remaining balance. After husband dies she downsizes drastically and moves to a new state (You can see what’s coming right). The 2007 return is now being audited. She disposed of the records of the stock loss and the tax returns several years ago. The brokerage firm has since been bought out, the successor brokerage firm says that they disposed of the records after the proper retention period and so they have no records. We are attempting to get an image copy of the 2001 tax return from the IRS but that takes forever. The Schedule D on the original return would show the information to support the loss-carryover. Even better would be the original brokerage statements but then if frogs had wings….