Free Trial: TheSiteFactory.com

Voluntarily Attaching Balance Sheet 1040/1041

Technical topics regarding tax preparation.
#1
doshikc  
Posts:
40
Joined:
15-Jan-2016 12:26pm
Location:
Florida
I am wondering about the benefits of voluntarily attaching tax basis balance sheet for high net worth individuals 1040 and larger trust 1041 each year.
Do you think it helps establish basis and asset ownership in case of irs audits and reduces cynical position in lifestyle audit by agent of viewing large assets as recent acquisitions from unreported income. Also would it reduce burden of proving with receipts of long held assets and improvements made many years ago. I am thinking houses ornaments gold antiques etc long held by families including generational heirlooms and the difficulty of proving at a point of time.
 

#2
sjrcpa  
Posts:
1775
Joined:
23-Apr-2014 5:27pm
Location:
Maryland
IRS does not look at any nonrequired attachments ( and sometimes not even the required ones). Keep those balanxce sheets in your file. I wouldn't spend time and effort attaching them to the tax returns.
 

#3
doshikc  
Posts:
40
Joined:
15-Jan-2016 12:26pm
Location:
Florida
Y
Last edited by doshikc on 17-Aug-2019 3:38pm, edited 1 time in total.
 

#4
doshikc  
Posts:
40
Joined:
15-Jan-2016 12:26pm
Location:
Florida
Yes. Not normally. This is regarding what is in records at the time of an audit. just like a chronological journal helps establish fact pattern.
 

#5
doshikc  
Posts:
40
Joined:
15-Jan-2016 12:26pm
Location:
Florida
Example if client is reporting owning a $200,000 painting faithfully each year for last ten years in his voluntary filed balance sheet will that help answer the auditor saying how come you own all these items and asking to show recent income for it on the cynical assumption that it is a recent acquisition. Most clients would have a hard time finding acquisition records of long held high value personal items, it would be easier to report current asset list each year.
 

#6
JAD  
Posts:
1730
Joined:
21-Apr-2014 8:58am
Location:
California
I think that reporting more than is required is a liability issue for the tax preparer. Attaching a balance sheet to a 1040/1041 is not normal. The additional information could attract more attention and trigger a line of inquiry that might otherwise not be triggered. You would be taking responsibility to some degree for its accuracy and completeness. Could the regulatory agencies deem it some form of a financial statement that requires an opinion? There is no good reason that I can see to go down this road.
 

#7
Posts:
619
Joined:
21-Apr-2014 7:09pm
Location:
NC
I’ve never seen anyone do this..... from big 6 to top tax practitioners.

probably tells us everything we need to know.
 

#8
Posts:
3228
Joined:
21-Apr-2014 7:01am
Location:
Near the fridge.
Does Trump attach a balance sheet to his tax returns?
 

#9
doshikc  
Posts:
40
Joined:
15-Jan-2016 12:26pm
Location:
Florida
Thank you thoughtful replies. Much appreciated.
 

#10
Dennis2  
Posts:
386
Joined:
18-Feb-2016 11:08am
Location:
New York State
For a trust If you feel an attachment. would be beneficial use the annual accounting.
(without one a balance sheet is rather meaningless...♫)
 

#11
doshikc  
Posts:
40
Joined:
15-Jan-2016 12:26pm
Location:
Florida
Thanks. My main interest is to cover items that normally will not ever show up in tax returns because they do not have taxable income or expense associated with them but are significant wealth items. Hope was that establishing long term ownership this way would reduce inquisition. Most of replies show a reluctance with good reasons stated.
 


Return to Taxation



Who is online

Users browsing this forum: CO CPA, DavidG, dellpaul, JAD, Jeff-Ohio, Keyad22, ManVsTax, Michaelstar, MSchmahl, nancyaeo, wwwcpa1biz and 140 guests