LEGALLY speaking

LEGALLY speaking

Where’s the (Choice) beef?

Western Livestock Journal

Since 2000, the IRS has nearly tripled the number of audits of tax returns filed by people making $25,000 to $100,000. Kevin Brown, the IRS deputy commissioner, stated that this is an effort to run a “balanced audit program.” Last year, the number of audits in this category was approximately 436,000, up from about 147,000 returns in 2000.

However, for people with incomes above $100,000, the odds of being audited are about 1 in 59, and for people earning $1 million or more, the odds of getting audited are about 1 in 16.

People who operate farms or ranches that generate tax write-offs continue to be audited fairly often because the IRS regards these taxpayers as “vulnerable.” Any endeavor that has some elements of a “hobby,” but which the taxpayer reports as a business, poses a red flag under the IRS hobby loss rule.

FULL STORY

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