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Conduct of IRS Examination: Four of your team’s clients have contacted you recently. They have advised you that they are under examination by the IRS and want your assistance in dealing with the IRS. The fact patterns are provided below.
Assignment: Draft a short answer to each of the clients based on the client’s questions which are specified directly after each fact pattern. Each client memo should be about 1 to 2 pages.Do not repeat the question in the answer. Each memo must include an explanation of the relevant code sections, regs and/or other relevant controlling authority such as case law. Don’t just cite the rules or cases, explain them and their application to the specific facts in the questions. AI 0% and this one has to be under 15 % plagio
CLIENT A: Client A has received a notification from IRS and has forwarded to you IRS CP2000 Notice. This notice reflects that the client appears to have omitted $575,000 of income from sales of securities on client’s 2019 tax return. You have checked the CP2000 and are able to determine that there apparently was a brokerage 1099 that the client had failed to provide you at the time of preparing the return. You further note that the omitted income appears to have resulted because the IRS calculation includes the sales price but not the cost of the securities as the Client has owned the securities for quite a while. In addition, although the securities had been held for more than a year the income is shown as short-term capital gain. The IRS also proposes to assess the accuracy related penalty
QUESTIONS:
1.Is this an IRS examination?
2.How do you respond to IRS?
3.What document do you need in order for IRS to discuss the matter with you?
4.In Addition to asking your client, how can you confirm that there are no additional accounts that your client may have missed?
5.In Addition to asking your client What should you do when preparing later years’ returns to prevent a recurrence?
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