Clients say the darndest things

[IRonMaN]

So I was working on a 1040 a couple weeks back and checked with the client on whether or not he wants to make a SEP contribution.  In the past he has earned $100,000 to $150,000.  This year he is showing a tad north of $200,000 on his schedule C.  When told where he is sitting he says, "that can't be!"  He has no cash, how can he be showing that much income?  It is bewildering and I have to admit that I am completely stumped.  How can we be showing that much income but have no cash?  I'm pretty sure the $200,000 he took out in draws during the year doesn't factor into the equation.  I hope I can figure this out before April 15th 😶

[sjrcpa]

Don't you know that if you took all the cash out then you don't have any taxable income?

Clients have told me this on more than one occasion.

[IRonMaN]

Thanks - your information really helps me out 😀

[BobKamman]

I got this email from a former client (haven't seen her in a couple years):

"I've been trying to purchase a $300 Amazon E-Gift card by email in denominations of $100, but it says they are having issues charging my card. I contacted my bank and they told me it would take a couple of days to get it sorted. I intend to buy it for a friend of mine whose birthday is today. Can you purchase it from your end for me? I'll refund it to you once my bank sorts the issue out. Let me know so I can send you her email."

We tracked down her phone number and called.  Slow day around the office, you know.  She said she had been hearing from people she hadn't seen in years.  She said she had changed her email password.  I'm not sure that will help -- the email came from the same name, but a different domain.  

[IRonMaN]

I also had one of those e-mails a year or two ago.  For anybody else on my client list, I would have automatically deleted it in half a second.  But it came from the only client I could think of that would actually think of asking that type of question so I had to hold off the delete button and think about it for a wee bit.

[abctax55]

On the flip side is the question from closely held S-Corps shareholders:

"But I left the money in the bank account at the end of the year; that way I don't have to pay tax on it.  Right?"

[IRonMaN]

Capital gains fall into the same category - "but I didn't get the money, why do I need to pay tax on it"!

[Just-Lisa-Now-]

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@IRonMaN wrote:

Capital gains fall into the same category - "but I didn't get the money, why do I need to pay tax on it"!

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I tell them you COULD have got the money, but you left it in there.

[IRonMaN]

Are they convinced with that story?😁