Changing Tax Preparers: Owner Carryforward Checklist

What to check first

When changing tax preparers, transfer the schedules behind your business and rental returns along with the filed PDFs. A new preparer needs support for opening basis, unused losses, depreciation and other continuing items; last year’s refund amount cannot establish those balances.

By AE Tax Advisors Team · Published September 26, 2026

Ask for balances with their supporting history

Build an inventory by taxpayer, entity and property. For each continuing item, list the ending balance, tax year, supporting schedule, preparer and whether it has been reconciled. Ask the new advisor what historical records are needed; a single final-year worksheet may not explain an unexplained opening figure. Retain your own copies even if the firms arrange a direct transfer.

A complete filed return is the starting point. Request the supporting schedules available under the engagement and applicable requirements, recognizing that access to a preparer’s internal workpapers can differ from access to client records. The practical objective is documented balances and the information required to reproduce them, not a promise that every internal file must be transferred.

Keep different loss buckets separate

A passive-loss carryforward is not interchangeable with a basis-limited or at-risk-limited loss. Publication 925 explains passive and at-risk restrictions, while the Form 7203 instructions address S corporation shareholder stock and debt basis. Label each balance by its actual limitation and owner. Combining everything into one “prior losses” entry can make a later release or utilization analysis unreliable.

For rentals, preserve the property-level activity history and any relevant grouping documentation. For an S corporation, retain the shareholder’s basis schedules and the underlying contribution, distribution and loan records. For partnerships, obtain outside-basis support rather than treating the K-1 capital account as a substitute.

Prepare a handoff manifest

Complete federal and state returns, amendments and filing acknowledgments.
Fixed-asset schedules with cost, service dates, methods, conventions and accumulated depreciation.
Loss, credit and other carryforward schedules, separated by taxpayer and jurisdiction.
Stock, debt and partnership outside-basis records where applicable.
Election statements, open notices and unresolved filing questions.
Estimated payments, refund applications and the next payment calendar.

Mark each file as received, missing, superseded or awaiting reconciliation. Include the date and version in the filename. A corrected return should be linked to the return it replaced so a software import does not silently restore an obsolete balance.

Example: the new software starts at zero

A landlord changes firms and the new rental worksheet shows no beginning suspended loss. The previous year’s support shows $28,000 associated with the property. That hypothetical mismatch is a request for reconciliation, not permission to deduct $28,000 this year. The reviewer should verify the prior calculation, intervening activity and current limitations before deciding what carries forward or becomes usable.

Likewise, importing a figure successfully is not proof that it was right. Ask the new advisor to distinguish balances merely carried over from balances independently reconciled. That distinction helps set a sensible scope and avoids creating a false impression that onboarding included a full historical audit.

Close the transfer with an opening-balance review

Before filing the first return with the new firm, compare opening balances to the signed-off handoff manifest. Record unresolved differences and their effect on filing readiness. Assign responsibility for obtaining missing documents and for responding to notices. For a specific rental mismatch, use the passive-loss reconstruction guide; for broader concerns, request a lookback review.

Sources and scope

Sources checked September 26, 2026. Examples are hypothetical. This educational guide does not determine whether your return is incorrect or which filing procedure applies. Editorial policy.

Talk Through Your Situation

Every situation turns on its own facts. Schedule a discovery call and we will walk through what applies to you, what it is worth, and what it would take to put it in place.

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Transfer the tax history, not only last year’s PDF

Request complete returns, depreciation registers, carryforward worksheets, election statements and unresolved correspondence. Confirm who handles extensions, pending amendments and notices during the transition. A new preparer should not have to infer historical choices from summary totals. Use a secure document channel for returns and identity information.

Illustrative decision

The outgoing CPA supplies the personal return but not entity basis schedules or a rental aggregation election. The new preparer may be missing information that materially affects the next filing. Track each missing item and its requested source rather than marking the transition complete after one upload.

Records and decisions to prepare

List each taxpayer and outstanding filing
Request asset and carryforward exports
Obtain election and notice records
Confirm extension and payment responsibility
Reconcile the opening balances before preparing the next return

Decision guide updated September 26, 2026. AE Tax Advisors Team.

Primary references for this decision:

Examples illustrate decisions, not guaranteed outcomes. Apply the rules for the relevant tax year and review the underlying facts before filing.

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