Battle of the CPAs – would you pay two CPAs to find out who gets a better result?
This happened to me. Seriously!
I had a client that hired me to do his tax return, but didn’t tell me until I was done that he had also hired another CPA because we wanted to compare the results. (I still chuckle every time I think about it).
I’ve never hear of it before – it’s true. You probably will get different results if you go to two different CPAs…almost guaranteed. But, I’m really glad he did because his other CPA would have lost him over $20k!
At the bottom of the recession real estate investors were scrambling to figure out how to get out of their properties without having a huge tax bill they couldn’t pay. It was a big problem. When you walk away from an investment property or do a short-sale, you owe the IRS for tax on the amount of the loan you walked away from. The results was no cash, yet a big tax bill! Sound familiar?
BTW – a little side note. Did you know that there is one tax code? Yep. It says that everything is taxable! (IRC Section 61 says “gross income means all income from whatever source derived”) And then there are thousands of other codes, regulations, interpretations and case laws that go through all the exceptions to this code.
Anyway, back to my story.
In my years as a CPA, I’ve worked on some of the biggest real estate deals in the state of California, so I have become quite familiar with real estate tax. Many CPAs were not aware of how to use the exceptions to get out of paying tax on the loan forgiveness and dump investment properties and get tax refunds. This was true of that other CPA as well.
When the results were in between the two of us, not only did I save my new client $20k on that one tax return, I went back and amended his prior year’s returns and got another $25k back. This was a gold mine for him after losing his job and multiple investment properties.
So, maybe it’s not such a bad idea to hire two CPAs. I don’t know, it still sounds very strange to me.
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