Internal Revenue Service examination
Dec 15, 2017OUTCOME: Client ended up with a deficiency of roughly $20,000 out of $50,000
The clients were an elderly couple each self-employed. The IRS audited one of their recent tax returns. In our first conference, I discovered that the clients were using old-fashioned pencil and ledger ... pad bookkeeping and in many cases had no supporting receipts or other documentation. They had estimated unproven deductions much too high. Some deductions were reported in the wrong place in their return. We estimated their tax deficiency at over $50,000. With my advice, the client found additional proof and they did assemble an impressive file that made life alot easier for the IRS examiner. The client asked that I attend the examination conference. At the conference I quickly established a rapport with the examiner by explaining my experience as a tax attorney and my former position as an IRS attorney. The examination started and the examiner rapidly found a deficiency of over $20,000. However at that point the examiner announced that she was going to not examine further items, but would allow us to furnish additional proof of the items examined so far. Basically, she had mercy on the old couple. They were able to reduce the deficiency with additional proof.THe examiner did not examine further items. THe taxpayers considered themselves luckly. They were!
