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Just a "HI"

My season is just about closed...but while checking these posts I came across yours as Southpark.....peaked my curiosity as our son lives in Charlotte's SouthPark sesction!!

Small world.....


Thanks for the input on my question about my client that paid no payroll. I was thinking of giving her a 1099 for a portion of the distributions that she took and offset the rest against the shareholder. I want her to pay some SE tax. Where would you report it on the 1040? I was going to use a schedule C, but I get the impression that it may cause more problems.

Hello from Charlotte

Hi. I too am from Charlotte. Since you mention your firm in some posts I was wondering you do individual 1040s or do you only handle the tough stuff?

practice size


How long did it take you to grow your firm to 300 individual returns and how did you do it?

Thanks Keith Pearce JAX, FL aka 94Nole

tax season in Charlotte

Hello SouthPark. I'd like to write to you but I'm unsure if this is the right place.

Murrsg07 Murrsg07

Donnie Castleman, Enrolled Agent in Vegas

Hey Matt,

Your post really hits home about the audit of a venue, did you learn anything or have any experience that you could share, as I mostly handle musician's tax returns and would welcome any advice of course. My first post-college music job was at a place called the Armory in Winston-Salem back in 1991. I always enjoy reading your posts and look forward to batting ideas back and forth for many years, sincerely, Donnie

Thanks Matt


It was great to meet you the other day. You helped me put a few ideas into perspective and ultimately helped me get into a higher gear for tax season.  I know you are not in it for the referral fees but I will be glad to accept any of the clients you send my way and would like to buy you a round of golf when if you refuse my payment at the end of the season.  I will keep you informed on how well the new fees work out. 

Again I appreciated your time and certainly get a few clients who tell me their CFP knows nothing about taxes! Hopefully I can persuade any of the big players to head your way. Ken

S or C Corp

Hey Matt. You sound experienced in an area I need help.

Are your Chiropractors S Corp or C Corps?

Or, what I am looking for is, am I right to think that professionals who are S Corps cannot have a medical reimbursement plan, but at least they never have to face the PSC (Personal Service Corporation) top corporate tax rates?

A client of mine, a consultant, wants to incorporate. Would you suggest a C Corp with a medical reimbursement plan with the risk of PSC tax if the bookkeeping goes awry or an audit dismisses deductions? (I say this because of course I would try to zero out the profits with bonuses and a defined benefit plan contribution.)

Or would you explain to him the dangers of the PSC tax, and that an S Corp would be a safer way to go, though an S Corp would only be able to pay for and deduct his health insurance premiums (of course by putting them in Box 1 of the W-2, blah blah), BUT NOT his medical expenses?

Am I seeing this right?

If you are busy and don't have time to respond, I sure understand.


Kendrick 20:22, 21 January 2008 (CST)

On the OIC matter

Sp: Mscash makes a good point. Try to find out how the TP found out about the lien still being there. Was it a credit report? If so, the report will need to be corrected. In other words, it may not be the IRS's fault.

Now, with a judgment lien, as an example, once the judgment is paid (or released for whatever reason), the credit bureau still has a right to note that there was a judgment, but they must show also that it has been satisfied.

The credit bureaus may do a similar thing with tax liens. Still on report, but marked released or satisfied on the report.CrowJD 03:20, 25 January 2008 (CST)

your message?

I got this strange question about Amish contract laborers. That wasn't from you, was it? I'm in Asheville and am glad someone else agrees about the QB export feature. What a waste of time! Now, if I can figure out what happened to all of my FAM clients; that's a new problem - among many - with Intuit products (much more than you asked!). Good luck during tax season.


Another TA poster said he noticed you/your clients use MasterBuilder. I have one client who uses it. I was wondering if I could run a few questions by you RE MB. Natalie 15:55, 4 February 2008 (CST)Natalie

You caught me being

Southpark: Sorry, you caught me being silly in my first response. I think I'm getting a little whacked from a crazy day. I don't deal with many doctors either, and have not heard of anything like this. But if I do! CrowJD 20:02, 26 February 2008 (CST)


Hey Matt,

This is Will from NYC, i used to go down to NC on audits at my first cpa firm about 13 years ago, we went to Shelby, NC (yikes) but Charlotte is pretty cool.

How is the market there as far as picking up new tax clients? I have no interest in moving just always curious how other tax pros try to get new clients.

Of course, referrals take the top honors, but i like to get a few new clients totally on my own too.

my new clients i get from ostly the following:

mailings to fellow high school and college alumni mailings to hockey teamates and opponents too! asking current clients for referrrals throwing a holiday party last 2 yrs for my clients sending out qrtly newsletters literally dropping letters in mailboxes in the neighborhood purchasing mailing lists (such as new homeowners, etc.) breaking out of my shell and being a social bug, and trying to get my business out in the open but of course in the most subtle tasteful way possible. people viewing my websites palcing ads in local newspapers

i can't say any one works very well, but a few new clients here and there to add to the referrals really adds up :)

anyway, i'm crazy busy but i love this stuff literally, and just thought i'd drop you a line for absolutely no reason at all.

Have a great stretch run.




EA convention in May - Asheville

YES, every one of the speakers is excellent!!! It would be well worth your time and the money. Make sure that you introduce yourself to me!! Kevinh5


Believe it or not I have taken most of the advice you gave me.  Those foreign clients I posted about last night are one of my last low dollar clients. I have only had a few folks complain about my higher fees and i just told them they can go to Block!  I guess I should have also stopped doing this "charity" work for this couple too.  When you trim the fat, I guess you need to trim it all.  Also thanks for the referral i received a few weeks ago!

Hi Matt,

Thanks for the message-I live and practice in East Northport. I appreciate that you would consider referring clients my way! How do you enjoy the Carolinas? Miss LI at all?

Musician Rental

I am going to bring the rent to zero, but I am curious to see the 2006 return not only for treatment but also for how much interest was deducted. The way the guy told it, he did not put it up for rent but rather the insurance company found him and while 38K is a lot of rent, it obviously simply held the fort until a buyer came along, or until this guy realized he was not going to get his asking price.

He's not looking for aggression, and is not a good potential witness telling what happened, partly because his is Hispanic and is hard to understand, and partly because being in the arts, precision of dates and numbers means little to him.....musical note, yes, but not numbers. It is the interest that worries me, more than the gain or loss on the sale or on the rent.

He is a world class clarinet player with another 35-40K of monies from playing and endorsements from the instrument makers.

Thanks for the input.

PS: his girlfriend joined the Philly Orchestra from St Louis and has a 259K violin which causes all sorts of AMT problems as an employee....can't depreciate it slow enough! Old accountant has it on a 10-year life

Death&Taxes 15:56, 6 April 2008 (CDT)

Qualified nonrecourse financing

Hello Matt,

I was looking up the subject of qualified nonrecourse financing and found an earlier post of yours. The post is listed below.

Southparkcpa (talk|edits) said:

29 December 2007

I learned this the hard way. My client financed $800K of equipment with a small finance company. The finance company literally forgot to get PG's signed. I assumed, like all of my clients, a PG was signed. I deducted losses and upon audit it was discovered that while we had basis, we did NOT satisfy 465 at risk.

I have some questions about your post if you don't mind.

1) Was the loan that your client have in the corporation's name or the shareholder's name?

2) Will a loan in the name of the corporation, but with the shareholder's having an unconditional personal guaranty give them basis? I have a husband and wife dentists that just open their practice last year. This year there is a question about adequate basis for their losses. I want to be sure of myself that this would give them basis.

Thanks for the help!


Qualified nonrecourse financing

Regarding the last post. I read what I posted again. I meant to say that I don't think it will provide basis. I also forgot ti sign the post. ~~cindylee

Concur on targeting clients

SP: I completely concur with that, and hope I can work in that direction.

I found this out from a psychologist who is married to a highschool friend of mine. Appearently, there is this one lawyer in town that knows everything there is to know about the law of mental health, licensing of mental health workers, business associations they form etc. etc., disputes they get into, all of it. As I understand it, the guy is covered up with work, and I imagine he has very little marketing expense. CrowJD 12:37, 25 June 2008 (CDT)


I have the Proseries Power Tax package and pay less than $ sales tax. What extras do you have to run it over 5K? I am curious.


401(k) question and your very knowledgeable response.

Thank you so much for your very informed response to my discussion question regarding the pending divorce and possible early 401(k) withdrawal to payoff the 2nd mtg..... KimWyoming


Atlanta... lawyers on every corner, lol. I wish I was a plumber! CrowJD 09:56, 23 July 2008 (CDT)

Need tax appeal/court representation in Charlotte, NC

Hello Southparkcpa,

I am a CPA located in Charlotte, NC and I need assistance with an audit currently under way.

How can I contact you in North Carolina?

Thank you,

Tax representation letter

Thank you for the offer Matt. Would you mind posting your email address so we can correspond that way?Natalie 19:14, 16 September 2008 (CDT)Natalie

Thank you for the samples, Matt. Did you get my reply?Natalie 22:36, 19 September 2008 (CDT)Natalie

Preparer Penalty

Several months ago in this thread : you offered to write a letter to the IRS for me if they went ahead and assessed preparer penalties. At the time I thought that was over-the-top generous and I still do. However, $2,000 is, to be frank, about 10% of what I earn annually for the tax preparation I do, so it looms large. This is what I have prepared to send the IRS: (Cover letter)

Enclosed is form 12203 requesting an independent appeals review of the assessment of preparer penalties reported on form 5816 which is also enclosed with its attached report of findings, form 886-A.

In accordance with instructions, my daytime telephone number is--------. However, I am profoundly hearing impaired and, given the gravity of this situation, hesitate to put myself in a position where misunderstanding is possible. I would appreciate your courtesy in continuing this investigation, as necessary, by written correspondence or e-mail My e-mail address is -------------- Thank you in advance for your consideration.

Very truly yours, Then on form 12203 in the "reason why you disagree" space: "Circular 230 Secion 10.34(d) states "A practitioner...generaly may rely in good faith upon information furnished by the client." It is true that the section goes on to say that the "practitioner...must make reasonable inquiries if the information as furnished appears to be incorrect, inconcistent...or incomplte." but the information provided did not appear to be incorrect, inconsistent with any other information provided nor incomplete. The report of findings states that the amount of the carryover was large enough to require further investigation but that contradicts the above quoted section. The taxpayers informed this practitioner that the deduction was correct and lawful and that the carryover was available. The taxpayers provided their 2004 tax return showing the carryforward amount of charitable deduction limited to 50% of AGO but did not provide any information that made the return provided to be incorrect, inconsistent or incomplete. Even if it can be asserted that, contracry to the above section of Circular 230, failure to inquire into the nature of the carryforward was a failure to exercise due diligence, according to training material of the IRS, failure to exercise due diligence involves conduct that is "more than simple error, but less than willful and reckless misconduct". See Gardner and Willey "The Tax Practitioner's Guide to Circular 230 (Part II) The Tax Adviser, December 1995, pp. 7110715. Therefore, the alleged conduct of the preparer is, according to the IRS training material, NOT willful and reckless but at worst, an error in judgment."

Thank you for any comments you can provide.

Intrested in a research study? rewards available!

Hey how are you doing? I was wondering if you could help in a research project i am doing. Basically what I am doing is testing several CPAs across the state of North Carolina to see how they fair, and then comparing them with a fresh bachelors degree graduate from the colleges in my surrounding area. It would be greatly appreciated if you would participate, and the person who gets the best score overall will receive a small gift card to best buy. I know this sounds crazy but it is legit, if you would like to help, let me know. thank you very much.

Your opinion

Would you take a look at the "Does this sum up . . . " discussion on the chat forum? I'm curious what your thoughts are. Natalie 02:23, 15 November 2008 (CST)Natalie

no profiles = no responses

I generally agree. But now we've got the ability to move their discussions to the Consumer page if we can't tell that they are a tax pro. We've got to do more than look at their profile page to determine that, though. I have looked at some people's history of discussions and determined that they were a tax pro based on the information I saw (questions and answers and history with TA). Someone new with no history and no profile is probably a consumer, though. Kevinh5

Program/Project Code


If you have time, can you tell me if your exam had a Program/Project Code? The ones I have been seeing across the country, for example, say "PC 0133" in the upper right hand corner of the first page of the notice.



Goodwill - S Corp

Southpark -

I've recorded the sale of inventory and assets and the income will flow through as ordinary income/Sec 1245 recapture/ etc. The S Corp gets paid goodwill and for a covenant not compete.

If I reflect the Goodwill as capital gain on her K-1, how best can I get it there?

I assume the covenant not to compete is ordinary income and I could include it as income to the S Corp since her loss is limited.


Hey Southpark, thanks for the answer. We're going to go ahead and file the return to stay on the side of complience. Hope you're having a good tax season, and thanks again for your assitance.


Thanks for the inputStunts65 15:20, 6 July 2009 (CDT)

Thanks very much


Thanks, for the kind remarks you made about me.

RoyDaleOne RoyDaleOne 07:56, 22 July 2009 (CDT)

your website

hi southparkcpa,

i'm very impressed with your response in the floridacpa/floridataxes thread.

can you point me to your website? it sounds like it would be a great example.

thanks, Steve, The New Tax Guy

Question regarding a comment you made..

Hi there! I saw your response to a New Practitioner thread where you made the following comment:

"For example, I gave them an example of how a large capital gain at 15 percent increases fed tax by about 19 percent because of its effect on AGI, phaseouts, social security etc…. that alone started a 10 minute discussion that made me look smart."

I'm REALLY new to the tax prep industry, and I was wondering if you might be able to expound a bit on this.

Thanks in advance for your time and help!

NAN Financial 23:50, 15 September 2009 (CDT)

Thank you, SouthPark, for your comment about my audit of unreported income. Hadn't thought of that. I really appreciate that you took the time to write it.

Cobbcpa (Dianne)

Copyright issues with your RIA excerpt

Hi, Matt -

It looks like you've got a fairly extensive excerpt from RIA pasted into a discussion post here: Discussion:Land adjacent to residence involuntarily converted. That'll likely be a violation of RIA's copyright, and definitely is too long for TaxAlmanac's policies, which are fairly stringent to protect the site from any issues - they basically say if it's under copyright, don't post more than a couple of lines.

Could you please go back into your post and edit it to remove the copyrighted material and maybe just allude to the specific parts - or you could probably replace the first para with a link to the regs, as that looks like a recap of the regs basically, and then remove the RIA analysis/examples, which is the part where they earn their $$$. Let me know if you want to discuss further, or want other suggestions, or whatever you need.


Trillium 11:02, 9 October 2009 (CDT)

(Here are links to the various places TaxAlmanac's copyright policies are shown, if you want more info on that: Policies, T&C, and the bottom paragraph of this Article help page.)

Southparkcpa I read with interest your post on the IRA theft. Was the advisor a member of a brokerage firm? We had a large Ponzi scheme recently and I advised my clients who head been involved to file suit. You actually end up in arbitration, as every brokerage client has signed an agreement to binding arbitration in the securities industry for many years now. If the advisor is a "rep" for another, he is their agent, and as such they ahve a resposibility to monitor activities. As their agent the burden of proof shifts to the Brokerage and they must prove that he acted fraudulantly....but most of the time they become liable for loosses or a percentage determined in arbitration. On the latest clients I was involved they received almost all money back... worth cosideration Osutaxman

Letter from CPAs buying practices...

Hey Southpark...any chance you would have filed away one of the letters you've received from the firm you reference in one of your posts who have grown so rapidly?

I want to put together a postcard (as you suggested) but I'd like to see how they approach the's obviously working for them.


if you do, or if you have something you've used, I'd appreciate seeing it.

Thanks Keith Pearce aka 94nole


Southpark: Does the Proseries professional package include unlimited use of 1120,1120S,1065,and other business forms? I've been on the website and I'm not sure.

I used to be with the professional package but switched to basic. My practice is including more and more business returns and I'm thinking of switching back.



Hi Southparkcpa

I'm currently based in NYC and seriously considering a move to Charlotte NC- I saw from your posts that you took a similar route a few years ago.

The main motivations for my move are heavy competition and price pressure in NYC, and the high cost of living. Based on what I've read & experienced, NYC tax firms aren't able to charge SO much more than the rest of the country that it makes up for the difference in the cost of living.

I have friends in Charlotte and visited there a few times and it seems like a really nice town. It also seems like a lot of New Yorkers are moving down there- even with the bad economy.

Would you be willing to share a few of your experiences & views?

Thanks so much PeteEA 08:30, 16 August 2010 (CDT)


Hi southpark, thanks for your offer to chat via email, I've sent you a note to the address you gave.

PeteEA 11:23, 16 August 2010 (CDT)

I use Drake

and their state modules were all out the first week in January. We got their Federal module in early December (obviously there have been changes due to the new tax laws). I actually met the NC programmer for Drake three months ago when I drove down to Franklin NC. Kevinh5

Oh the forms are ready

there just has to be a depreciation adjustment made if NC doesn't allow the same as the Fed. We've had this many times before with bonus depreciation. Your software company is lying to you. They don't want to do any extra work. Kevinh5

Name of CPA embezzler

I practiced in NC for the start of my career and have my license there still. Could you provide a link or some more information about who/where it was, as I am curious if it was someone I might have heard of?



Speaking of you specializing....

Hey - Again, sorry for being harsh. I just posted to a topic that you had replied to a while ago. It is here... I have not dealt with the "subject to" installment sale stuff in the past and admit I am ignorant on it. So, if you could take a look at that discussion and point me in the right direction, I appreciate it. Davidcpa 02:19, 3 May 2011 (UTC)

Accrual to cash

Thanks Southpark for your offer of a spreadsheet. If you could send it to, it would be appreciated. Actionbsns 04:58, 12 February 2013 (UTC)

accrual to cash worksheet.

Hi SouthParkCPA,

I was wondering if I can get a copy of that worksheet to convert accrual to cash for tax reporting.



Email is

Section 197(f) aggregate rules

Hey Southpark, thanks for chiming in on a recent post where I asked about deducting a loss on sale of some franchise territory rights and whether it was 1245 property. The 1245 question was easily resolved, but a bigger issue was uncovered. Not sure I totally understand the bottom line, at this point. (But I think you do!) Taxpayer bought 49 territories -- all at one time -- about 3 years ago. Then sold back 16 of those territories to the franchisor, at a loss, at the end of Oct 2012. In your understanding, can the loss be deducted in 2012, or do we have to adjust the basis of all 49 territories and defer any loss until all are either sold or fully amortized? Thanks much AnchormanAnchorman 19:07, 8 April 2013 (UTC)

Cash to Accrual change

Thanks Southpark for your offer to help. My e-mail address is: I really appreciate it. Paula Actionbsns 01:21, 14 November 2013 (UTC)

PA Local rates

very possible to have the employer deduct at the wrong rate. Rates are different and if employer is located where the rate is 1/2% but employee lives where rate is 1%, he owes the difference. If the employee lived where there was no tax, nothing would be owed but he wouldn't be refunded the tax. I know in the Harrisburg area, there are many rates for many townships, some as high as 2%. You might look at this;

Death&Taxes 21:26, 27 February 2014 (UTC)

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