Your clients, Tom (age 48) and Teri (age 45) Trendy, have a son, Tim (age 27). Tim lives in Hawaii where he studies the effects of various sunscreens on his ability to surf. Last year, Tim was out of money and wanted to move back home and live with Tom and Teri. To prevent this, Tom lent Tim $20,000 with the understanding that he would stay in Hawaii and not come home. Tom had Tim sign a formal note, including a stated interest rate and due date. Tom has a substantial portfolio of stocks and bonds and has generated a significant amount of capital gains in the current year. He concluded that Tim is a deadbeat and the $20,000 note is worthless. Consequently, Tom wants to report Tim’s bad debt on his and Teri’s current tax return and net it against his other capital gains and losses. Tom is adamant about this. Would you sign the Paid Preparer’s declaration (see example above) on this return? Why or why not?

Answer rating: 100% (QA)

Answer No I would not sign Paid preparers declaration because Usually if we consider the tax ... View the full answer