To deduct, or not to deduct …
Meanwhile, the biggest challenge facing Kim wasn’t working with bank statements or credit-card receipts, since they were clear, but sorting through grocery and dining expenses for a home office. Jack frequently allowed members of several groups to make fundraising calls from spare lines in his kitchen and home office, and even let them use his cell phone in their efforts to recruit others to their causes. To keep things fun, he would often pay for everyone’s lunch, or prepare everyone’s lunch in the kitchen. Had he taken clients out to eat, he could have deducted up to 50% of the bill, but Jack and Kim had no idea how to deduct meals prepared in his home office, or food in general, or how the dynamics of the deduction for the office might change for all his volunteer efforts over the year.
“After all,” Jack asked, “if my home was used as an office for 70% of the time, don’t I have the right to deduct more than the standard deduction?” This was just one of the challenges confronting Jack as he anticipated his meeting with the auditor. If we ask for more consideration, where does it put us? ... was the next question from there.
Alan did his best to prepare Jack using excel files created by Kim, more examples, and then they reviewed everything together and made several revisions. “It’s not just what you present, but how you present it” Alan repeated several times. Jack was finally getting the message-his attitude was changing, and for the better as far as everyone else was concerned. Over the next few days leading up to the interview, Jack was stone serious, but everyone felt that that was part of necessary change.
Power of Attorney – good idea?
Although Alan requested Power of Attorney on several occasions, Jack didn’t want to give it to him. He had done that too many times in the past and this time he didn’t want to jump in too fast. However, after a few days Jack decided to confront Alan, and said, “Alan, I like you as a friend and as an accountant, but right now, I don’t know which one comes first. On one hand, I think you will guide me the best way you know how, but on the other, I don’t know if you have the experience to make this work, and are just rehashing some other client’s story five different ways”. According to Jack there was dead silence over the telephone. He feared he had really gone too far this time. He soon learned, however, that it was just the opposite-Alan needed a moment of silence like this to confront Jack about his the world he’d been living in.
As Jack relates it, Alan then replied gracefully, “Oh, so now you’re ready to learn the rules of the road? Do I take it you now realize how serious this is? Is that a fair statement?” Jack signed the Power of Attorney…
Everything on the table
Jack didn’t want to go into too much detail about what happened after that-about how he kept missing filing deadlines and gracefully blaming it all on Alan; or how the Social Security number and address given him by a former consultant never worked out (information Alan told him to verify before the consultant began working for him). No, Jack didn’t want to go into detail about this… but I did my job and coaxed it out of him. I guess this was the point in our conversation when Jack was confronting his feelings about Alan helping him make a few necessary adjustments to his perspective. It was quite an intense moment…… (to be continued here on our website, www.baycurrents.net)
