The IRS Audit Blog

Archive for August, 2009

Question: When you apply for a job with the IRS as a field agent or special agent…..?

they do a tax audit that you agree to be performed for employment. How far back do they go, and should unreported ebay income from a few years ago be a worry in this process?

Answer: Anyone applying for Employment with the IRS has their Tax filing history reviewed. They look that all returns for up to 10 years are filed, whether you left income off of a return, Basically were you compliant in filing your returns. They also do a detailed background check and you are required to be fingerprinted.

Local CPAs differ on proposed IRS regulations

By Derek Jordan Herald/Review var objLink = new myC_Remote.BuyLink(); objLink.LinkContent = ” “; objLink.IsAboveImage = false; objLink.LinkClass = “field-items”; objLink.PricingSheetID = “2041″; objLink.Render(); SIERRA VISTA — As the IRS moves to create new regulations and oversight to ensure paid tax preparers do their jobs correctly and fairly, many local tax preparers expressed mixed …

IRS Audit Help, Represent Your Audited Taxpayer or Yourself!

Categories

Joyce Riolo, 608 Broadway, $50,000, 26-by-28-foot addition for accessory apartment. [more...] Area residents are invited to Rome Memorial Hospital’s free annual Community Health Fair on Saturday from 8 to 11 a.m. at Chestnut Commons, 107 E. Chestnut St., said organizer and hospital Di…

Albany, NY – Across the country Audit the Fed Mass Action Day 9-15-09

Question: For those who have lost already,what’s next?

So now that the big guys are in a sticky,companies are going under what about us little people that lost it all?

The big companies I believe helped influence the changes in bankruptcy laws.I wonder what they knew or who they bought off.I have friends that did not over borrow and were simply victims of loss of jobs,myself included.What is in our future in all this?

Then there is IRS that is squeezing small business.I found mine being audited back to 2003.Now I had to pay for this audit (my bookkeeper) an additional $1500 only to find they disallowed certain items.They spent way over the $700 I had to pay them.

Again there is no information as to what happens to us little guys.Anyones thoughts?

Thank you

Answer: You know…I think this would be an absolutely brilliant thing to have brought up to Senator Obama and McCain. Where were you a month ago?

Business Briefs for Jan. 5

The Henrico County-based cooperative will receive 50 percent of the renewable electricity from the 101-megawatt wind farm in Bradford and Tioga counties in the north-central region of the Keystone State. AES Wind Generation owns and operates the wind farm, which has 67 wind turbines and now has started commercial operation. As a result, a new parent company, called Lumber Liquidators Holdings …

IRS Debt? Federal Law Can Help (Bankruptcy Lawyer Durham Raleigh Fayetteville & Wilson)

Question: On form 1120 & 1120s, what does the IRS mean by 1b Less returns and allowances-cash discounts?

link if possible

thanks
The IRS gives no instructions on this issue.

Answer: You don’t have to put anything on that line if you already report revenue as net of discounts/returns.

With some of my larger retail and manufacturing clients, they separate out their discounts and returns as contra accounts to the sales accounts (it’s far less common with smaller businesses and service providers). So, when I go to prepare their 1120s for them (or 1120S), I report gross sales on the first line, then subtract out discounts and returns on this line.

So, if you have a discounts or returns contra account, you can put the amount here. If not, don’t worry about it.

That said, if you want more instruction, use the IRS instructions for the forms- they will tell you, line by line, what to enter.

Good luck! :0)

First Federal Tax Returns App for iPad Now Available from Taxsoftware.com

Taxsoftware.com today announced that an application for six of the most often used 2010 federal tax returns is now available for a flat fee of $9.99 on the Apple iPad. (PRWeb January 10, 2011) Read the full story at http://www.prweb.com/releases/2011/01/prweb4954714.htm

Question: For an LLC (partnership), if we expect to make a profit in the 4th year, should we avoid deducting expenses?

For an LLC (partnership), if we expect to make a profit in the 4th year, should we avoid deducting our expenses this year to retain for-profit status?

My colleague and I formed a Delaware LLC last year, but realistically it will take some time for us to make a profit. According to the IRS Publication 535, to remain a for-profit partnership, and thereby deduct expenses, we need to make a profit in at least 3 of the last 5 tax years. If we expect to make a profit in the 4th year, should we avoid deducting our expenses this year, to retain for-profit status? Are there any special considerations when filing the IRS Form 1065, if we specifically do not wish to deduct taxes, based on our projection of making a profit in the 4th year?

Answer: It is just as illegal to overstate income as it is to understate it. Note the perjury statement on hour tax returns were you sign them!

The profit in 3 of 5 years is a GUIDELINE, not a hard and fast rule. Other factors play into the decision of hobby vs business than just turning a profit.

What to deduct on business/personal trips?

Question: I will be traveling to Florida for business next month and would like to bring my wife and spend a couple of extra days for a short vacation. Are my expenses still deductible?