Find the right tax accountant

We applaud those who do their own taxes. It’s not unreasonable, though, to seek a professional to prepare your taxes.

To find a good one, seek referrals from people whose business savvy you respect. Any accountant can buy advertising, but she can’t buy satisfied clients. Ask for an interview. The accountant should be willing to give you some time (at no charge) to discuss and assess your situation. Ask her the following questions:

•How big is your firm? (How important will your business be to the company?)

•What are your fees and billing policies? (Ask for an estimate.)

•Who exactly will be preparing my taxes — you or somebody else? If I have problems or questions, do I speak with you?

•What are your continuing professional education (CPE) requirements, and how many CPE hours do you normally take each year? (If she exceeds the requirements, that’s a good sign.)

•What research material do you use and subscribe to? (Answers like “CCH,” “Research Institute” and “BNA” are encouraging. If the answer is merely the current Federal Tax Handbook, run, don’t walk, to the nearest exit. Sometimes complicated problems arise that require deep research. You don’t want your tax geek just giving it her best shot. Being correct is always best when dealing with the IRS.)

•If my return is audited, will you represent me before the IRS? (She should go instead of you, not with you. If the accountant sources out the audit work, think twice before signing up. If she insists that you also be present at an audit, think a third time.)

•Can you get the return done in a few weeks? (It’s March, after all!)

Finally, select someone with whom you’re comfortable. She might be the best tax technician, but if you aren’t comfortable with her, you’ll hesitate to call her and might not provide the information she needs to do a good job for you. Learn more at www.fool.com/taxtime.

Ask the Fool

Q: What are LEAPs? — T.C., Oxnard, Calif.

A: They’re simply long-term options — ones that expire after more than a year from their issue date. Remember that a standard option lets you purchase the right to buy (via “call” options) or sell (via “put” options) a fixed number of shares of a stock at a fixed price within a fixed time period, typically a few months.

So if you think that Rubber Chicken Catering (ticker: CHEWY), which is trading at $40 today, will soon be at $60, you might buy call options for $6 per share that let you buy the shares at $45. That will ultimately cost you $51 per share, netting you a $9 profit — but only if the stock hits your target before the expiration date. Options such as these often end up expiring as worthless. That’s why LEAPs, with their longer time frames, can be more attractive, despite costing more.

Options are not for beginning investors, and many advanced investors steer clear, too. Still, they can sometimes make sense. Learn more at www.cboe.com/learncenter, www.fool.com/foolFAQ/foolfaq0055.htm, and by clicking on “Options” in the blue band at www.fool.com/investing.htm.

Q: How can I tell if a company is owned by (or owns) another company? – J.P., Jacksonville, Fla.

A: You can call the firm and ask its Investor Relations department. You can also visit its Web site. Most major companies have informative ones — look for a link titled something like “About Us,” “Company Profile” or “Our History.” A search at google.com can also yield valuable info.

You may be surprised which companies are related. Yum! Brands, for example, owns Taco Bell, Pizza Hut and KFC, among other names. Gap owns Old Navy, Banana Republic and Piperlime.

My dumbest Investment

As a young, destitute college student, I managed to miss the dot-com bust of the 2000s (whew!). As a recent grad, though, I began dabbling in the market. I perused numerous financial publications and felt the flame of excitement fill me. I hastily opened up a brokerage account. Frothing at the mouth, I immediately plunked everything into one stock. Rest assured, I did my research. I looked at the stock’s chart and saw it was on a tear upward and read an article labeling it as one of 10 stocks with the potential to double within a year. I knew it manufactured some kind of alternative energy products or power generators, something like that. I sat back, satisfied, and watched as the shares immediately plummeted in mere days. Horrified, I sold everything, taking a 25 percent loss. Chastened by my first investing experience, I soon found myself learning more at The Motley Fool and elsewhere. I can sincerely say that my stock picks have now been much more well informed and successful. — Collin Beatty, San Antonio

The Fool Responds: Bravo!