Tax

Tax Court Rescues Taxpayer From The Agent From Hell

income-tax3_660_071814092530_121416074635_013017032932.jpg_thump (1)

Given everything that gets by the IRS, it is really odd when they seem to put a lot of energy into what looks like a losing case from the get-go involving people who don’t really seem to be getting away with anything. Such, in my view, was reflected in the recent Tax Court decision in the case of Joyner Family Limited Partnership

Although it was a little suspenseful reading the decision, Judge Goeke hints where it is going to go in the very first paragraph.

Joyner Family Limited Partnership (JFLP) is a small, family-run business that sells land and mobile homes primarily to low-income, high-credit-risk individuals under seller-financed deferred payment plans. It received cash payments from the buyers of less than $500,000 during 2010, 2011, and 2012 (years at issue) and is facing an $8.7 million adjustment on the basis of the face values of promissory notes it received in the sales, the substantial majority of which were defaulted on and went unpaid.

An Accounting Nightmare

My major takeaway from this case was that I was really glad that I was not charged with figuring out the correct way to do the accounting for the Joyner Family Limited Partnership and the related entities involved in the litigation. There must be a right answer, but even with the decision I don’t know for sure what it is.

The solution, in practice, to that sort of situation is to do something reasonable, which the Joyners did. But then they must have run into what I call the Agent From Hell. AFH works hard and is diligent, but that’s where AFH’s qualities end.

AFH is firmly convinced that your client is up to no good. I have only run into AFH a couple of times. My personal approach to Revenue Agents is that we are brother or brother and sister accountants searching for the truth. That the truth is definitely “no change” or in a very rare circumstance a refund is something that I don’t emphasize…Read more>>

 

Source:-forbes

.