IRS Audits

Distressed asset trust DAT tax problem

February 28, 2008 | Mike Habib, EA

Distressed asset trust transactions identified as listed transactions

In a Notice, the IRS has identified a distressed asset trust (DAT) transaction as a listed transaction under Reg. § 1.6011-4(b)(2), Code Sec. 6111 and Code Sec. 6112. In such a transaction, a tax-indifferent party contributes one or more distressed assets with a high basis and low fair market value to a trust or series of trusts and sub-trusts, and a U.S. taxpayer acquires an interest in the trust for the purpose of shifting a built-in loss from the tax-indifferent party to the U.S. taxpayer that has not incurred the economic loss.

How to reconstruct tax records after a disaster

February 27, 2008 | Mike Habib, EA

Reconstructing Your Records

Mike Habib, EA

Reconstructing records after a disaster may be essential for tax purposes, getting federal assistance or insurance reimbursement. Records that you need to prove your loss may have been damaged or destroyed in a casualty. While it may not be easy, reconstructing your records may be essential for:

1099 Tax Reporting Requirements Corporations, LLCs, DBAs

February 27, 2008 | Mike Habib, EA

Most common questions by corporations and other business entities on 1099 reporting requirements. Below is a direct IRS response to frequently asked question on 1099 issues.

Mike Habib, EA

IRS provides further guidance on Form 1099 reporting

Tax Controversy Services

February 18, 2008 | Mike Habib, EA

As you probably know by now, I specialize in representing individuals and businesses before the IRS and any taxing authority.

Mike Habib, EA

IRS strengthened enforcement policies, along with their new and complex tax regulations, makes it essential to properly plan for and manage IRS examinations or collections efforts in a proactive manner. Applying new dispute resolution procedures and best practices is critical to managing IRS examinations or collections, resolving disputes at the earliest point, and containing administrative and tax costs. The Tax Controversy services we offer are:

IRS Tax Audit due to Tax Return Preparer Fraud

February 15, 2008 | Mike Habib, EA

Tax Return Preparer Fraud

Since I recently represented an innocent couple who were victims of Tax Return Preparer Fraud, and successfully helped them in their audit, I thought you might be interested in the info below.

Per the IRS:

IRS gets tougher on VPFC variable prepaid forward contracts with share lending arrangements

February 13, 2008 | Mike Habib, EA

IRS gets tougher on variable prepaid forward contracts with share lending arrangements Variable Prepaid Forward Contracts Incorporating Share Lending Arrangements

An IRS coordinated issue paper for all industries concludes that variable prepaid forward contract (VPFC) transactions that incorporate a share lending or similar agreement permitting the counterparty to borrow or dispose of the pledged shares results in a current taxable sale of the underlying stock.

Observation: VPFCs are sophisticated tools used by wealthy individuals with large stock gains who want to cash out some of their shares but defer the tax until a later year.

Tax Court found that it could hear challenge to frivolous return penalty before rejecting summary judgment in favor of IRS

February 8, 2008 | Mike Habib, EA

IRS tax problem, IRS penalty, IRS Tax court ruling in favor of taxpayer

Tax Court found that it could hear challenge to frivolous return penalty before rejecting summary judgment in favor of IRS

Callahan (2008), 130 TC No. 3

S Corporation Tax Problems, IRS S Corp Tax Issues, IRS S Corp Audit

February 4, 2008 | Mike Habib, EA

S corporations tax challenges by the IRS and other taxing authorities

Tax Advocate’s Report highlights S corporation issues

Despite the fact that Subchapter S corporations are the most common corporate entity (over three million S corporations filing returns in fiscal year 2006), the National Taxpayer Advocate’s 2007 Annual Report notes that IRS is still struggling to develop an effective and comprehensive strategy to address noncompliance by S corporations. The Report focuses on some of the challenges in this area, including insufficient data to assess compliance risks and undue taxpayer burden because of the S corporation election process and Schedule K-1 matching errors. In particular, the Report examined the avoidance of employment taxes by means of treating shareholder wages as distributions.

Is the IRS knocking on your door? Don’t let them in!!

February 1, 2008 | Mike Habib, EA

How to handle the IRS at your Front Door? Is a Revenue Officer or a Revenue Agent visiting you soon?

If you find yourself face to face with an IRS Agent (Revenue Officer for collection issues, or Revenue Agent for audit and examination issues), at your front door you must remember to avoid these common mistakes:

1. Don’t invite them into your home or business.
2. Don’t answer any question. No matter how innocent they sound.
3. Don’t provide them paperwork or documentation.

IRS tax audit and IRS tax problems facing transportation or construction businesses, and other similar industries

January 25, 2008 | Mike Habib, EA

IRS tax audit and IRS tax problems facing transportation or construction businesses, and other similar industries

IRS SBSE-04-0108-003, 1/14/08

The IRS has reissued interim guidance that provides audit guidelines to its examiners reviewing excess per diem payments. The original guidance expired in November 2007.