What is the IRS?

[ILLMAS]

Today on Yahoo News

http://www.nydailynews.com/ny_local/2010/08/24/2010-08-24_thought_you_had_irs_problems_failed_daytrader_nailed_with_172m_bill.html#ixzz0xcaSNfyW

[Catherine]

Today on Yahoo News

http://www.nydailyne...l#ixzz0xcaSNfyW

Oops.

[jainen]

>>Oops.<<

Oh, the press loves stories like this but it doesn't hold up to a closer look. What brokerage allowed a young alien to churn a half billion dollars in risky trading while living underground? What exactly does it mean, he "nearly" went bust? Why call him an "emigre" when he never settled here? The only research the writer did was to browse an anti-government site, talk to some friend, and ask a CPA who wasn't even involved. Not exactly responsible journalism.

But it does work as humor. "What is the IRS?" Gee, why wouldn't people in Spain know about taxing authorities? They call theirs by the same word they use for God's representative on earth!

[taxxcpa]

I've had clients do the same thing, but not on such a large scale. They make some trades in the stock market and lose money, so they think they don't need to file a return, or if they file, they don't mention it and file no Schedule D.

I've filed amended returns for some of these situations and the IRS pursued it no further. One guy who failed to report his stock transactions was a BANKER of all things. At least he worked at a small bank--I'm not sure what kind of work he did at the bank.

[jainen]

>>they don't need to file<<

Technically, they DON'T need to file unless they have taxable income. When 1099's start showing basis, will the IRS still harass people like this?

[grandmabee]

>>they don't need to file<<

Technically, they DON'T need to file unless they have taxable income. When 1099's start showing basis, will the IRS still harass people like this?

I thought it went by gross income not taxable income

[Catherine]

I R S = "the Institution Responsible for Stress"

courtesy of Camille West (she has a _wonderful_ song called "The Audit" that everyone here would adore, on her CD "Diva's Day Off")

[jainen]

>>gross income not taxable income <<

Yes, good point. I misspoke, not meaning Line 43 but "income subject to taxation." For example, in the $3650 gross income test for dependency, the non-taxable portion of Social Security does not count. Similarly, an individual whose only income is $18000 Social Security does not have a filing requirement, because "gross income" or AGI is zero.

Although net capital gain is included in gross income, net losses exceeding $3000 are not. In business terms, gross income is not the same as gross receipts. Of course, when the IRS knows money was received it may ask for proof of the losses, just as it might ask for proof that checking account deposits are from non-taxable loans or gifts.

[TAXBILLY]

>>Similarly, an individual whose only income is $18000 Social Security does not have a filing requirement, because "gross income" or AGI is zero.<<

Not always true. :~)

taxbilly