|
Posted by Benjamin Yazersky CPA on March 25, 2007, 12:07 pm
Please log in for more thread options
> I recognized I was in over my head, and I properly told her
> that she really needed to go back and talk with her
> attorney.
>
> A young lady came in with a seemingly simple tax return of
> two W-2s. In the course of talking with her, she shared with
> me that she had declared bankruptcy, that it had been
> finalized in December, and that it had been chapter 7
> wiping-the-slate-clean type of bankruptcy, as opposed to a
> chapter 11 re-structuring.
>
> I know that debt forgiveness generally is taxable. So I
> looked it up in Quickfinder, saw that release of debt
> through title 11 bankruptcy was not taxable income, but no
> mention of 7, mmm? I told her that I would do some more
> research and call her back. She accepted that (not all
> clients do!).
>
> Do you see the initial confusion? 'Chapter' 11 vs. 'Title
> 11.'
>
> Title 11 is the over-arching bankruptcy law of which there
> are various chapters. And she was probably thinking of ch
> 13 which is personal restructuring of debt, as opposed to
> the often-mentioned ch 11 which is for business
> restructuring.
>
> But, in my research, I did find that she would have to file
> a separate tax return for the bankruptcy estate. I called
> her that evening and told her (I've found that people like a
> prompt call-back even if you're only able to give them a
> partial answer).
>
> I expected the law firm to tell her that they had done the
> bankruptcy, everything was finished, she would have to do
> the taxes on her own. Most people just aren't good at after
> sales service, and that's the fact of the matter.
>
> Then I got to thinking, how could they not have done the tax
> return for the bankruptcy estate? And then we might get to,
> in my opinion, that most people aren't good at educating the
> client. I'm a nerd, I like understanding things. I
> probably overdo it the other way (for example, Hope Credit
> vs. Lifetime Learning Credit and how you might want to save
> your first year of the Hope, I just don't know a way of
> explaining that short, concise, but also lays out what the
> person needs to know). I guess it's like being a doctor,
> some people want to know what's going on, other people just
> want to be told what to do. So you kind of have to be a
> poker player and get pretty good at reading people. You
> kind of make a medium raise and see which way the person
> wants to go.
>
> Okay, so I'd like to know some more about the bankruptcy
> estate. Or, comment about any of the above.
>
> I worked for H&R Block tax season 2003, did other stuff for
> the last couple of years, and am working for Jackson Hewitt
> this year. I am emphatically not a CPA (but I am
> interested!)
>
> I don't expect to be able to do one (bankruptcy estate),
> certainly not at this stage in my career. I just want to be
> able to recognize the animal in the forest so to speak.
check with the bankruptcy trustee to find out what they filed
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ======================================================= >>
<< 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 (2006) - All rights reserved. >>
<< ======================================================= >>
| 
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap