"mort" <Mort[at]lccn.com> wrote in message
news:gm7g93$vbp$1[at]news.motzarella.org...
- quote -

Good question!

Is my software better than yours? I hope so, I pay about $5K a year for it!

But the trick is NOT in the software. The software is nothing more than a
tool - like a work truck. Does a $100K truck do a better job than a $10K
truck? Probably not really, though it may make the job easier to do it is
NOT a replacement for professionalism.

I, and I'm sure the vast number of pros who lurk and contribute here, could
very likely have done a good on your return with your software BECAUSE we
know (or are supposed to know) what should happen with the information
reported on the K-1 not because we have better software. Having a $5,000
saw doesn't mean your cuts will be straight if you don't have good saw
skills to start with. On the other hand, knowing how to operate a saw will
well allow me to produce better cuts with a cheaper saw.

For example, you say you have some money in a limited partnership - are you
aware that you are subject to the Passive Loss Rules? For example, if the
LP threw off losses on Line 1 of the K-1 your ability to deduct those losses
on your return is limited because you are a passive investor? You can
deduct these losses but only up to the amount of your passive income. Now
for the professional level question - we know that interest income and
dividend income is passive, but what about capital gains distributions
thrown off by the mutual fund company? Now what about real gains if you
managed to sell an investment at a gain - can that be used to allow you to
deduct some of your passive loss from the LP?

How long would it take ME to deal with your K-1? Depends on what all is on
it and if it was issued correctly - you'd be surprised how many small LPs
try to cut corners (like you're doing) by prepareing a complicated return in
house. Last week I had a client with a 1065 K-1 that we KNEW had tax free
municipal interest from multiple jurisdictions - the K-1 said as much but
failed to include a list of the jurisdictions and the percentages of income
associated with each. Poorly prepared K-1 took longer than usual to deal
with.

On the other hand, in my office it matters not how long it would take to
deal with the K-1. We bill on a fee schedule basis - our fee is based on
the forms and schedules required and caused by your activities. So if your
K-1 had only $1.00 in interest income the cost to your final return would be
negligible. BUT if your K-1 included income from multiple states, which
require returns for each state, and it had rental activity in addition to
ordinary business activity, and it included Section 1256 Straddles and a
Section 1031 Exchange then the K-1 itself could cost more than the rest of
your return combined. It all depends on what's included. I can tell you
this - the minimum fee increase to a 1040 for dealing with a K-1 is $55.

If you're investing in limited partnership, oil and gas ventures, low income
housing units and other things you really do need a professional tax
preparer.

Good luck,
Gene E. Utterback, EA, RFC, ABA

--
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"mort" <Mort[at]lccn.com> wrote
- quote -




The whole return? Or the K-1?

With a few exceptions, K-1's take a few minutes longer than inputting a
W-2 - multi state issues aside.




--
Paul Thomas, CPA
Watkinsville, Georgia

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

A former investment manager put a small amount of my money in a limited
partnership. TaxCut does not handle it and it took me several hours to
figure out what to do with all the numbers on the K1.

Does the software that professional tax preparers use do it any better?
About how long would it take for a professional to handle a limited
partnership?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >