The Old Quick Question

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#1
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Received the following from a new 1040 client whose 2022 return I prepared:

In 2015, I purchased a mobile home for my brother and his wife. All three of our names are on the certificate of origin. Recollection is that the purchase price was $63,000, cash sale. They wish to sell for $75,000. I will not receive any money from the sale. My gift to them. Should I remove my name from the certificate of origin before they sell? Wondering about tax implications.

My question isn't about the technical advice they're requesting. I'm curious how others respond to requests like these. The first question would more appropriately be directed to an attorney, and second they're throwing in the kitchen sink query assigning me the responsibility (and potential liability) to advise them of tax matters for which we have no engagement. My tax prep engagement letter specifically states it does not include tax planning, and the engagement ends when the e-filed tax return is accepted by the taxing authorities.

Curious how others reply to these.
 

#2
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I usually respond with the briefest summary of the issues that I can get away with, then detail the initial work that I would do if engaged at a fee of $xxx per hour. I may even give them an estimate of the time it would take to do the stated tasks. Some good clients will choose not to pursue it and others will.
 

#3
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For truly quick questions, we add the following disclaimer:

Legal Notice and Disclaimer: This response is not written tax advice. Any accounting, business, or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid additional tax or tax-related penalties and interest. Information provided herein may be general in nature or based on previous communication, so it may not be applicable to the recipient's specific circumstances. If the client would like official written tax advice or planning services, please let us know as this would require a more in-depth analysis of tax issues involved and a separate written engagement.


This question in your post is not a quick question, of course. So we would respond with:

Thanks for your questions. Unfortunately, the answer to your question depends on many factors and for several reasons (listed below, if you are interested) we can’t provide this type of advice via email.

Please call the office at XXX-XXX-XXXX and we will be more than happy to provide guidance by phone or in person with an appointment.

Thanks for your understanding,

Reasons we can’t give tax advice via email:

• Errors or misunderstandings might not be covered by our professional liability policy.
• We likely need more information to answer which likely requires several rounds of lengthy back and forth questioning.
• We would have to write an email that is several pages for each email to cover all bases which would result in a large increase in our fees for your production.
• Misunderstandings are common in email communication.
• Issues caused by misunderstandings could result in an inaccuracy or understatement of tax liability which could lead to penalties, interest, time costs, other fees, liens, levies, audits, and credit issues.


Also, in my experience, when a client must commit to actually making an appointment or picking up the phone, suddenly 90% of their questions just go away completely and I am left mostly responding to the one's that are actually important.
 

#4
Frankly  
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09RoadKing wrote:Curious how others reply to these.
Quick questions get quick answers -
"If you own a piece of property and sell it for more than you paid for it you have a reportable taxable gain."
"If you give away property you may be required to file a gift tax return. In many cases there is no tax, but filing is required."
 

#5
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Frankly wrote:
09RoadKing wrote:Curious how others reply to these.
Quick questions get quick answers -
"If you own a piece of property and sell it for more than you paid for it you have a reportable taxable gain."
"If you give away property you may be required to file a gift tax return. In many cases there is no tax, but filing is required."


This is true. But it also starts the unbillable ball rolling. The quick answer won't be the end of it, and the client will keep sending email with more questions. I've done that long enough. Here is what I decided to send. The client responded immediately that she wanted to proceed.

In order to answer your question in a manner consistent with your need for accurate information to make decisions and my professional liability considerations, I would need more information and details on your matter. Also, as you know, our tax return preparation engagement letter does not cover tax planning and ended with the completion of your tax returns.

My tax planning rate is $X/hr. and to obtain the necessary info, review it, and provide answers to your questions I estimate 1.5 to 2.5 hours would be required.

If you would like to proceed, let me know.
 

#6
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I bill based on time used for informal consults. For new clients I give a courtesy reminder that the time will be billable. Clients that have been with me for over a year usually expect a bill for "quick questions". Just because it took you 60 seconds to type up a stream of consciousness email doesn't mean I only need 60 seconds to give it meaningful thought, ask followup questions and respond to you.
 

#7
KoiCPA  
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I give a quick answer, a lot like Frankly suggested in that post. I actually build some "free" tax planning into my base fees. It's only about 0.2 hours per client, but about 2/3s of clients don't use it, so if I spend half an hour per person who actually asks questions, I'm covered.

But then, to prevent "the unbillable ball rolling" any further, I end the email with something like "There's a lot to consider here, and I would need more information to give you a useful answer. If you'd like to schedule a consultation meeting, please call to schedule an appointment."
 

#8
CP Hay  
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I agree with what many of you have to say on this topic. However, I’d also consider some sort of minimum fee. The hassle of billing for a 5-minute phone call, broken down based on an hourly fee, seems to be more trouble than it’s worth.
 

#9
KoiCPA  
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Since this topic just got brought back, funny story from last week:

The "quick question" was "What is my tax bracket?" but during email exchanges, it turns out the question he really needed to ask was "What do I need to know if I'm getting married and moving to a different state?"

Maybe he wasn't sure if I'd keep an out of state client, but talk about burying the lead!
 


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