News from the IRS AUDIT WORLD:
The X Window Company’s Audit is Shut Down and the Owners are Happily on Vacation in Europe
A recent case involving the X Window Company was recently settled for 7k. The owners are now in vacation in Europe and could not be reached for comment. They left as soon as the audit was closed. But I am promised a special gift when they return. The Audit was an exhaustive process that went through the books and records and focused on proving of expense categories, cost of goods sold, supplies, and ultimately “loans to shareholders”. Each category of expenses was largely proven due to excellent accounting and retention of records by the client and their existing accounting team. On over 2 million dollars of income, the additional tax debt due was $7000.
The IRS AUDITOR wanted to reclassify the loan as income to the shareholder or owner. This would have resulted in Reopening the shareholder’s personal 1040 and would have increased his income an additional $200,000. Proof was given about the loan and ultimately this issue was closed.
The important takeaway from this case was:
- The client’s accountant did not feel comfortable handling the audit on his own, but contacted my firm at the outset of the audit notice.
- The Business kept excellent records and were able to draw on them in the audit.
If you receive an IRS audit notice or know somebody who has, DO NOT WAIT, contact my firm immediately for an initial FREE Consultation. Call 1888-382-7880.