Lexicon, jargon and acronyms
Whenever I stop to grab something to eat from a certain place, I have to walk right by a Liberty Tax Service. I've seen a couple of the people who work there eyeing me as I walk past their office. I've often wished that they would come out and solicit my business. I already have my response worked out in my head.
Me: "I don't think you guys are equipped to handle my taxes, they are too complex for you.
Them: "We can handle anything. What makes you think your taxes are so complex?"
Me: "Well, I have to go back and amend 2010 because I had a NOL in 2011 that I chose not to carry-back at the time. But I didn't make a formal election notice to waive carryback provisions. I figured that I'd need the NOL in 2012 because I was expecting a large profit from the exercise of an ISO with a large capital gain from the grant-date. Amending 2010 will allow me to capture some unallowed PALs from my Schedule E since it will lower my AGI below 100K. Then there's my other problem, which is I sold my house in 2012 but I don't qualify for a full Section 121 exclusion. I do qualify for a pro-rata exclusion using one of the execptions though, but that's complicated too. See, it's a duplex and for part of the time the other half was rented out, so I have to recapture some depreciation on the 4797."
Them (probably): Yeah, I see what you mean.
Now I could have made that fake tax return even more complex than it sounds, but I figured that ought to be enough to make the majority of non-CPA, non-Enrolled Agent tax pro's eyes glaze over. I wouldn't trust many tax pros without those credentials to do this stuff properly. But what does all of that mean in English?
NOL = Net Operation Loss. That's a situation where losses from a business or the sale of property were more than all of the other income in a year. So if you had a job and made $50,000; but you sold your rental house at a loss of $180,000, when all is said and done, you'd have a NOL of $130,000.
Unless of course you had depreciation recapture involved. Depreciation is where you write-off the cost of acquiring business property over time. Houses don't wear out, but they are depreciated anyway. A better example is if you bought a computer for your office. You would depreciate it over a five year period (yes, under certain circumstances you can write some, most or all of it off in the year of purchase, but let's not make this stuff tougher than it already is. I promise, I do have a point). The amount of depreciation you recapture would reduce the loss in this case.
ISO = Incentive Stock Option. When exercised, the income shows up on the W-2 form, but depending on the difference between the purchase price at exercise and the sale price when sold, can lead to a capital gain or capital loss.
I'd go on explaining, and if anyone is morbidly curious, email me and I'll go over the rest, but I think my point is made. In preparing taxes, and most other professions, we use lexicon, jargon, acronyms and so on. It can make communication we think are simplistic, incomprehensible to others.
Here are a few other examples of terms used in professions that those outside of those professions may struggle mightily with:
Diaphoretic
Peculation
Hypothecate
One of the things I've always tried to teach my tax prep students, and to do myself, is not use jargon or unfamiliar acronyms with clients. A nurse having their taxes done will know instantly that diaphoretic means someone who is sweating, but will suffer that glazed eye thing when they hear "wash sale rules". A lawyer will know the second and third terms, and might even know what the wash sale rules are, depending on their legal specialty, but might well suffer the glazed eye thing if their tax pro says "let me see if I can waive the 2210 penalty using the prior liability exception".
I'd love to live in a world where we all try to avoid our industry specific lexicon in communicating with people outside our industries. Communication would be much clearer.
And yes, I would be being a major smart-ass if I really said that stuff to the poor person having to suffer through working at a second or third-rate tax service. So I might fantasize about it, but almost certainly wouldn't do it. Almost. :)
Me: "I don't think you guys are equipped to handle my taxes, they are too complex for you.
Them: "We can handle anything. What makes you think your taxes are so complex?"
Me: "Well, I have to go back and amend 2010 because I had a NOL in 2011 that I chose not to carry-back at the time. But I didn't make a formal election notice to waive carryback provisions. I figured that I'd need the NOL in 2012 because I was expecting a large profit from the exercise of an ISO with a large capital gain from the grant-date. Amending 2010 will allow me to capture some unallowed PALs from my Schedule E since it will lower my AGI below 100K. Then there's my other problem, which is I sold my house in 2012 but I don't qualify for a full Section 121 exclusion. I do qualify for a pro-rata exclusion using one of the execptions though, but that's complicated too. See, it's a duplex and for part of the time the other half was rented out, so I have to recapture some depreciation on the 4797."
Them (probably): Yeah, I see what you mean.
Now I could have made that fake tax return even more complex than it sounds, but I figured that ought to be enough to make the majority of non-CPA, non-Enrolled Agent tax pro's eyes glaze over. I wouldn't trust many tax pros without those credentials to do this stuff properly. But what does all of that mean in English?
NOL = Net Operation Loss. That's a situation where losses from a business or the sale of property were more than all of the other income in a year. So if you had a job and made $50,000; but you sold your rental house at a loss of $180,000, when all is said and done, you'd have a NOL of $130,000.
Unless of course you had depreciation recapture involved. Depreciation is where you write-off the cost of acquiring business property over time. Houses don't wear out, but they are depreciated anyway. A better example is if you bought a computer for your office. You would depreciate it over a five year period (yes, under certain circumstances you can write some, most or all of it off in the year of purchase, but let's not make this stuff tougher than it already is. I promise, I do have a point). The amount of depreciation you recapture would reduce the loss in this case.
ISO = Incentive Stock Option. When exercised, the income shows up on the W-2 form, but depending on the difference between the purchase price at exercise and the sale price when sold, can lead to a capital gain or capital loss.
I'd go on explaining, and if anyone is morbidly curious, email me and I'll go over the rest, but I think my point is made. In preparing taxes, and most other professions, we use lexicon, jargon, acronyms and so on. It can make communication we think are simplistic, incomprehensible to others.
Here are a few other examples of terms used in professions that those outside of those professions may struggle mightily with:
Diaphoretic
Peculation
Hypothecate
One of the things I've always tried to teach my tax prep students, and to do myself, is not use jargon or unfamiliar acronyms with clients. A nurse having their taxes done will know instantly that diaphoretic means someone who is sweating, but will suffer that glazed eye thing when they hear "wash sale rules". A lawyer will know the second and third terms, and might even know what the wash sale rules are, depending on their legal specialty, but might well suffer the glazed eye thing if their tax pro says "let me see if I can waive the 2210 penalty using the prior liability exception".
I'd love to live in a world where we all try to avoid our industry specific lexicon in communicating with people outside our industries. Communication would be much clearer.
And yes, I would be being a major smart-ass if I really said that stuff to the poor person having to suffer through working at a second or third-rate tax service. So I might fantasize about it, but almost certainly wouldn't do it. Almost. :)
posted by me at 8:18 PM
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