The client owned a self-directed IRA that invested $150,000 in his employer’s promissory notes. After the promissory notes became worthless, the IRA custodian assigned the promissory notes to the client individually and issued an erroneous Form 1099-R to the client for $150,000.

The IRS filed a substitute for return including $150,000 in taxable income and assessing a $15,000 penalty for early withdrawal. This substitute for return also included the client’s business income, but none of his expenses, thereby overstating the client’s taxable income by $216,358. Client filed his tax return three years later reporting the Schedule C and 1099-R distribution but also deducting the $150,000 as a loss due to the worthlessness of the investment.

Upon appeal we were able to prove the worthlessness of the underlying promissory notes and validity of his Schedule C, thereby reducing taxable income by $216,358 and obtain the non-assertion of the $15,000 penalty for early withdrawal.

Our clients, a husband and wife, filing married filing jointly submitted their form 1040 that included a Schedule E, Other Income-Cancellation of Debt. IRS selected the taxpayers’ Form 1040 tax return for audit with special consideration of the Schedule E, Other Income – Cancellation of Debt, and Form 4797. The audit involved the sale of real estate and the sale of small business entities and included complex basis issues.

We represented the clients during this five-month audit, working with the taxpayer to secure the necessary details and documentation necessary to prove that the taxpayers Form 1040 was in fact true and accurate. At the end of the audit, the IRS agreed and it resulted in no change to the tax return and no additional tax assessed.

Our client owned a successful cleaning service in Florida. At the time of the audit, he was caring for his ailing mother who eventually passed away. With his attention elsewhere, the audit deadlines slipped away from him, and he failed to provide the information necessary to defend his position. The State of Florida gave him a bill of just under $250,000 and a tax warrant. By the time the client came to us, he owed over $270,000! And the state had garnished his bank account! While the client’s accountant tried to work with the state of Florida, the state was refusing any attempts by his accountants to review the audit as the appeal and protests periods had already lapsed.

Working with contacts in the state of FL, IRS Trouble Solvers were able to get the audit reviewed, and revised – the state of Florida determined his total liability was under $10,000. This was a savings of over $260,000!

Our client had a business that had been doing great, but ran into some tough times. During the same time period, his wife passed away, creating turmoil, and clearly taxes were the last thing on his mind. Needless to say, the taxes for his business and personal sides both piled up and before long he was owing $1.4 M in personal taxes alone. After dealing with a Revenue Officer from the IRS for over a year on his own, including threats of seizing his home and other collection action, he turned to IRS Trouble Solvers for help. Once on the case, we jumped in – dealing with the RO so that the taxpayer no longer had to, and forced the IRS to collect only what they were allowed by law. We negotiated a payment plan of $1,805 per month for the next ten years, for a total of $216,600! This is a tax savings of over $1 M!

While our client still has a lot of items to deal with to get his personal and business financial life back on track, at least now he stands a fighting chance.