H&A Successful in Audit Challenge

In this case our client was faced with a proposed IRS audit adjustment of $412,000 of denied deductions, which would have resulted in over $126,000 of additional income tax owed and $38,000 of penalties and interest.  The primary issues related to hobby loss exposure and substantiation.  H&A advised client throughout the audit process.  The IRS eventually reduced the assessment to a mere $436.     This successful outcome was the result of a collaberative effort between the client, his accountant, and the H&A team.  We want to thank everyone involved for their efforts.

If you would like help dealing with the IRS, please contact us at (404) 255-7400.

3 Year Statute of Limitations Applies to IRS Assesments based on Mistatement of Basis

The statute of limitations on IRS assessment of taxpayers is normally 3 years, but the law provides a 6 years statute of limitations where the taxpayer has understated gross income by more than 25%.   In United States v. Home Concreate & Supply, LLC, the IRS argued that where property basis is overtated, it is tantamount to an understatement of income, and, therefore, the 6 year statute of limitations applied.  The Supreme Court found otherwise, holding the 3 year statute of limitations rather than the 6 year statute of limitations applied where the taxpayer overstated it’s original cost basis on the return.    Below is a link to the case.


If you need help dealing with the IRS, give us a call at (404) 255-7400.

H&A Successful in another Estate Tax Audit

H&A has again successfully settled an estate tax audit.   In this case, the IRS confronted the Estate with an additional assessment of nearly $2.4 million dollars in estate taxes.  The IRS assessment was based largely on three issues.  First, the IRS argued that an LLC created prior to death should be included in the estate under IRC Section 2036.  Second, the IRS argued that a vacation home  previously owned by a QPRT and rented back to the decedent should be included in the decedent’s taxable estate under IRC Section 2036.  Finally, the IRS disallowed an estate tax deduction for interest on a Graegin loan taken from the recently created LLC to pay estate taxes.

H&A was able to successfully defend the Estate on each and every issue on which the IRS based its assessment. Through proper planning, creative thinking, and hard work by H&A, the Estate recently received from the IRS a no-change closing letter.  This was a collaborative effort across all firm departments, and is a testament to the wide ranging skills and knowledge offered to our clients.   I’d like to thank everyone involved for their efforts in bringing this matter to a successful conclusion.

We cannot guaranty similar results, as success or failure of any audit defense depends on the facts and circumstances of the individual case.  If you need help dealing with the IRS, please do not hesitate to contact us at (404) 255-7400.