When selecting a licensed professional to handle your tax filings and issues, make sure their area of focus has or is in taxation.
Larry bird’s business partner, Christopher Cooke, learned this lesson the hard way.
When attempting to take deductions for a property used as a Bed & Breakfast, his response, upon examination, to the Tax Court was that he relied on the advice of his CPA. The Tax Court determined that his deductions would be disallowed and subject to accuracy related penalties.
“[Mr. Cooke] offered no evidence of the CPA’s competence as a tax professional or that he provided the CPA with all the necessary and accurate information required to provide proper advice. Thus, the Tax Court found that he was liable for the penalties.” – Howard, Beth. “Deductions Disallowed for Operator of Larry Bird’s Former House as a B&B.” Tax Matters, Journal of Accountancy, 1 Aug. 2017, www.journalofaccountancy.com/issues/2017/aug/operating-deductions-disallowed-larry-bird-former-house.
When seeking advice, ensure you are dealing with a licensed tax professional.