Audit risk for amending 2018 corp for TCJA? - Spidell

Audit risk for amending 2018 corp for TCJA?

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Message Board Audit risk for amending 2018 corp for TCJA?

This topic contains 2 replies, has 2 voices, and was last updated by Brian Booth 2 weeks, 3 days ago.

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  • #175604
    Brian Booth
    Participant

    Does anyone have an estimate of the audit risk for amending a 2018 California Corporate tax return for the TCJA?  Client is a manufacturer, has over $10M in sales, paid CA tax of $150,000.  Amending would result in a $90,000 refund from CA.

  • #175709
    Lynn Freer
    Participant

    So you are talking about the change of accounting method I assume. I have no idea if they will audit. I do know that if there is a “large” (they won’t define “large”) refund they often do audit. However, if in this case I don’t know they would do much more than ask for a copy of the federal 3115 and possibly the entire federal return. Your client will get interest on the refund. I think I would amend the return. However, as the process hasn’t been finalized, I think I would wait to amend when the processes are fina;.

  • #175766
    Brian Booth
    Participant

    Yes, your assumption is correct.  We did file the federal return on the cash basis and completed the 3115 Forms.  We kept the California on the accrual basis.  But Client wants to us jump on this and get the refund.  Thank you for your thoughts.