What happens if tax professional does not establish basis for an asset?

If a tax professional fails to establish the basis for an asset, it can lead to incorrect calculations of gain or loss during the sale of that asset, potentially resulting in overpayment or underpayment of taxes. This oversight could trigger audits or penalties from tax authorities due to inaccurate reporting. Additionally, the taxpayer may miss out on potential deductions or credits, leading to a higher overall tax liability. Properly establishing basis is crucial for compliance and accurate financial reporting.