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Can you aggregate expenses from rental units and apply them against aggregated rental income, even if some of the units were empty?

For example, I have units A, B, C, D, and E. All of them had expenses associated with them, but D and E were empty the entire year. Will expenses from D and E offset income from A, B, and C or only income that D and E generated?



First off, why are you filing an 1120S if you formed as an LLC? (I've seen the LLC file an 1120, but why?)

Second... Depends on the firm and other services provided.

Without looking at it, or speaking with you one on one, I would say anywhere between $500-2000.

How long? again, depends on the firm. Total hours will be 10-20 depending on software, etc, but turn around may be a couple weeks, we're kinda busy this time of year. lol.


Yes, assuming your reporting the activity correctly.

Your biggest hurtle would be if you had overall lose, which would be limited. And I assume this because based on conversations with you I don't think you qualify for RE Professional.

Don't forget the obamacare 3% on that income. :wink:


*loss not lose


I gave them my receipts and they did the rest. I have no clue why my colleagues paid less than 1/3 of what I paid for the same services. It seems like the majority of the man hours were spent copying receipts and typing stuff into Quickbooks.

I'm asking this question because I've already received the services but feel like I was over billed.


Here is the thing:

1) First year stuff is typically more expensive.
2) You brought in receipts. We don't like that. We charge more for that. Had you done the quickbooks yourself, it should have been cheaper.
3) You very may well have ben over billed, however it is dangerous to compare your bills with other people. Mainly because the circumstances of each client is different.
4) If there is any question up front if the money will be paid, we tend to charge more... Make the reward worth the risk. (Not saying you are the type to seem like that, but everything is a possibility.)
5) You may have gone to a firm that is more complete service approach than a return mill that just pumps out returns...


I got a return email back from them where they stated they do charge more than some firms because they hire well qualified people. That wasn't my problem, I took more issue with how they spent their time on my file.

The issue I have with them is the owner of the firm told me specifically to file my receipts the way I did. Never did they mention I could spend 180 bucks for Quickbooks and do it myself. So, instead, I ended up paying 160 dollars an hour for them to copy receipts for hours on end. He even admitted the majority of the time spent on my file was creating a Quickbooks file.


I completely understand where you are coming from, so don't take this as me arguing their case for them. I'm just offering perspective here.

This tells me two things.

1) The partner/contact at the firm you spoke with miscommunicated with you or his team. And this firm isn't the type to eat mistakes, or this isn't a good opportunity for them too.

2) This firm likely wants to end up a "trusted advisor" more than the place you stop at once a year to have them do your compliance work.

We tend to be an ethical bunch when dealing with clients. (We might play a game or two when dealing with the IRS, but when it comes to clients, we typically shoot straight.) Mainly because we like getting paid, and all the lawyers we know are really fucking good, so really fucking expensive, so need to mess around and have them involved in things.

That being said, I don't think this guy lied to you in order to charge you more. If I had to guess, I think based on conversations with you he assumed you either didn't know quickbooks, or didn't want to do the bookkeeping, and was trying to allow you to have this be as seamless as possible for you. (This approach also ensures you bring in all your paperwork, lol.)

If you were to bill your time out, would it be worth more or less than the amount you paid an hour for his staff? If it would be more, you (economically) still paid less then if you did it yourself.

My advice to you is to decide if you like this guy or not. If you don't, I would call, voice your concerns in a professional matter and ask him to discount the bill. If he declines, chalk it up to a learning experience. Don't threaten to leave or not pay, this will get you no where. Don't tell him you aren't coming back until next year.

If you do like him, call him up, explain you want to maintain a good relationship, look forward to working together in the future, but think based on the miscommunication, there should be something you guys can work out.

If this guy is looking to build a relationship and be a trusted advisor, he'll work with you. If he just wants his money and doesn't want you as a client, he'll either give you a discount and never call, or tell you to pound sand.

It boils down to what YOU want out of your accountant. This guy's sales pitch to you should have included all this...


LOL, I guess we can chalk this one down to a learning experience then as I've already sent them an email saying they can expect payment by the end of this week and I'll no longer be needing their services. I've already received a referral from a new business partner who seems promising. I'm sure next time I shouldn't be so quick to act, but I was never quite sure about this firm (gut feeling and all that). One named partner I liked, but the other...something just didn't seem quite right about that guy.

It mostly boils down to me owning a brand new business and operating on an extremely tight budget. The firm did not know that, but they also didn't ask. It didn't seem like they really cared at any point about me or the business. I don't think the relationship is worth saving and that I'll be better off with someone else in the future.


You sound like someone who is willing to pay for the service and isn't in the market for a return mill.

This is good. (As in I work in the type place you are looking for lol.)

Seems to me you made the right choice. Relationships in business are of the utmost importance.


Beans, I have a question for you. We hired a CPA for the first time ever (always used TT before) as we had a rather complicated legal matter that brought in some income that I wasn't sure of how to report. I got the firm's name from a friend who is connected in the local business community. I spoke with the firm owner over the phone in December and gave him a rundown of our situation (the legal matter, the fact that we have a rental house, etc.) and we set up a face-to-face meeting. He told me returns are $350 minimum but likely in the $400 - $500 range. We were comfortable with this and moved forward with using his service and didn't discuss fees further.

Over the next couple months we had some back-and-forth via email about the legal matter. His firm wasn't familiar with the situation and had to research some things. The results of their research were wrong, however, and I had to go to our tax attorney (2+ hours worth) to get it laid out for the CPA. So I basically told him how to report this income.

I get a call this morning from the CPA assigned to our return and was told that the total is over $2,300. She started breaking down the charges, but frankly I didn't catch it all as my jaw was on the floor. I did catch that it was several hundred dollars for our single rental house alone. She was going to have the owner (whom we originally met with) call me back to discuss. He did, but I let it go to voicemail as I was too pissed still to answer. He said in his vm that he would "knock a couple hundred off for the tax return, which makes that $550". The total is now $2,150.

So I guess my question is: does this sound right/normal/ok to you or is something amiss? Never once since we first met did he tell me that his original quote was in jeopardy due to the amount of time he's spent our our case, or anything of the sort. I have a feeling when I speak to him, he's going to say the $550 for the return was right in line with his quote. It's all of the other charges ("tax planning", rental, etc.), that I have a problem with as I didn't even know they were a factor.


Has he given you whatever deliverables he owes you?

Was the initial quote in writing?

Whenever we incur overruns that we'd like to bill to the client we discuss them or we don't expect to get paid. But I work for a very large accounting firm and our clients are typically pretty large businesses so it's probably a different ballgame.

If he hasn't given you what he owes you I would tell him to go pound sand and you'll have the work performed elsewhere. If he already delivered you should negotiate the fees way down. Either way, no chance I pay the scheister $2100.

All the hours he's charging you for the incorrect research should be written off, at minimum.


Thanks Lanky. The original quote was not in writing. This guy was referred through a friend. He bought this accounting practice within the last few years and is trying to build it. What irks me is that he gave me a quote of $400 - $500 when I first spoke to him and he knew we had a rental and some legal things to deal with. He never said anything about a per-hour charge nor, as I've said, did he ever let me know we were exceeding his quote.

He has not provided the deliverables yet. The CPA called yesterday to tell me it was done, what the charges were and that it was at the front desk for me to pick up. I have emailed her for a breakdown of those charges and haven't heard back yet.

As much as I want to tell this guy to fuck himself, there are a couple of reasons I can't. First, it's a referral from the father of my son's best friend (Walt). I don't want this to cause issues there. Second, my wife and I are wanting to buy a business within the next six months or so and keeping good relations with the local business community is important. This CPA and Walt are members of a local business organization that has some very connected members, so I want to be careful.

The other thing that pisses me off is that I had to fill out a packet of info listing all income, deductions, etc. It's not like I dumped a box of receipts in their lap and wished them luck. I gave them just W2s, 1099s, and some Excel printouts (for home office deduction, detailed mileage, etc.). In other words, I spent as much time preparing all of this as I would have just running this through TT. The only reason we hired them was for help in classify the income from the legal matter.

I hope the billing breakdown they provide shows hours spent for research, but my guess is it's going to be more like "Tax Return: $550, Rental Property: $400, Tax Planning.....". We'll see. Thanks again for your feedback.


That's exactly what it'll show, but you can always ask for more detailed support. They didn't pull whatever "tax planning" amount out of thin air, it's backed by however many hours they spent researching your issue, which apparently they got wrong. If you need to be tactful in how you handle the situation, be respectful but tell them you think it's unreasonable for you to pay the hourly rate for whatever research they had to perform given their conclusions were wrong and you had your tax attorney filling them in.


This. And if they are wanting to build a long term relationship with you, I'd expect more give here.


Just an update on my situation (I know you've all been dying to hear): got the breakdown from them. It was $550 for the return, $150 for the rental and $1,450 (!!) for the legal stuff. I asked for a further breakdown and they provided me a screenshot of all of the time/hours charged. In addition to all of the legal research charges listed there (which I felt should be removed since their conclusions were wrong), there was $300 for our initial meeting, which he told me he wouldn't charge for.

Anyway, since I tend to run a bit "hot" on things like this, my wife (who is much more diplomatic) called and spoke to him. He is going to halve the charges since he wants our business going forward (still iffy whether we'll do that). He did express some regret about not contacting us to let us know that his initial estimate was going to be (greatly) exceeded. So we're comfortable with how this came out in the end.

Let this be a lesson to anyone considering hiring a professional for, well, anything: don't be a dumbass like me and assume a verbal estimate you received at the start is going to be the final bill. Ask questions or, at the very least, put it in writing that you are to be contacted if the charges are going to exceed the estimate.


I'm very surprised they didn't reach out to you about exceeding the budget. That's poor form.

It certainly happens in business all the time, and I'd certainly expect it to happen to you in the future, but communication is key here.

Good job not bending over and taking it.


Thanks Z. I appreciate the feedback from both you and Lanky on this. It helped us put together a plan of attack that seemed to work out well enough in the end.


happy holidays fuckers


Hahaha, congrats on another year beans. My buddy's dad is a CPA and every year they're waiting for him at home with beers and a meal on this day as he drives through the neighborhood laying on the horn on the way home.