Preparing an OIC for a self employed client who ignored notices and get hammered losing 4 years of Schedule C Expenses and didn’t let us know until after the appeals deadlines. This is also my first OIC in about 5 years so I’m rustier than the Tinman in a hurricane.
His assets are $40k IRA and $8k in brokerage for his wife’s continuing education. His cash in bank is only about $1500, and his house is nearly maxed on two mortgages.
Question 1 after putting in both of their incomes and monthly expenses I have a small negative per month. That is without accounting for my fee to prepare this matter and he hasn’t paid for his 2016 return (and they owe on that too). Should I deduct the fees from the value his assets and include that in the notes or should I account for that elsewhere?
Question 2 since all he has to work with is the IRA and brokerage, would I be allowed to reduce the value beyond the 80% on the form to adjust for the IRA tax and penalties?
Any help would be greatly appreciated. Thank you