Taxes, Insolvency and the Bankruptcy Estate

You are insolvent when your liabilities exceed the Fair Market Value (FMV) of your assets. It is important to determine your liabilities and the FMV of your assets immediately before the cancellation of debt to determine whether or not you are

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Posted in Bankruptcy, Insolvent

Ranking Tax Debt in Bankruptcy

According to IRS Publication 908, Bankruptcy Tax Guide, generally the automatic stay rules prevent a creditor from taking actions to collect debts incurred before a bankruptcy petition is filed. However automatic stay rules do not universally apply. Exceptions include an IRS

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Posted in Bankruptcy, Cancelled Debt

Exemption from IRS Filing in Bankruptcy

Here is the hard part, to qualify: 1. The corporation must have ceased business operations and must have neither assets nor income for the tax year. 2. The exemption request must be submitted to the local IRS Insolvency office handling

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Posted in Bankruptcy, Foreclosure, IRS Centralized Insolvency, Tax Filing Status, Tax Guidance & Preparation

IRS Notice 2006-83: The Bankruptcy Estate

When an individual files a bankruptcy petition under chapter 7 or 11 of the bankruptcy code a bankruptcy estate is established. The bankruptcy estate is treated as a separate taxable entity. If a trustee is appointed, the trustee is responsible

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Posted in Bankruptcy, Entity Classification, Foreclosure, Tax Guidance & Preparation

What is a Dependent Qualifying Relative?

According to IRS Publication 501, Exemptions, Standard Deductions and Filing Information. a dependent qualifying relative can be any person who lives with you all year, is not a qualifying child of another taxpayer, and someone for whom you provided over half of his

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Posted in Dependent

IRS Form 3949-A Information Referral – PROBLEMS

After it was learned that thousands of identity theft 'Information Referrals' reported on IRS Form 3949‑A were not being processed the Treasury Secretary General for Tax Administration (TIGTA) investigated and published a report (#2012-40-106) essentially stating that the "process for individuals to report

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Posted in Identity Theft, TIGTA, Whistleblower

Failure to File IRS Form 1099 Penalty

I have a client who failed to file 1099-misc for contract labor and am dealing with an examiner who denied all contract labor expenses because of a lack of IRS Form 1099-MISC back to 2007 even though an audit trail exists substantiating

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Posted in Independent Contractor

IRC Section 1398 Election: Banruptcy and the Creation of a Short Tax Year

If you are an individual debtor in a chapter 7 or 11 bankruptcy case you may be able to elect to close your tax year for the year in which the bankruptcy petition is filed as of the day before

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Posted in Bankruptcy

IRS Restrictions on Contacting Taxpayers

I've worked with many good people inside the IRS on a wide variety of cases. So please do not get me wrong I'm not bashing ALL IRS employees. However like any big bloated bureaucracy I've also worked with some real

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Posted in Appeals & Audit Resolution, Audit Reconsideration, Audit Technique Guide, IRS Appeal, IRS Audit, IRS Collections, IRS Criminal Enforcement, IRS Enforcement, IRS Examination, IRS Mediation, Tax Abuse, Tax Guidance & Preparation, Tax Relief, Taxpayer Advocate, TIGTA

IRS Publication 503 – Dependent Care Expenses

A taxpayer came to me today for verification on dependent care expenses. Their basic profile may be similar to yours. A husband and wife with two children in day care. The wife is a full time student that does not

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Posted in Children, Dependent, Disallowed Expenses, Husband/Wife, Tax Guidance & Preparation, Tax Problems & Requests, Taxable Income, Unemployment
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