What is an Enrolled Agent?

An enrolled agent (EA) is a federally licensed tax practitioner who has technical expertise in the field of taxation and is empowered by the US Treasury to represent taxpayers for audits, collections and appeals before the IRS.  Only enrolled agents demonstrate their competence in matters of taxation and report their hours of continuing professional education…

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Documents Required When Negotiating Payment with the IRS

Alimony or Child Support Received Commission statement Completed Form 433- A, B or F Copies of delinquent tax returns and /or ASFR returns Explain in detail why the taxpayer is not able to full pay or borrow to pay Employer’s information including work number Investment income Life insurance policies cash out value Number of individual’s…

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Characterizing Liquidating Distributions – Wallis, et ux. v. Commissioner TC Memo 2009-243

Liquidating payments made by a partnership to a retiring partner are governed by §736.  In general, if the payments are in exchange for partnership property, the amount received in excess of the exiting partner’s outside basis in his partnership interest is taxed as capital gain.  On the other hand, if the payments represent a distributive share of partnership income or are deemed to be guaranteed…

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Bartering

Bartering is the trading of one product or service for another. Usually there is no exchange of cash. However, the fair market value of the goods and services exchanged must be reported as income by both parties. A barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and…

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Be Sure to Allocate Costs If You Share Ownership: US Tax Court Summary Opinion 2010-15: Sword v. Commissioner

Unless of course you are married and filing a joint tax return, whereby the IRS essentially classifies both individuals together as a single tax payer, you should take care to allocate costs equitably for items of shared ownership. In US Tax Court Summary Opinion 2010-15 (Sword v. Commissioner) the tax payer as parents took advantage…

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Net Operating Loss (NOL) Carryback Allowed to Reduce Outstanding Tax Liability

Generally, a claim for credit or refund of an overpayment must be filed by the taxpayer within three years from the time the return was fi led or two years from the time the tax was paid, whichever is later [§6511(a)].  There are exceptions for example, §6511(d)(2) provides an additional special period of limitation for a claim for…

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Alternative Minimum Tax (AMT) Triggers and Tax Planning

The Alternative Minimum Tax, or AMT, is a parallel tax system to the standard tax system.  Every taxpayer is responsible for paying the higher of the regular tax or the alternative minimum tax. The difference between the two tax calculations is determined using IRS Form 6251 (pdf) and using Instructions for Form 6251.   If the minimum…

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Application of Asset Classification Rules When Determining Cost Segregation Depreciation

Okay this is pretty huge in regards to some of the IRS Examination Appeals work I have been doing lately.  The bottom line is that you need to follow the asset classification rules if you are going to engage in cost segregation depreciation.  The following text is taken directly from the IRS’ Audit Techniques Guide…

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W-2 Missing or Not Received – What to do? … If needed file IRS form 4852, Substitute Wage and Tax Statement

You should have received a Form W-2, Wage and Tax Statement, from each of your employers by January 31, 2011. If you haven’t received your W-2 yet you should contact your employer(s) or previous employer(s) to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the…

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Breast Pumps and Supplies to Assist Lactation Are Now, Finally, Considered Tax Deductible Medical Expenses by the IRS – Announcement 2011-14

The Internal Revenue Service has concluded that breast pumps and supplies that assist lactation are medical care under § 213(d) of the Internal Revenue Code because, like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman.  Therefore, if the remaining requirements of § 213(a) are met (for example,…

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