The IRS has been accused of using inappropriate political criteria, or “viewpoint discrimination,” in processing of applications by tax exempt organizations. President-elect Donald Trump will no doubt replace the IRS Commissioner, John Koskinen, who himself has been accused of obstructing congressional investigations. The IRS is a bureau of the Department of the Treasury. Incoming Secretary…
Dealing with an IRS Audit Excessive business deductions by owners and breeders of horses, livestock or general farmers–or in other businesses activities–can be a red flag that triggers IRS audits. The IRS Restructuring Act of l998 shifted the “burden of proof” away from the taxpayer, so that the IRS has the burden of showing that…
An area of concern in IRS audits of farming, livestock and horse activities is the amount of time expended by the taxpayer in the activity. A recurring problem is that taxpayers do not keep contemporaneous time records, but instead “reconstruct” time records in the face of an audit. This can always be a hurdle because…
A new tax case, Elizabeth Giles v. I.R.S., T.C. Memo 2005-28, ruled against the taxpayer in connection with her Arabian horse activity. The taxpayer is a dentist in Rialto, California, who bought three horses and produced foals by breeding two of her horses, which the court characterized as “minimal breeding.” During the subject years, she…
Do Livestock Owners Need Tax Opinion Letters? Livestock businesses should be operated basically in the same way as other business, utilizing business principles and judgment in decision-making, and maintaining appropriate books and records. For many ranchers, this activity is a second venture, entered into to supplement retirement income or with the expectation that assets will…
What is a Tax Opinion Letter? The Internal Revenue Service and the U.S. Treasury department have declared war on the widely used tax opinion letters in their effort to combat abusive tax shelters. But tax opinion letters are also used in many legitimate transactions, and are prepared by tax attorneys for any business or personal…
Ultimate Resource: Criminal Tax Evasion The possibility of being indicted for tax evasion is a fear that some people have if they don’t file or pay their taxes, or if they secret money away in foreign banks. Under Section 7201 of the Internal Revenue Code, it is a federal crime for anyone to willfully attempt…