Developer Tax Preparation Chicago Illinois

August 8, 2015
Developer Tax Preparation Chicago Illinois
A couple of months after the real estate recession hit in 2008, a developer burst into my offices unannounced. I’ve known this guy for years. He’s a fixture in our local community. There’s a building in the area that he had been trying to buy for many years. The bank had just taken it back from its former owners and was offering it at a substantial discount.
The problem was that the developer had gone to the bank and didn’t qualify for the financing. Not only did he not have sufficient cash flow, but he also lacked reasonable equity in his existing properties.
I asked him why he wanted that particular building so badly. It turned out that his father had built the property and he had grown up in one of the apartments.
Business owners come into my offices all the time with similar issues. The problem is that I’m not a magician. I can’t magically create cash flow and equity. I can’t magically make a person qualify for a loan. I mentioned these facts to him, saying that there was probably very little that I could do. I will never forget his response.
He said, “Chris, I know that you are a fair and reasonable man. All I ask is that you take a look at my situation. If there is anything that you can do, I would be eternally grateful. This building is a part of my family’s history. It belongs in the family.”
So he gave me the package that he had provided to the bank. It turned that his wife had prepared income statements for their individual properties, and provided them to a local, franchised, income tax service. The income tax service didn’t do any due diligence on the numbers, accepting them blindly in completing the returns.
I started digging and realized that he was completely over deducted on the returns. Penalties were deducted that are non-deductible. Remodeling projects that should have been depreciated were deducted as repairs. Many other items were just too aggressive.
The personal financial statement was also incorrect. Instead of valuing the properties at their current value, he had reported them at what he had originally paid for them.
Why did all of this happen? His wife didn’t understand tax law, and the former tax preparation service didn’t know much more than his wife. We amended the prior two years of tax returns, put together a proper personal financial statement, and walked into the bank to present it. He more than qualified for the purchase. They closed on the property after a shortened due diligence period, and he took possession.
We have continued to handle their accounting and taxation needs throughout the years. He has purchased several additional properties, and is certainly one of our success stories.
Christmas came that first year that we had helped him, and he invited me to an open house at the property. He was holding it in the apartment where he had been raised. I walked in with my wife and daughter to find not less than forty of his close and extended family members there. They were playing music, wine was flowing, and I don’t think that I have ever seen so much food in my life.
My client walked up to me with his arm around an older gentlemen. The man was eighty-five if he was a day, used a walker, and was quite feeble. It was the Father who had built the property and raised his family there.
The Father reached out his old, weathered hand to shake mine. He looked up at me with bright brown eyes, that flowed with tears. He just kept repeating the same words.
“Thank you. Thank you. Thank you.”
If that isn’t the job of an accountant, I don’t know what is.
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Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.