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  • Holly Roundtree CPA

2019 – 08/05

Unusual changes to reported income may draw unwanted IRS attention. In one case, a psychic counselor reported substantial wage income over several years. Then without explanation, his reported wage income dropped sharply. Upon review of his records, the IRS found unreported bank deposits exceeding $1.5 million. The taxpayer claimed the deposits were repayments of loans he’d made to his late mother, or money she’d given him to buy property for her. However, he was unable to produce credible evidence that formal loans had been made or that property had been purchased for his mother. Therefore, he was issued a notice of deficiency and assessed accuracy-related penalties. (TC Memo 2019-93)

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