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Most Recent Posts

Association For Honest Attorneys Founder Really Needed A Competent Accountant

Association For Honest Attorneys Founder Really Needed A Competent Accountant

Finally, an observation on the sad fallout from the interminable IRS scandal.  With the budget cuts and general demoralization,  audit rates are down.  Compliance is going to erode and more and more sloppiness and outright shenanigans are going to go undetected.  Audits serve an educational function.  At Lu Gauthier’s Boston Tax Institute seminars, grizzled veterans will compare notes.  Old hands will tell youngsters about things that clients get tripped up on – cautionary tales.  There will be fewer of those in the next few years.  Perhaps more significantly, anybody who does get audited will more likely think that they have been targeted as they get raked over the coals for practices that they know are commonplace.

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IRS Keeps Percentages Paid Private Collection Companies Secret

IRS Keeps Percentages Paid Private Collection Companies Secret

Anyway to a layman to the mysteries of FOIA, I don’t find the argument for non-disclosure very compelling.  ConServe is worried that if other companies knew what they were charging to contact delinquent taxpayers, those companies might offer to do it for less.  Like that would be a bad thing.  I think it would be a good thing and I thought it might just be me and Mr. Hodes, but as it turns out that is not the case.

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Billion-Dollar Tax, Penalty And Interest Charge Against Exelon Upheld By Seventh Circuit

Billion-Dollar Tax, Penalty And Interest Charge Against Exelon Upheld By Seventh Circuit

There is a lesson there for tax planners. Despite its efficiency, e-mail, with multiple copies might not always be the optimal way to communicate, particularly when you are trying to get your story straight.  The zeal of the lawyers to have the appraisal language “just so” (because God knows CPAs can’t write) contributed to the client going out of pocket an extra $87 million (plus interest).

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Lawsuit Against Caterpillar For Inadequate Tax Disclosure Dismissed

Lawsuit Against Caterpillar For Inadequate Tax Disclosure Dismissed

When you think about it, it is a little odd.  You really can’t have a note in your financial statements that you are unlawfully using foreign subsidiaries to avoid paying billions in taxes, without accruing the taxes.  At least that is my understanding of Fin 48. Of course, I never learned the secret handshake or got the decoder ring, so I can’t be sure.

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Estate Of Monster.com Founder Tax Court Victory Reversed By Second Circuit

Estate Of Monster.com Founder Tax Court Victory Reversed By Second Circuit

The lengths that a billionaire might go to avoid gain recognition is an indication of what I see as one of the great drivers of wealth inequality-unrealized appreciation.  Most of us have to realize in some taxable form most accretions of wealth in order to spend it to live.  Statistics about what people in different income classes pay as a share of the total income taxes collected do not capture that reality.

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IRS Not Making Much Use Of Bank Currency Reports

IRS Not Making Much Use Of Bank Currency Reports

Young Earth Creationist Kent Hovind is on something of a crusade against the injustice of his structuring convictions, although his narrative leaves out that he was convicted of other crimes also and subject to an enormous civil income tax deficiency.  My theory about his outrage is that he had prepared himself to be charged with evasion by establishing a Cheek defense and was blindsided by structuring.  The irony is that if he had just had his wife withdraw eleven grand when that is what they needed, the routine bank report might not have caused a ripple.

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Window Closing On IRS Program To Lessen Penalties, Avoid Prison For Offshore Shenanigans

Window Closing On IRS Program To Lessen Penalties, Avoid Prison For Offshore Shenanigans

” Bad actor” sounds pretty harsh and you and I both know that you are really not a “bad actor”.  You are probably actually a  mensch.  But fifteen years ago, somebody talked you into stashing some money in the Cook Islands just in case and who’s gonna know.  And it dawned on you some time ago that that was wrong and you have been agonizing about it.  That could make you a “bad actor” in the eyes of the IRS.  So don’t let this window close on you without getting some good advice.

 

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Tax Refunds Due Injured Veterans – IRS Should Make It Easier

Tax Refunds Due Injured Veterans – IRS Should Make It Easier

 I had a long talk with a friend of mine who runs a fifteen or so person practice.  We figured that you would end up spending around $1,000 in billable time trying to figure out whether the full amendment might be the better way.  He ended up deciding he wouldn’t do it unless it was somebody he knew.  And then he said that if a veteran came walking in off the street asking for help he would help him, but would tell the guy not to tell his buddies about the help he got.

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Do Not Ignore IRS Form 1099-C – It Will Not End Well

Do Not Ignore IRS Form 1099-C – It Will Not End Well

If those loan servicers know their business, it seems pretty unlikely that Joe was solvent to the extent of over $360,000 after the discharge.  I don’t know.  Maybe he is a really good negotiator.  For the sake of argument let’s assume there is a good argument for insolvency.  Joe could have filed his Form 1040 and attached Form 982.  Take a look.  Check box 1(b) Discharge of indebtedness to the extent insolvent or maybe 1(e) for residence interest.  Then in Box 2 go for the gold and write in $364,179.  That should appease the computers anyway.  And even if it gets looked at, at least there is no failure to file.  I’m not going to get into Part II.  It only matters if you have tax attributes that you need to reduce.

If you want to be thorough you should got to Publication 4681 and fill out the worksheet on Page 6.  Note at the top right-hand corner that it says “Keep for your records”.  That means you don’t have to send it in with your return.  So you could wait till they ask for it to fill it out.  And if they never ask for it, well you saved some time.

Had Joe taken those simple steps, I would put the odds at well over 90% that his return would have sailed through the system.

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