Clueless CPA and Clueless owner

[flyct]

My friend bought a Cadillac Lyriq last year. He bought the Lyriq shortly after he had a windfall by selling a business with a 3 million dollar capital gain.

After he told me he bought the Lyriq I asked him if got the $7,500 tax credit at point of sale. He told me that the dealer told him he wouldn't qualify because his 2024 income was well above the allowable. I informed him that since he didn't make more than $300k MAGI in the prior tax year, 2023, he wound still quality. I told him to have the dealer register the VIN with the IRS and get a Form 15400 form them.

Well after going round and round with the dealership for weeks they finally registered the sale and gave him the Form 15400

Fast forward to this week:
Over the weekend he told me that he visited his CPA this week to finalize his 2024 tax return and pay the IRS. He said I was wrong about the tax credit and the CPA informed he didn't qualify. The CPA told him the rules had changed for 2024 and the income limit was $120k and the AGI must be below that figure in 2024 for a vehicle purchased in 2024 and they cannot use the prior year MAGI to qualify. Well telling me I was wrong really pissed me off.

Today he called me with his CPA and then 3-way called me. The CPA insisted he didn't qualify for the EV tax credit since he bought it in 2024 and only the MAGI for tax year 2024 is used as a qualifier. I politely told him he was WRONG. He started to argue with me . I then asked him for his email address and sent him a link to the IRS page https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after I also told him to review IRS Form 8936 and 8936 schedule A.

Well after he looked at the IRS link I sent him he went silent for a minute or 2. Then he said he would have to check with his partner and get back my friend.

This evening my friend called me and said the CPA modified the personal return and he got the tax credit. He proudly said the CPA is inexpensive and only charged him $1,600 to do his personal return and his complex business return. I told him his being cheap CPA almost cost him $7,500. Cheap doesn't always save you money in the end.

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[ORLightning]

I’m a CPA and want to thank you for pushing back on the issue!
Good work!!

 

[TaxmanHog]

Congrat's

 

[chl]

Warning: some sermoninzing follows....

I have learned from experience over the years that, in every profession, there are individuals with different levels of abilities, skill, knowledge, etc., and there are practitioners who fall short of the high standards expected of the profession.

Your friend sadly encountered one of them, but was lucky enough to have you to set the CPA straight.

Let your story be a lesson to everyone to double-check what your pro tells you or does, and when you encounter one who does not listen to you or bother to double-check themselves, walk away as fast as you can.

I am an electrical engineer and an attorney working in the patent field and I have encountered this kind of situation many a time in both realms.

Many professions have continuing education requirements to maintain your license.
The State Bars do. Court decisions have to be kept up with as the often law changes as a result.

The Congress rewrites tax laws practically every 2 years if not more often, and the IRS changes things as well. Sometimes court cases change tax code too. CPA's have to keep abreast of those changes or they are doing their clients a disservice and failing in their professional responsibilities.

In the electrical field, there are changes made to the electrical codes frequently that have to be noted and learned by licensed electricians (I am not one but I try to keep up with the codes so I can double-check things).

The medical field is another area where things change every day.

Unfortunately, some professionals seem to be too busy making money to keep up with these changes.

So it is caveat emptor for their clients.

Amen (end of the preaching).

 

[Lytning]

50% of the people in EVERY profession graduated in the bottom half of their class.

 

[chl]

50% of the people in EVERY profession graduated in the bottom half of their class.

Ha, yes it would seem that way...but...

What if the professors gave everyone a 'C' grade with the same numerical score?
No top or bottom then.

Well we can only hope that those at the very bottom 'F' grade didn't graduate, lol.

But in reality, in most professions, just graduating with a degree does not qualify you to practice your profession.
For law, there are the bar exams.
And even after passing the exam, there is on-the-job practical experience and training, because no test or classroom course (except maybe a workshop) can guarantee you are actually competent to represent a client.

Electricians have to pass licensing exams.

Doctors do residency and have state exams as well to be licensed.

Just looked this up (caveat it's the AI search result summary):

"To become a Certified Public Accountant (CPA), individuals generally need to meet specific education, examination, and experience requirements, which vary by state. In Virginia, for example, aspiring CPAs need a bachelor's degree with an accounting concentration, 150 semester hours of post-secondary education, and relevant work experience, in addition to passing the CPA exam."

And even then....alas.

 

[ORLightning]

Ha, yes it would seem that way...but...

What if the professors gave everyone a 'C' grade with the same numerical score?
No top or bottom then.

Well we can only hope that those at the very bottom 'F' grade didn't graduate, lol.

But in reality, in most professions, just graduating with a degree does not qualify you to practice your profession.
For law, there are the bar exams.
And even after passing the exam, there is on-the-job practical experience and training, because no test or classroom course (except maybe a workshop) can guarantee you are actually competent to represent a client.

Electricians have to pass licensing exams.

Doctors do residency and have state exams as well to be licensed.

Just looked this up (caveat it's the AI search result summary):

"To become a Certified Public Accountant (CPA), individuals generally need to meet specific education, examination, and experience requirements, which vary by state. In Virginia, for example, aspiring CPAs need a bachelor's degree with an accounting concentration, 150 semester hours of post-secondary education, and relevant work experience, in addition to passing the CPA exam."

And even then....alas.

The CPA exam is 16 hours and is effing hard! With that said, there are still folks that manage to pass (75% is passing) but can barely add 2+2….

 

[chl]

LOL...what is 2+2 these fact-free days anyway?

Yes, I hear ya.

My law school was trying to get full permanent accreditation when I was there so, for every class of say 100 students there would be one or two A's, one or two F's and the overwhelming majority would be C's, like a greatly distorted Bell Curve.

It was a shock to go from an A student in engineering to getting my first C+ in law school!

Law school tests are weird - you try to find the "most right answer" or the "least wrong answer" in the multiple choice exams. For essays tests, they look for 'key words' - the rest of the text could be gibberish as long as you had the key words they'd skim your answer for, lol.

Not like engineering, or accounting I imagine, where there is (hopefully) only one right answer.

Took me a while to figure that out and finally get a law school B.

Then I took the Virginia bar exam, which liked so much I took it a second time (sarcasm - it was freaking hard to figure out the first time and I should have taken time off work to study - my bad).

After I passed Virginia, I took the Maryland Bar - OMG what a cake walk by comparison! For example, any statute you needed to use to answer a question was in the question materials, no need to dig into some dark corner of your memory to find it like on the VA bar. I was the first to finish and pondered wtf was wrong with the others in the exam room sweating it out?

DC let's attorneys admitted in Va or Md waive the test except for the ethics exam, so I did that too. I was young and impetuous.

The bar exams didn't tell you your score in Va or Md, it you either pass or fail. So maybe I only got a C on them or maybe I aced them, lol.

My field of practice was gonna be Patent Law anyway - the bar exams are geared to general practice. I had 4 years on the job training at the US Patent and Trademark Office while in laws school and my first year I was one of the top 2 students in the Patent Training Academy graduating class in 1986, fwiw. Underpaid and overworked back in those days as a US Government Employee.

But the REAL patent law learning (and a big bump in income) took place when I left the USPTO and went to work at a law firm as an associate - a rank lower than secretary or file clerk to the Partners it turns out. Billable hours, time keeping, coping with the peculiarities of the partners, long intense hours on top of a daily 2 hour commute. What was I thinking?

But back to the OP situation.

Despite all I may have learned and think I know, the most important thing I know now is, I always have to double-check everything I think I know because it might have changed while I wasn't looking. A lesson that CPA should learn.

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