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Your Team Actually Wants You Less Involved in Daily Operations—Here’s How to Give Them What They Need

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For an accounting firm owner, days can feel like an endless stream of Slack notifications and “quick questions” from your team. You’ve become your company’s “internal Wikipedia”—the go-to source for every operational decision, client question, and process clarification. Sound familiar?

Chase Damiano, founder of Human at Scale and recent guest on the Earmark Podcast, has a name for this trap: the bottleneck.

Damiano brings a unique perspective to the accounting world. After scaling Commonwealth Joe Coffee Roasters from zero to $5 million in revenue and earning a spot on Forbes’ 30 Under 30 list in 2018, he experienced burnout so severe it drove him to take a 12-week sabbatical that included two weeks of silent meditation. This radical reset transformed his understanding of leadership and delegation. Now, he shares those insights with accounting firm leaders trapped in similar operational quicksand.

In his conversation with host Blake Oliver on the Earmark Podcast, Damiano challenges a fundamental assumption plaguing firm owners: the belief that hiring more people will solve their capacity problems. The reality is far more complex. Breaking free requires a systematic approach to delegation that transforms how you communicate expectations and how you measure success.

Every overwhelmed firm owner needs to understand three critical transformations. First, why the traits that make you successful—perfectionism and desire to serve—become the quicksand that traps you. Second, how a six-part delegation framework frees you from daily firefighting. And third, why building a “team responsibility inventory” provides the roadmap for extracting yourself from workflows while actually increasing your team’s autonomy.

The Psychology of Being Stuck: Why Good Intentions Create Bad Systems

Before you can implement systematic delegation, you need to recognize that the very traits that made you successful now hold your firm hostage.

Damiano knows this pattern intimately. After scaling his coffee company to $5 million in revenue, he found himself addicted to the productivity habit. It took three full weeks of his sabbatical just to stop compulsively “figuring things out.”

“Even the act of ‘figuring out your life’ can now look more like a job,” he explained to Oliver. “Wake up, have breakfast, go to a coffee shop to figure things out. Then it’s time for lunch, more figuring out, dinner—and suddenly another day has vanished.”

This addiction to busyness hits accounting firm owners particularly hard. Your perfectionism, your genuine desire to serve clients, and your technical expertise aren’t character flaws. They’re the foundation of your professional success. But when it comes to scaling a firm, they become quicksand.

Oliver admits he fell into this exact trap with his own firm. “I said yes to everything,” he reflected during the conversation, “and then I’ve got too much to do and I’m busy all the time, working 60 hour weeks.”

The desire to help everyone feels noble in the moment. But it creates a system where your brain becomes the firm’s operating system. Every decision, every quality check, every client question routes through you.

The perfectionism problem runs deeper than just workload. Oliver shared an example from his time at a Big Four firm. The nonprofit team was performing full compilation engagements for clients who didn’t need them. “Most of these nonprofits did not need compilations, but we were doing it anyway with a huge added cost,” he observed. The team could have delivered a simpler service at better margins while still meeting client needs.

Damiano challenges firm owners to examine their “inner data”—not financial metrics, but the intuitive signals about energy and alignment. When he asks bottlenecked CEOs how they feel day-to-day, the answer is always the same: “incredibly draining,” “incredibly stressed,” “I don’t want to do this.”

Yet the pattern continues. They know they’re stuck, they can articulate the problem, but they take no action to change it.

This paralysis stems from a fundamental identity crisis. As Damiano discovered after exiting his coffee company, entrepreneurs often don’t know who they are without their business. “Everyone asked me what I’m going to get into next.” he recalled. “People assume you’re going to go on to an even greater thing, but you might not be clear about that internally, and that’s okay.”

The reality check comes when you realize your team actually wants you less involved. Teams see your pain from being overwhelmed. But more importantly, they experience frustration when you inject yourself into processes and “muck things up,” as Damiano puts it.

Your team craves autonomy over their roles. They want to make decisions without running everything by you. But first, you need to accept that your five-minute solution might be worth sacrificing for their two-hour learning experience.

Damiano’s perspective on one-on-ones captures the mindset shift required: “Your one-on-ones should not be about status updates. It’s an opportunity to develop them as leaders in every role, in every position. They should do 80 plus percent of the talking.”

Understanding these psychological barriers is crucial, but awareness alone won’t free you from the trap. You need a concrete system for transferring responsibilities that addresses both your need for quality and your team’s need for clarity.

The Six-Part Delegation Framework: From Chaos to Clarity

The breakthrough moment in Oliver and Damiano’s conversation came when Oliver realized effective delegation to humans uses the exact same structure as prompt engineering for AI.

“What you just described is a well-written prompt,” Oliver exclaimed as Damiano outlined his delegation system. “It’s the same thing.”

This revelation transforms delegation from an art into a science. The framework emerged from Damiano’s observation of countless delegation failures. One particularly instructive disaster involved a chief operating officer who attempted to delegate a billing process. She wrote just seven words on a piece of paper: “Manage billing process while I’m out on vacation.”

The predictable result? Complete failure. Without context, success criteria, or clear boundaries, the delegation was doomed from the start.

During the podcast, Damiano and Oliver worked through a real example: delegating the management of weekly team meetings. Here’s how the framework transformed this common bottleneck into a clear, delegatable responsibility:

1. Name the responsibility: “Manage and coordinate weekly team sync.” Just two to three sentences that start with action verbs.

2. Define the purpose: As Oliver articulated: “Our weekly team sync is what keeps everyone organized and makes sure nothing falls through the cracks. It helps us prioritize.” Damiano added, “This is our command center for what is happening for the week, but also a place for us to come together as a culture.”

3. Establish success metrics: “Everybody leaves the meeting with their top three to five priorities clearly defined. We’ve addressed any blockers,” Oliver said. Plus the binary metric: Did the meeting happen? Did everyone who could attend actually attend?

4. Document the process: They mapped out everything from sending meeting invites and creating agendas to collecting topics, facilitating discussions, and updating the practice management system.

5. Identify resources: Access to calendars, ability to run reports on upcoming deadlines, time for preparation and follow-up. “In a prompt that would be the tools,” Oliver noted.

6. Clarify decisions: The operations manager can choose meeting times and create agendas autonomously, but needs approval to cancel meetings two weeks in a row.

The elegance of this system lies in its flexibility. “Those first three are perfect delegation opportunities for a more senior individual,” Damiano explains. Junior team members benefit from all six elements as guardrails.

What makes this framework powerful is how it addresses trust issues that sabotage most delegation attempts. When delegation fails using this structure, you can pinpoint exactly what went wrong.

“You can literally look at it and pinpoint exactly where,” Damiano says. “And that is what makes the delegation stick, because you can just fix that one issue.”

The framework also flips the traditional delegation dynamic. Instead of the owner having to document everything, team members can use these six elements as a guide to ask better questions. This transforms delegation from a top-down directive into a collaborative process.

Oliver’s enthusiasm was immediate: “I’m going to start using this. I’m going to do this tomorrow with my team.”

The framework addresses his core challenge: getting his team to take ownership without constantly coming to him for decisions. By clearly defining decision boundaries upfront, team members gain confidence to act autonomously while knowing exactly when to escalate.

But individual delegation is just the beginning. True transformation requires examining every responsibility across the entire firm.

Building Your Delegation Roadmap: The Path to Strategic Leadership

Moving from technician to strategic architect demands a systematic inventory and redistribution of all responsibilities across your firm.

Damiano calls this process building a “Team Responsibility Inventory.” As Oliver discovered with his own 16-person company, you can reach a point where founders are still doing work from when the company was half its size.

“We’re the bottleneck,” he admitted, recognizing how he and his partner had become “functionally critical participants in the workflow” even though they now had a team capable of handling that work.

The Team Responsibility Inventory begins with radical transparency. Every team member completes a seven-day time audit, brain-dumping every task and responsibility they handle. No organization needed, just raw data.

Then comes the revolutionary part: a facilitated session to compile all these responsibilities and review them line by line as a company. For many firms, this marks the first time the team sees exactly what’s on the CEO’s plate.

“Imagine you’re going line by line through these responsibilities and as a team making a decision,” Damiano explains. “Should the CEO still have this responsibility?”

The power of this collective review can’t be overstated. Team members who’ve been frustrated by their CEO’s constant intervention suddenly understand the impossible workload their leader carries. More importantly, they become active participants in solving the problem.

Each responsibility faces one of six possible destinies: hire someone, delegate and train internally, outsource to a service provider, automate through software, consciously eliminate, or keep.

The elimination option deserves special attention. “This is an underused one,” Damiano emphasizes. After years of growth, firms accumulate zombie tasks—reports nobody reads, processes that served a purpose five years ago.

Oliver shared the perfect example: “There’s all these people running weekly, monthly, quarterly reports that were defined five years ago that they’ve been sending out constantly and nobody’s actually reading them.”

The delegation roadmap shows how responsibilities shifts over time. But successful execution requires developing your team’s decision-making capabilities, not just their technical skills.

This is where Damiano’s “Problem-Outcome-Solution Framework” comes in. Instead of bringing problems to leadership, team members learn to present complete proposals. Define the problem and its cost. Articulate the desired outcome. Recommend a solution with clear resource requirements.

Oliver’s current challenge illustrates why this matters: “My team comes to me with a problem and then I have to use my brain space to think about the solution. But it’d be much better if they defined the problem, defined the outcome they want, and gave me a proposed solution.”

This shift transforms every interaction from a drain on the CEO’s cognitive resources into a development opportunity for the team member.

The framework works because it addresses a fundamental misunderstanding about delegation. Firm owners often justify keeping tasks because “I could do this in five minutes. Why delegate something that takes them two hours?”

But this calculation ignores the compound effect. That two-hour learning investment today becomes 90 minutes next week, then 60 minutes, then eventually faster than you could do it yourself—all while freeing you to focus on strategic work only you can do.

Oliver’s ultimate success story proves what’s possible. After five years building his firm with these principles, he achieved the dream: “I was doing no sales, I was doing no client work. We were getting customers. They were getting served. They were happy, they were paying. Money was coming into the bank and I was not involved.”

For anyone trapped in 60-hour weeks, Oliver’s enthusiasm is infectious: “I will tell you that it is the greatest thing in the world to get into that position, because then you’re really just an owner of a business.”

From Bottleneck to Breakthrough: Your Next Strategic Move

The journey from bottleneck to strategic leader is about fundamentally reimagining how knowledge and decision-making flow through your organization.

Damiano’s framework reveals that delegation isn’t a single skill but a system. It requires clear communication, defined success metrics, and the courage to accept “good enough” from others. The same perfectionism that built your reputation can become the cage that limits your growth.

This transformation extends beyond individual firms to the entire accounting profession’s evolution. As AI handles increasingly complex technical work, the firms that thrive will be those where owners have already extracted themselves from technical execution. They’ll focus on strategy, relationships, and innovation instead.

What makes Human at Scale different is, “We don’t just come in as a consultant or advisor or coach,” Damiano explains. “We actually come in and join your team. We are in there, actually running these systems and building that with you.”

Listen to the full conversation between Oliver and Damiano on the Earmark Podcast to discover additional frameworks and tools. Visit Human at Scale to take their operational leadership assessment that can diagnose your firm’s specific bottlenecks.

Your Best Audit Findings Hide Behind the Questions You Never Ask

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Picture this: A controller walks an auditor through their revenue recognition process, casually mentioning a manual journal entry they make at year-end to “true things up.” That offhand comment—captured only because the auditor asked an open-ended question rather than a checklist query—led to uncovering improper revenue recognition that would have otherwise gone undetected.

In this episode of Audit Smarter, host Abdullah Mansour sits down with Sam Mansour, CPA, to explore an often overlooked aspect of auditing: the art of asking effective questions. Through their conversation, they reveal how the most basic tool in an auditor’s toolkit can make the difference between surface-level compliance work and truly understanding a client’s operations.

As Sam points out early in the discussion, “The quality of the answers we get is only as good as the questions we ask.” This principle shapes everything that follows, from why traditional yes-or-no questions fail to practical techniques for creating an environment where clients willingly share critical information.

Why Yes-or-No Questions Sabotage Your Audits

The most common mistake auditors make starts with two simple words: “Did you?” As Sam explains, yes-or-no questions create a trap that undermines the entire purpose of audit inquiries. They push clients toward specific answers and provide almost no insight into actual processes and controls.

Consider the typical scenario Sam describes: an auditor asks, “You reviewed this reconciliation, right?” The client faces an almost impossible choice. “What are they going to say? No?” Abdullah observes during the conversation. Sam agrees. “They almost have to say yes, even if they’re lying.” The phrasing practically forces a “yes” response, but even when that answer is truthful, what has the auditor actually learned?

“Let’s say they did review the reconciliation and the answer is actually yes,” Sam continues. “So you say, ‘You review this reconciliation, right?’ Then they say, ‘Yes, I did.’ It’s like, well, that’s it, right? You’re done.”

Instead of asking whether someone reviewed a reconciliation, Sam suggests a different approach: “Walk me through how you review the reconciliations. What do you look for? What happens if it’s off?” This reframing transforms a binary checkpoint into a window into the client’s actual processes.

The power of this approach became crystal clear in Sam’s story about uncovering improper revenue recognition. During a routine inquiry, he asked a controller to walk him through their revenue recognition process. The open-ended question invited explanation rather than confirmation. “Midway through, they casually mentioned a manual journal entry they made at year end to true things up,” Sam recalls. “That comment led to further testing and uncovered improper revenue recognition. If I hadn’t asked that open-ended question, we would have missed it.”

But there’s an art to crafting these questions. Sam warns against being too broad. For example, asking about “internal controls in general” leaves clients unsure where to start. He also cautions against cramming multiple questions into one. “Sometimes people will ask you like three different questions in one shot,” he notes. “And it’s really hard to remember what was number two or number three.”

The sweet spot? Be specific about the area you’re investigating, but open about how you want it explained. For example: “How do you receive cash in that specific area?”

Moving from yes-or-no questions to open-ended inquiries is just the first step. The real challenge is creating an atmosphere where clients feel comfortable sharing detailed, honest information.

The “New Employee” Technique That Changes Everything

Technical knowledge alone won’t extract meaningful information from clients. As Sam demonstrates through his eight years of field experience, the key lies in how you position yourself during the inquiry.

“When I’m doing these inquiries,” Sam explains, “I’m like, look, I understand how payroll generally works really well, but I don’t understand how you do it here. That’s very new to me. And so I want you to pretend like I know nothing about payroll, pretend like I’m brand new to this, and you’re explaining it to someone for the first time.”

Abdullah immediately grasps the value, “As if you’re a new employee to their firm.” This positioning accomplishes two objectives. First, it prevents clients from assuming the auditor already knows their processes and therefore skipping crucial details. Second, it reduces the threat level of the interaction.

“You don’t want to fill in gaps in the process,” Sam explains. “Maybe they don’t explain specific things to you because it’s like, well, that’s just how it’s done for payroll, right? Of course. But the thing is, what if they don’t actually do it like that?”

The physical and tonal elements matter just as much as the words. Sam paints a vivid picture of what not to do. “If someone walks in and they cross their arms and put on a frowny, unpleasant face, that body language and tone definitely gives you the feeling they’re unapproachable.”

But swinging too far in the other direction creates its own problems. “You don’t want to become their best friend in the whole wide world,” Sam warns, “because then if you have to write them up for a finding or communicate bad news in the future, you might feel uncomfortable doing that.”

The solution is what Sam calls being “professional but approachable.” He starts meetings with simple human touches like asking about their weekend, checking if it’s a good time to meet, and crucially, asking if clients have questions about the audit before diving into his own inquiries. “Giving them the opportunity to  ask why we’re doing certain things makes them feel good.”

One of Sam’s most powerful techniques is the strategic use of silence. “Clients often fill the space with valuable content,” he notes. “If you ask a question and give room for pause, they might feel a little bit uncomfortable and start giving you more information.”

The danger of getting the approach wrong becomes clear in Sam’s cautionary tale about a staff auditor who burst into the conference room declaring, “I know we have a finding in this area. I know there’s a problem here.” The aggressive approach damaged the client relationship and led to an incorrect conclusion. The auditor missed compensating controls that actually addressed the perceived gap.

“When they were doing the inquiries, they came off as a little arrogant and accusatory,” Sam recalls. The client later confided that this approach “kills the conversation really quick.”

Different personality types require different strategies. Some clients barely speak, requiring you to seek information from other sources or approach them with very specific questions. Others flood you with information. “Sometimes you have to rein them in if they’re more on the chatty side,” Sam advises. “Don’t be afraid to control the conversation a little bit.”

These interpersonal skills don’t develop automatically. They require deliberate practice and a commitment to continuous improvement—even for senior professionals.

Practice, Preparation, and the Path to Mastery

The gap between knowing how to ask better questions and actually doing it in the field is larger than most auditors realize. Sam references Neil Rackham’s book “SPIN Selling” to illustrate this point. “If you’re trying to train yourself to sell, don’t use something you’ve just learned on a big deal because it’s not familiar to you. It’s going to be kind of clunky.”

The same principle applies to audit inquiries. Entry-level auditors are unfamiliar with clients and uncomfortable with fieldwork and the expectation to ask potentially invasive questions. “It’s not just potentially uncomfortable for the client,” Sam acknowledges, “it’s probably uncomfortable for you.”

His solution might surprise those used to traditional accounting training: role-playing. Picture a lunch meeting where team members practice asking each other the same questions they’ll pose to clients. The senior auditor observes, catching those yes-or-no questions before they become habits.

“You want to be able to hear yourself saying the question and feel comfortable with those questions coming out of your mouth,” Sam explains. He uses payroll as an example. After ten years, asking for everyone’s pay scale feels routine, but “as an entry-level person, you might think, oh, it’s really strange to ask them to give me the pay scale for everyone that works here.”

Abdullah agrees:, “Role playing is one of the most helpful things I’ve done in certain situations.”

Preparation extends beyond practice sessions. Sam strongly advocates for developing questions in advance, challenging the notion that spontaneous inquiries appear more confident. “If you go into an inquiry and you’re just winging it, it could be very unprofessional.”

His reasoning is practical. When dealing with a difficult or unresponsive client, having prepared questions serves as both a roadmap and a safety net. “At least when you walk away from that inquiry, you have achieved your goal of asking the right questions,” he explains. The alternative—having to return for follow-up questions on the same topic—triggers a cascade of problems, from client complaints to difficult conversations with audit partners.

Active listening requires its own skill development. Sam describes maintaining a notepad during inquiries, jotting down items that need follow-up but resisting the urge to interrupt. “You don’t want to stop them and say, ‘Show me that journal entry.’ You want them to just keep going.”

The learning curve extends throughout an auditor’s career. “For a partner or manager to think they’ve achieved the highest level of skill in this field is somewhat unrealistic,” Sam observes. 

This matters because teams watch their leaders. Sam recalls being an early-career auditor, observing every interaction between partners and clients because those conversations typically involved “more sophisticated or important things.”

Yet formal training in this area is scarce. “Unfortunately, I don’t think there’s a lot of great CPE out there on the skill of strong inquiries,” Sam laments. This gap forces motivated professionals to seek resources outside traditional accounting education, including from books on sales, negotiation, and communication.

The payoff extends far beyond audit quality. “Being able to uncover key details in your personal life, professional life, at the client, in your own organization, it’s just so critical,” Sam reflects. 

Your Next Steps Toward Better Audit Inquiries

The journey from checkbox auditor to strategic advisor doesn’t require mastering new accounting standards. As Sam demonstrates, it requires three fundamental shifts in how we approach asking questions.

First, abandon yes-or-no questions in favor of open-ended inquiries that reveal what clients do and how and why they do it. Second, cultivate an environment of professional approachability—warm enough to encourage dialogue, professional enough to maintain objectivity. Third, treat inquiry skills as a career-long development priority, not a soft skill you’ll somehow absorb over time.

Sam’s final advice brings it all together. “Be approachable, but be professional. If you’re not professional, it derails the inquiries. If you’re not approachable, it also derails the inquiries.”

These aren’t just nice-to-have communication techniques. The controller who mentions those year-end “true-up” entries won’t share that information with someone who makes them feel defensive. The employee who knows where the real control gaps exist won’t confess them to someone asking yes-or-no questions from a checklist.

For audit professionals, the quality of audit findings will never exceed the quality of your questions. Whether you’re preparing for your first solo client inquiry or you’ve been asking the same questions for decades, there’s always another level to achieve.

Ready to transform your audit approach? Listen to the full episode of “The Art of Audit Inquiries: Asking Better Questions” on Audit Smarter to hear Sam’s complete framework for handling difficult clients, managing different personality types, and knowing when to pivot your approach. Your next significant audit finding might be just one well-crafted question away.

The Hidden Tax Trap That Turns Disaster Relief Into Taxable Income

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When Hurricane Ida slammed into Jessica’s print shop in northern Florida, it destroyed equipment worth tens of thousands and left her building damaged. But when she claimed a casualty loss deduction, she discovered that receiving $250,000 in insurance actually created a taxable gain instead of the tax break she expected. Her (fictional) story shows how complex disaster relief provisions have become for tax professionals and their clients.

In this episode of Tax in Action, Jeremy Wells, EA, CPA, begins a three-part series on disaster-related tax provisions. This first installment focuses on casualty losses and how the rules have changed since the Tax Cuts and Jobs Act (TCJA). As Wells notes, “the world’s changing in multiple ways, and one of those ways is that we see more and more frequent big storms, earthquakes, catastrophic events, and those can have serious financial implications.”

The TCJA limited personal casualty loss deductions to federally declared disasters starting in 2018. The documentation requirements are strict. Taxpayers must file insurance claims even when they seem unnecessary. And the calculations, based on the lesser of basis or fair market value changes, can produce unexpected results when insurance enters the picture.

Understanding What Qualifies as a Casualty Loss After 2018

The Tax Cuts and Jobs Act created a two-tier system that treats personal and business casualty losses differently. Starting with the 2018 tax year, personal casualty losses are only deductible if they result from federally declared disasters. This means a house fire, a tree falling on your car, or flood damage from a broken pipe no longer qualify unless FEMA declares your area a disaster zone.

A deductible casualty loss still requires three specific criteria. First, there must be actual damage, destruction, or loss of property. As Wells explains, “theoretical losses or potential losses don’t qualify.” Second, the damage must result from an identifiable event that can be isolated from other occurrences. Third, that event must be sudden, unexpected, and unusual in nature.

The “identifiable event” requirement plays out in interesting ways. Wells shares a Tax Court case where a taxpayer successfully claimed a casualty loss for his home in a Vietnamese village that was destroyed during the war. The court ruled in the taxpayer’s favor because the North Vietnamese invasion of that specific village was an identifiable event, distinct from the broader, years-long conflict.

But not all disasters qualify. When property values drop due to fear of potential mudslides without any actual damage, no casualty loss exists. Wells notes that “even though there’s going to be a significant economic and financial impact on the taxpayer, that doesn’t actually qualify as a deductible casualty loss because there’s been no damage, destruction or loss of property directly to the taxpayer yet.”

Between personal and business losses lies a tricky middle category: activities engaged in for profit but not rising to the level of a trade or business. These might include passive real estate investments or limited partnership interests. Courts consider whether the taxpayer’s main goal was economic profit independent of tax benefits. They also consider factors like the taxpayer’s expertise, reliance on qualified advisors, and success in similar ventures.

The insurance claim requirement often surprises taxpayers. Congress stated that choosing not to file an insurance claim doesn’t create a casualty loss. Instead, it represents “the taxpayer’s personal decision to forgo making a claim against the insurance company.” This means you must file a timely insurance claim to qualify for any casualty loss deduction, even for minor damage where you’d rather not involve your insurance company.

Calculating Losses When Insurance Changes Everything

The basic formula seems simple: take the lesser of your adjusted basis or the change in fair market value, then subtract any insurance or reimbursement received. But each part carries hidden complexities that can dramatically change the outcome.

Jessica’s case shows how insurance can create unexpected results. Her building had a $200,000 adjusted basis, but insurance paid her $250,000. That created a $50,000 gain. Her equipment, with a $50,000 basis but only $30,000 fair market value when destroyed, generated a $30,000 loss. The net result? A $20,000 taxable gain reported on Form 4797, despite her business suffering major damage.

Revenue Procedure 2018-08 provides safe harbors for establishing fair market value when formal appraisals aren’t possible. Wells explains you can use repair costs as evidence if the repairs meet four criteria:

  1. they’re necessary to restore pre-casualty condition,
  2. not excessive,
  3. only fix casualty damage, and
  4. don’t increase value beyond pre-casualty levels.

Getting two qualified repair estimates and using the lower figure offers another safe harbor. But Wells acknowledges the challenge: “It might be difficult to get two different companies or crews to come by and give you estimates” when entire regions need repairs after a disaster.

For personal casualties, the calculation gets even tougher. After determining the basic loss, you reduce it by $100 per event, then reduce the net amount by 10% of adjusted gross income. Wells shares his experience with Florida clients: “It’s entirely possible after the netting of gains and losses, then the reduction by $100, then the reduction by 10% of adjusted gross income, they don’t really see much of any tax effect. And that can be frustrating and disappointing.”

The increased standard deduction under the Tax Cuts and Jobs Act adds another hurdle. Since personal casualty losses become itemized deductions, many taxpayers see no benefit even after suffering significant losses. A couple with $100,000 AGI suffering $20,000 in casualty losses might receive no tax benefit at all after the reductions and standard deduction comparison.

Business casualties avoid these personal loss limitations but face their own issues. Form 4797 captures these transactions and might trigger depreciation recapture, converting expected capital treatment into ordinary income. Mixed-use property requires careful allocation between personal and business portions.

Documentation and Timing: Making the Right Moves

The essential documentation includes several key items. First, you need the cost or adjusted basis for every damaged property. Next, you need fair market value immediately before and after the casualty, although Wells notes “people don’t usually see, for example, a hurricane is about to strike and then go hire an appraiser.” Insurance policies and filed claims are mandatory. For personal losses, you also need the FEMA declaration number.

A valuable option allows taxpayers to claim casualty losses from federally declared disasters on the prior year’s return. For example, if disaster strikes in 2023, you have until October 15, 2024, to elect to claim that loss on your 2022 return, potentially getting a refund much sooner. Wells explains this involves filing an amended return with Form 4684, marking the special election box.

Form 4684 splits casualty losses into two sections. Section A handles personal property with its various reductions and thresholds. The FEMA declaration number goes above line one as proof of deductibility. Section B streamlines business and income-producing property calculations.

Wells emphasizes the importance of cloud storage, especially for firms in disaster-prone areas. “A lot of firms in these disaster prone areas have had to deal with storms hitting and losing their clients’ records.” He strongly recommends digitizing records and backing them up to the cloud.

The timing rules mean casualties are deductible in the year they occur, regardless of when repairs happen. But this creates challenges. How do you prove repair costs for work not yet done? Deadline postponements in disaster areas offer some relief, but you might need to file extensions to gather proper documentation.

Key Takeaways for Tax Professionals

The casualty loss rules have become more restrictive and complex since 2018. Personal losses rarely generate meaningful deductions outside federally declared disasters. Insurance payments can turn apparent losses into taxable gains. And the requirement to file insurance claims even when you don’t plan to pursue them catches many taxpayers off guard.

Preparation is essential for taxpayers and their advisors in disaster-prone areas. Maintain cloud-based records of all property basis and insurance coverage. Document property condition periodically with photos. Understand which events typically qualify for federal disaster declarations in your region. And prepare clients for the possibility that insurance proceeds might create tax liabilities.

Wells, speaking from experience in Florida, observes that hurricanes “don’t happen all the time, but they happen every now and then and they’re becoming more frequent and more powerful.” This reality makes understanding these provisions essential for tax professionals who serve clients in vulnerable regions.

Listen to the full episode to hear Wells explain all the calculations and share details that could save thousands in unexpected tax liabilities. Over the next two episodes, Wells will cover theft losses (including Ponzi schemes and cryptocurrency disasters) and involuntary conversions (which could have helped Jessica defer her unexpected gain entirely). With natural disasters increasing in frequency and severity, this series provides critical knowledge every tax professional needs before the next storm hits.

Your Airline Miles Are Worth $74 Billion and Hackers Know It

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Ever check your airline miles balance and think, “I should probably use those someday”? Well, fraudsters aren’t waiting. While you casually ignore those reward points, criminals are actively hunting for these digital treasures that have somehow become worth more than the companies that create them.

In this episode of Oh My Fraud, host Caleb Newquist explores the surprisingly vulnerable world of loyalty and rewards programs, revealing how the points flooding your inbox have become prime targets for fraud schemes that affect everyone from frequent fliers to wholesale club members.

The Accidental Billion-Dollar Asset Class

When United Airlines started tracking customers in the 1950s, it gave out plaques and promotional materials—basically corporate swag. Fast-forward to today, and rewards programs look entirely different. American Airlines generated $6.5 billion from its AAdvantage program in 2023 alone—not from selling tickets, but from selling miles.

The economics are almost absurd. As Newquist points out in the episode, airlines create miles for about half a cent each. They’re database entries. Then they turn around and sell these digital tokens to credit card partners for two to three cents per mile. That’s a 400% to 600% markup on something that costs virtually nothing.

“The hilarious thing is that these aren’t tangible,” Newquist observes. “They’re just made up. They’re just digital assets created out of thin air.”

The combined loyalty programs of United, American, and Delta are worth $73.8 billion. Think about that: these made-up points are sometimes worth more than the airlines themselves. And McKinsey estimates 30 trillion unredeemed miles sit in passenger accounts globally. That’s enough for every airline passenger on Earth to take a free one-way flight.

But here’s where things get dicey. Despite sitting on this massive pile of value, major airlines, including Southwest, American, Frontier, and Alaska, don’t offer two-factor authentication for account access. These companies spend millions on aircraft safety but can’t implement basic security that’s been standard in banking for over a decade.

When Your Miles Take an Unexpected Trip

The human cost of this security gap becomes painfully clear through recent victims’ stories. In July 2024, multiple Alaska Airlines customers woke up to drained accounts. One victim lost 150,000 miles, worth about $1,900. Another reported on Reddit that hackers stole over 200,000 miles. The points were being used to book luxury hotels in Abu Dhabi.

Gabrielle Bernardini, a writer for The Points Guy, discovered her Southwest account had been hacked when she received an email confirming a Hampton Inn reservation in Kalamazoo, Michigan—a booking she never made. The fraudster burned through 17,100 points, worth about $240.

Through persistence, Bernardini got her points back. But Southwest made it clear they were only doing it as a “gesture of goodwill” and a “one-time exception.” Their actual policy? “Southwest is not responsible for unauthorized access to a member’s account and will not replace stolen points.” Newquist confirmed that’s still the policy today.

Clint Henderson’s American Airlines nightmare went even further. Fraudsters drained hundreds of thousands of his AAdvantage miles for car rentals. Recovery meant jumping through incredible hoops. American required a new email address for his new account and demanded a PDF or screenshot of his police report. When Henderson went to file the police report, the NYPD’s online system was down. He had to visit a precinct physically, then was told that he couldn’t have a copy of his report until a detective intervened the next day.

Even with proof of fraud, the car rental company that accepted the stolen points simply refused to refund them. Henderson eventually got his miles back from American, but the whole ordeal revealed just how messy these situations can become.

From Sam’s Club to the Gas Pump

The problem isn’t limited to airlines. In May 2024, Sacramento County authorities arrested 38-year-old Inam Rasool after discovering he’d been systematically draining other customers’ Sam’s Club accounts. What started as an attempt to leave with $1,000 in unpaid merchandise turned into something bigger.

Store personnel began monitoring his return visits and uncovered a sophisticated operation. Rasool used stolen Sam’s Cash rewards to buy merchandise, resell it online. When police searched his home, they found over $25,000 worth of electronics, medications, pet food, hygiene products, supplements, and snacks. They also found shipping supplies, a computer, and a label printer for his online sales operation.

Meanwhile, in Peters Township, Pennsylvania, 18-year-old Paul Kostanich was hitting Giant Eagle fuel perks accounts. Video showed him visiting gas stations almost daily, holding his phone to barcode scanners to activate stolen points from different accounts. He admitted to hacking about 20 accounts and faced 58 charges, including identity theft.

One victim’s reaction captured the general disbelief, “I could never imagine someone hacking a Giant Eagle Perks card. I mean, really?”

Why This Keeps Happening

The problem is, rewards programs were never designed as financial assets—they’re marketing tools that accidentally became valuable. As Newquist explains, “They’re just a marketing gimmick developed by corporations that they hope will get us to spend more money with them. And it just so happens that they’re very, very good at doing that.”

From a corporate perspective, the math works out. If rewards fraud costs the industry $1 to $3 billion annually, but these programs generate over $70 billion for just the top airlines, that’s less than 5% lost to fraud. For many companies, it’s just a cost of doing business, especially when they can push losses onto consumers through terms of service that disclaim responsibility.

This creates what Newquist calls a perfect storm for fraudsters. You’ve got valuable assets with minimal protection, companies that won’t pursue prosecution, and victims left holding an empty bag while corporations point to fine print.

Protecting Your Points (Since No One Else Will)

So what can you do? Newquist offers practical advice with characteristic honesty.

First, change your passwords for rewards accounts. “I know you’d have to be a cerebral freak to generate a different password for virtually every account.” But at least make them different from your banking passwords.

Second, use two-factor authentication wherever it’s available. “Is it tedious? Yes. Does it save your bacon 99.9% of the time? Also, yes.”

Third, consider a password manager. Yes, the big ones have been hacked, but the benefits of managing unique passwords outweigh the risks.

Finally, actually check your accounts occasionally. Don’t be obsessive, but treat them with the same attention you’d give a bank balance.

The Bottom Line

Those rewards points you’ve accumulated aren’t just marketing fluff; they’re real value with real vulnerabilities. Companies have created a $74 billion economy from thin air, then washed their hands of responsibility when that value gets stolen.

For accounting professionals, this is a masterclass in risk transfer. For everyone else, it’s a wake-up call. In a world where teenagers systematically drain fuel perks and hackers book Abu Dhabi hotels with your miles, ignorance is an invitation.
Listen to the full episode above for Newquist’s complete investigation, including more cases and why he thinks these programs are essentially “legal money laundering” schemes. And maybe check your rewards balances while you’re at it. Just in case someone in Abu Dhabi isn’t already enjoying them.

From Vanishing Jobs to Work Slop: Inside Accounting’s AI Reality Check

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The accounting profession faces a stark reality-check as entry-level auditor positions have declined by 43% since January, and a third of accountants admit they cannot identify AI-generated fake receipts. 

In episode 455 of The Accounting Podcast, hosts Blake Oliver and David Leary address the growing evidence that AI is disrupting accounting more rapidly than most firms can keep up with. From vanishing entry-level jobs to the rise of “work slop” (low-quality AI output that wastes time and money), the profession is struggling with changes that are both promising and perilous.

The Tech Stack Problem Nobody Wants to Talk About

Before diving into AI’s disruption, Oliver shared a surprising statistic: only 37% of accounting firms require their clients to use their technology stack. That means 63% let clients choose their own tools, creating a mess of incompatible systems and inefficient workflows.

“It’s one of the things we did in my firm that was a differentiator and allowed us to scale quickly,” Oliver explained. “It reduced training time. It increased the speed at which we worked.”

The reluctance to standardize reveals a deeper problem in the profession: firms are so afraid of losing clients that they sacrifice efficiency and scalability. Yet Oliver found the opposite: “The ones that were willing to make that shift ended up listening to us about other things, too. So you might want to consider requiring clients to switch as, like a testing mechanism to see if they’re actually going to be a good fit.”

This standardization challenge becomes even more critical as firms try to implement AI. Without consistent data inputs and workflows, automation becomes nearly impossible.

The Vanishing Entry Level: A 43% Wake-Up Call

The most alarming news Oliver shared was the 43% drop in entry-level auditor job postings since January, based on a study of 126 million job postings. Meanwhile, senior positions requiring ten or more years of experience increased by 6%.

“These firms are extremely shortsighted,” Oliver argued. “They are just trying to juice profits and revenue in the short term. And the easiest way to do that is to replace your entry-level people with AI.”

The vulnerability of these positions is clear. As Oliver explained, “The stuff an entry level auditor does is so basic, like cash confirmations. You can have an AI agent doing cash confirmations all day long. It’s not complicated.”

The fear extends beyond auditing. Nearly half (45%) of accounts payable professionals now fear layoffs in 2025, up from 27% last year. These workers see AI agents matching invoices, approving bills, and processing expense reports—tasks that once required human oversight.

Leary raised an important question: Are firms actually succeeding with AI, or are they cutting staff first and hoping to automate later? In Oliver’s view, the automation is working well enough to justify the cuts. But this creates a long-term problem. Without entry-level positions to train tomorrow’s senior accountants, where will future leaders come from?

Work Slop: The $200 Hidden Cost of Bad AI

A new Harvard Business Review study coined a term for low-quality AI output: “work slop.” And work slop is expensive. Each incident wastes nearly two hours and costs about $186 per worker per month.

Forty percent of workers report receiving work slop in the past month. More than half feel annoyed when they get it, and 42% view the senders as less trustworthy.

“Every time one coworker gives another coworker slop, it costs your company 200 bucks,” Leary emphasized. But, “Employees who turn out work slop probably already did work slop before. They just did it at a much slower volume.”

The hosts shared their own experiences with work slop. Job applicants submit unedited ChatGPT responses. Guest pitches reference the wrong podcast. Some candidates even feed interview questions into AI during live video calls.

“It looks good,” Oliver said about typical work slop. “Like if you look at the email, it’s nicely formatted and it looks good and then you actually read it and you realize that it’s garbage.”

The paradox is striking: 97% of firms admit they’re not using technology efficiently, yet 86% believe AI-using firms have a competitive advantage. The gap between aspiration and execution means firms produce more low-quality work faster rather than better work more efficiently.

The Fraud Detection Crisis

Perhaps most concerning is accountants’ declining ability to spot fraud. Thirty-two percent admit they can’t recognize AI-generated fake receipts. Another 30% are seeing more fraudulent receipts than last year, and 42% suspect colleagues have submitted fake or altered receipts.

“If you want to see just how difficult it is or how easy it is to make one, just go and ask ChatGPT to make you a receipt,” Oliver challenged listeners.

Leary noted that expense fraud isn’t new. After all, people used to pick a receipt up off the ground at McDonald’s. But AI changed the game. Now anyone can generate perfect forgeries on demand.

Oliver explained that current AI models don’t understand physics, so shadows and lighting in fake images often don’t match reality. But detecting these requires expertise most accountants don’t have.

“When nothing is physical anymore, how do you, as an auditor or an accountant, rely on a scanned document?” Oliver asked, highlighting a fundamental challenge for the profession.

Solutions Emerging from the Chaos

Despite the challenges, practical solutions are emerging. Zapier announced a “human in the loop” feature that pauses automated workflows for human review at critical points. “Don’t try to automate the whole workflow,” Oliver advised. “Try to automate one task in the workflow.”

Keeper launched a new AI product that converts payroll reports and settlement statements into journal entries—a task that previously required complex spreadsheets and manual work. At $50 per client per month, it represents the kind of targeted automation that actually works.

Even Drake Software, long criticized for being behind the times, launched cloud-based tax software. While limited to certain forms, it signals that even legacy providers recognize the need to modernize.

These tools show that successful AI implementation isn’t replacing humans entirely. Instead, it augments specific tasks while maintaining human oversight for quality and judgment.

Looking Ahead: A Profession at a Crossroads

The accounting profession faces interconnected challenges that require more than technological solutions. The 43% drop in entry-level positions poses a threat to the talent pipeline. Work slop erodes trust and efficiency. Fraud detection capabilities are falling behind those of fraudsters.

Yet there are opportunities within these challenges. Firms that thoughtfully integrate AI, maintain human oversight, and invest in training the next generation will have an advantage over those who chase short-term profits by cutting entry-level positions and blindly implementing AI.

As Oliver noted about his own firm’s success, standardizing technology, requiring client buy-in, and focusing on quality over quantity created real competitive advantages. The same principles apply to AI adoption. Success requires strategy, not just software.

To hear Oliver and Leary’s complete analysis of these shifts in accounting, including their discussion of H-1B visa changes, Trump’s latest tariff threats, and more practical insights for navigating AI’s impact, listen to the full episode of The Accounting Podcast. Their unfiltered weekly discussions provide essential perspective for anyone trying to understand where the profession is heading and how to thrive despite the uncertainty.