Tax Planning - My firm is strictly an accounting and tax practice. Clients benefit by choosing from the most current tax planning strategies available. Many accounting practices attempt to be a "one stop shop" by representing themselves as investment advisors, stock brokers and insurance agents. The problem with this approach is that it leads to a "jack of all trades and master of none" mentality. The following are examples of tax planning and audit representation the firm has provided:

1. The "Tech Boom Bust" in the stock market during 2000 and 2001 provided exceptional tax planning opportunities. For this client the firm completed a 2001 "Day Trader Election." The election was filed during the 2000 calendar year. The Day Trader election allowed 2001 stock losses to be deducted as ordinary losses, lowering taxable income and generating a 2001 individual net operating loss. Individual Net Operating Losses may be applied on taxpayer's amended return for two years prior. The 2001 individual net operating loss was then deducted on the client's 1999 Amended individual 1040 tax return and the resulting refund was in excess of $185,000.
   [See 1999 Amended Day Trader Election ]
    
2. The recent Madoff scandal provided openings for tax planning. The Internal Revenue Service began to allow "Ponzi" type losses to be deducted as ordinary losses against income. In the past these losses were considered Capital Losses and limited to a tax deduction of $3,000 per year. For this client the firm filed a 2010 1040 deducting an Investment Theft Loss of $303,493 and related legal fees of $104,155. These loss deductions created an individual net operating loss of $296,891 that was deducted on a 2008 amended individual tax return. The 2008 amended return yielded a refund in excess of $32,000.
   [See 2010 1040 Ponzi Deductions ]
   [See 2008 Amended 1040 for Ponzi Loss ]
    
3. Corporate downsizing and shifts in the economy have given rise to many small business start ups. Business and individual tax planning are often interdependent. In this instance, client's 2009 S Corporation Loss of $78,402 was reported on client's 2009 individual tax retum(as is required by IRS regulations). This generated an individual net operating loss of the same amount, $78,402. When the loss was deducted on client's 2007 amended individual tax return, a refund was generated in excess of $27,000.
   [See 2009 S-Corp Loss ]
   [See 2007 Amended 1040 for S-Corp Loss ]
    
4. Tracking individual net operating losses often provides tangible tax benefits. For this client's Amended 2008 individual 1040, a refund in excess of $10,000 was generated from applying a 2010 Net Loss to the 2008 tax year. Client's 2008 1040 had been initially filed deducting a 2007 Loss Carryover. Net operating losses may be carried forward and carried back to the same tax year.
   [See 2008 Amended 1040 for Loss Carry Back & Carry Forward ]
    
5. Limited Liability Companies are one of the most effective mechanisms for business tax reduction. During 2009 I accepted a new LLC client and reviewed their 2008 LLC tax return for potential amendment/refunds. The client's were provided with and filed an amended 2008 LLC tax return. When the 2008 amended LLC results were reported on their individual tax returns, refunds were generated in excess of $6,000 and $5,500.
   [See 2008 Amended 1040 for LLC 1 of 2 ]
   [See 2008 Amended 1040 for LLC 2 of 2 ]
    
6. Mining prior year's returns for refunds is not limited to business returns. A new client's 2010 individual 1040 return previously filed was reviewed and an amended return prepared to correct rental property depreciation. The correction generated a combined Federal and CA refund in excess of $4,800.
   [See 2010 Amended 1040 for Rental Depreciation ]
    
7. Internal Revenue Penalties can be severe. A former client returned to me with two years of Non Profit Organization tax returns filed late by another preparer. 2008-2009 IRS penalty assessment was $20,000 ($10,000 for each year). After filing an abatement request, penalties were reduced to zero.
   [See IRS Penalty Notice ]
   [See IRS Penalty Abatement Notices ]
    
8. The attachment of a retirement plan to a Corporation or Limited Liability Company is a great means for reducing taxes and saving for retirement. A Defined Benefit Plan proves valuable when a business has been generating income for a number of years. For 2011, client contributed $160,200 to his Defined Benefit Retirement Plan while receiving only $50,000 in Salary. This is possible because Defined Benefit Plans use a Salary average for the past three years for the current year contribution calculation. If the average salary is high enough, the current year Salary is not considered for the contribution calculation. The $160,200 contribution generated an S Corporation loss of $114,274. When the S Corporation loss was reported on client's individual tax return, client's combined Federal and California refund was in excess of $30,000. Client applied the $30,000 refund to fund his current year pension plan (Business and Individual returns had been extended).
   [See 2011 S Corp with Defined Benefit Plan ]
   [See 2011 1040 with Defined Benefit Plan ]
    
9. Effective tax planning and preparation leads to convincing Internal Revenue Service Audit representation. A client was executor and beneficiary of an estate. The estate owned rental properties and when the Estate's final year tax return was completed, the executor/ beneficiary received an estate tax loss of $95,000 deductible on his individual tax return. The Internal Revenue Service selected the executor/beneficiary's individual tax return for audit. The IRS attempted to disallow almost $66,000 of estate deductions producing an additional tax assessment of approximately $14,000. After meeting with IRS representative and submitting written support of our position, assessment was reduced to $593.
   [See Initial Audit Tax Assessment ]
   [See Audit Response Letter ]
   [See IRS Audit Final Determination ]
    
10. During January 2012 I agreed to represent a taxpayer for an Internal Revenue Service audit of a 2006 Individual Tax Return Form 1040. I had not prepared taxpayer's 2006 return. Initially the IRS disallowed Sole Proprietorship business expenses of $17,681 and assessed additional tax due of $3,157. After reconstructing client's records and reviewing with IRS representative, final audit determination was no additional tax due.
    [See Audit Tax Assessment ]
    [See Audit Final Determination ]