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E. Martin Davidoff
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E. Davidoff’s Answers

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  • SUBJ: IRS Tax Correction Notice and Taxes Owed. What is the best course of action to minimize my losses? Which profession?

    I am retired from military service in 2013. For my 2014 return I was notified by the IRS that I made multiple mistakes on my 2014 return and owed them money. I have two weeks to have my reply before the proceed with collections. I have never had a...

    E.’s Answer

    You should show the notice to an attorney or CPA for proper interpretation. Preferably one who deals with IRS issues. One item in your question doesn't make sense. If the IRS believes there is an error on your return, they normally do not go directly from informing you of a correction to collections. So, you appear to need advice from both a procedural point of view and a substantive point of view regarding the accuracy of your tax return.

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  • Will ownership of a piece of property keep me from getting Currently Not Collectible Status from the IRS?

    I am trying to get Currently Not Collectible Status from the IRS. My expenses are about the same as my income, (probably about only $60.00 less) from a federal pension and a Social Security Supplement. However I own a piece of property, (land) tha...

    E.’s Answer

    We need more information to properly evaluate. How much do you owe the IRS? Is there a mortgage on the land? What is the land actually worth (not assessed value, fair market value). Presumably, the land is not your residence. Where do you live? Do you own or rent your home? If you own the value of your home may come into consideration. In situations such as yours, the IRS may ask that you sell the land to pay your debt or use the land to finance a loan to pay you off.

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  • If we dont pay the franchise tax then will the government come after me or my cofounder? We dont intend to continue the company.

    I am international and I registered a Delaware C Corp in June 2015. At the time this was more like an experiment- we did not have any real business or investment. Our agent told me its ok to have 10 million shares in the company- so I went ahead a...

    E.’s Answer

    I all liklihood, you will have no responsibility for the corporate debt. You should confirm with a Delaware corporate attorney.

    Marty

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  • Can the IRS rescind my already accepted Offer in Compromise if I inherit savings bonds that I did not know about at the time?

    I recently applied for an Offer In Compromise with the IRS. The IRS did not accept my offer, but made a counteroffer, which I accepted and paid this in full by borrowing money from a friend. I recently became aware of the fact that my grandmothe...

    E.’s Answer

    I work extensively in offers in compromise but have never run across your situation. You submitted financial information, it appears, which was unintentionally false. You omitted assets from the disclosure that you were not aware of. The Internal Revenue Manual controls IRS procedures on most everything they do. IRM section 5.8.9 deals with actions on Post-Accepted Offers and I have provided a link thereto. The IRS has the authority to rescind an offer if "false information, fraud, a mutual mistake of fact is identified". It appears to me that through either "false information" or a "mutual mistake of fact" (that is, you had these bonds but did not know about it), the IRS could rescind the offer. Now, much depends on how much the offer was resolved for and the amount of bonds that you had. If she bought in 1986 in your name, then the bonds had been yours at the time the offer was submitted. The key is that, even with the reporting of the form 1099-I, I suspect that the offer unit that would be responsible for the offer will never know the underlying facts and you have no obligation to advise them of such so long as your omission of the bond was not intentional. The bottom line is that the IRS CAN rescind your offer but likely will not.

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  • Are gifts received subject to income tax?

    I need to know, if a gift received is subject to income tax in any of the US states.

    E.’s Answer

    Section 102 of the Internal Revenue Code states that "Gross income does not include the value of property acquired by gift, bequest, devise or inheritance." So, a true gift, one that is provided as such and not a substitute for services rendered or a sale of an asset, are not income to the recipient. Note that even though gifts are not taxable as income to the recipient, there may be reporting requirements for gifts received from overseas (see form 3520). In addition, the donor of the gift may be subject to a gift tax which is different from the income tax.

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  • I owe both state and federal taxes from 2010 to 2012. If I filed bankruptcy, could this debt be wiped out?

    Bankruptcy, Fed & State - could this debt be wiped out? If so, would I need to file Chapter 7 - which is my preference.

    E.’s Answer

    Probably yes if you file after April 15th. Taxes are dischargeable on the later of 3 years after their due date or two years after filing. 2012 would have been due on April 15, 2013 or October 15, 2013 if you got an extension. So, the earliest 2012 could be wiped out is April 15, 2016. Other factors can come into play. So, see a bankruptcy attorney who has significant experience with tax issues.

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  • What can I do to get her to up the form for interest for income tax?

    buying a home and land package ..owner finance.we pay interest and she doesn't give a form for income tax.she told us she should be allowed to use on hers.

    E.’s Answer

    You do not need to receive a form 1098 (the form for mortgage interest) to claim interest paid on a mortgage. So, you do not need the form from the owner. Whether or not you can deduct depends upon the facts and circumstances. Consult and use a seasoned CPA who prepares income tax returns on a regular basis.

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  • Do I have to pay taxes on the amount on form 1099-c or does some sort of exclusion apply? Thanks

    Owned a home with my sister (originally hers after divorce) in NY; refinanced years ago with just my name on the mortgage; sister refinanced around 2005 and I co-signed. In May of 2012 had to do a job transfer to CA; sister stayed in the house bu...

    E.’s Answer

    There are exceptions and consulting a tax professional is a great way to get some answers. However, if you are into self-help, the IRS has a GREAT publication on this. Often such 1099-C income is not taxable. See IRSpublication 4681 (linked included) .

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  • Say $35,000 paid into you bank account from abroad as gift; is there any tax or declaration issues? thks

    say $35,000 paid into you bank account from abroad as gift; is there any tax or declaration issues? thks

    E.’s Answer

    The answer depends upon the source of the gift. The correct form if reportable is form 3520, for which I have provided a link. Even though reportable, such gifts are usually not taxable to the recipient.

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  • How do I go about filing my NY State and federal taxes.

    I used borrowed money to finance my NY company's business expenses but the business did not have any income in 2015

    E.’s Answer

    Hire a good CPA, Certified PUblic Accountant, NOW!

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