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To amend or not to amend

Technical topics regarding tax preparation.
#1
Andrew  
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140
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21-Nov-2018 5:00pm
Location:
CA
Client received (2) K-1s after the personal returns were already filed. These K-1s are under a new entity that has not been reported ever on the returns. The only items reported are in box 13, other deductions. A note on the K-1 says that the basis is unknown and it would be based on the tax basis of the member in their bankruptcy claim. The amounts in box 13 are rather small and would not give much of a deduction, if any. if the returns do not get amended, would the IRS send the client a notice? What do others do in this situation? Client must have some basis because she lost money in the bankruptcy.
 

#2
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345
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29-Sep-2015 10:10pm
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Gray, TN
You should be able to come up with the taxpayer's basis schedule if she can tell you how much she put in and took out during the year.
 

#3
Posts:
345
Joined:
29-Sep-2015 10:10pm
Location:
Gray, TN
Let to know the approximate effect of amending and let her decide. It's not our call.
 

#4
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123
Joined:
24-Jan-2019 2:16pm
Location:
Honolulu
^^

This.


Amendment is optional.

Pros :

--K1 deduction reduces tax liability by "______"

Cons:

--Your fee
--Potentially attracting IRS attention to the tax return (I'm sure everything is legit - but still always a hassle)
 

#5
lucyko  
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596
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27-Jul-2014 10:19pm
Location:
Orange County,CA
I'm assuming this is for tax year 2018 .If you decide not to amend you should consider going into your tax software and input the basis information ( original contribution and box 13 )
 

#6
supdat  
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363
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25-Apr-2014 2:11pm
Location:
New York
I wouldn't amend. But yes, run it by the client. Given the option, I have never had a client choose to amend absent a large refund or a fear of getting in hot water (i.e, the offshore disclosure programs). Make sure you update basis/carryovers that should be updated in the software.
 


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