ORP, OR LLC
FEBRUARY WIN OF THE MONTH Pass-Through Business IRS ProblemSolved CASE SNAPSHOT Client: Owner of a martial arts business Type of IRS Issue: Personal income tax complications due to business income
When deducting, you can choose to take the standard deduction (which depends on your filing status), which makes the tax preparation process go much faster, or you can choose to itemize your deductions. When tax planning, you should also keep in mind all of the standard deductions you may qualify for, such as adoption credits, capital loss deductions, charitable contributions, child tax credit, and more. Make sure you keep all of your records to validate all credits and deductions.
This tax season, get ahead of the game and prepare early. Have all of your tax paperwork and receipts organized and ready to go! For any of your tax-related questions or concerns, we are always just a phone call away. Happy tax planning!
Tax Year in Question: 2015–2018 IRS Claimed Liability: $57,167.44 Savings: $57,067.44
When the owner of a dojo martial arts studio came to us for assistance with his personal taxes, we were ready to help. His business was set up as a flow-through, or pass-through company, meaning any income the business makes flows through to the individual and/or investors’ personal income tax. They are not subject to corporate income tax. In this client’s case, he and his wife were the sole owners of the business, and while trying to run the business, the client fell behind in filing his returns and subsequently failed to make his tax payments. After conducting our investigation, and we had a final determination as to liability, we were able to begin our defense. We pursued an offer in compromise, which is an agreement between the taxpayer and the IRS. With painstaking attention to detail, we combed through the clients’ records and receipts, bank statements, income and spending, and any assets to get a thorough picture of their financial situation. We then compiled a bulletproof defense that the client just didn’t have the money to pay the IRS. Using a complex formula, we put together a document so compelling that when we offered $100 on the $57,000-plus liability, the IRS could not deny what we were telling them — the client did not have the means to pay the balance due. Once the IRS had the chance to review the documentation, they accepted the Offer in Compromise, saving our client $57,067.44 in taxes due to the IRS.
1 package fudge marble cake mix 1 1/4 cups and 3 tbsp brewed coffee, divided 1/4 cup canola oil
10 oz maraschino cherries, stemmed, drained, and chopped
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1/3 cup brandy
1/4 cup cherry preserves 1 cup chocolate frosting
1 lb chocolate candy coating, chopped
1. In a large bowl, combine cake mix, 1 1/4 cups coffee, canola oil, and eggs. Beat on low for 30 seconds, then on high for 2 minutes. 2. Preheat the oven to 350 F. 3. Pour batter into a greased, floured 9-by-13-inch baking pan. Bake for 30–35 minutes and let cool. 4. In a small bowl, combine cherries, brandy, cherry preserves, and remaining coffee. 5. Crumble cake. Add frosting and cherry mixture. Combine and shape into 1-inch balls. 6. Melt chocolate coating, following package directions. 7. Line a baking sheet with parchment paper. Dip balls into coating. Let them stand on the paper for 20 minutes, then serve!
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