Individual Income Tax Planning and IRS Dispute Representation

Wages, freelance fees, and partnership distributions may appear on different tax forms. An attorney compares Forms W-2, 1099, and K-1 with returns and bank records to identify omitted income, duplicate reporting, or disputed classifications.

When information returns report the same payment twice, invoices and deposits can establish whether income was duplicated. An attorney can identify the specific entries to dispute.

Business elections, property sales, and Roth conversions can affect future liabilities. An income tax planning review examines timing, tax basis, and reporting obligations before a decision becomes difficult to reverse.

A single-member LLC is generally disregarded for federal income tax unless it elects otherwise. Eligible LLCs may elect S corporation treatment using Form 2553 without also filing Form 8832.

An S corporation must pay reasonable wages for shareholder-employee services before non-wage distributions. If the IRS challenges payments, an attorney examines duties, payroll, and distributions. A self-employment tax review evaluates actual compensation, not projected savings alone.

Employment agreements and payroll records may help show how shareholder compensation was set. A job title alone does not establish reasonable pay.

Time spent working, comparable salaries, and the business's revenue sources may help assess reasonable compensation. The IRS can reclassify distributions as wages, creating employment-tax exposure.

Taxpayers with insufficient withholding may owe estimated tax. General safe harbors are based on 90% of current-year tax or 100% of prior-year tax, increasing to 110% for certain higher-income taxpayers. Payment timing and uneven income may affect penalties.

An attorney reviews underpayment notices, expense records, and qualified business income deduction eligibility. The deduction is permanent, subject to statutory limits.

For taxpayers whose income arrives unevenly, the annualized income installment method may change the penalty calculation. Payment dates and supporting records should be checked rather than assuming four equal earnings periods.

A rental sale may involve adjusted basis, depreciation, and net investment income tax. Section 1031 can defer certain gains from qualifying exchanges of investment or business real property, but transaction requirements and deadlines are strict.

An attorney examining capital gains taxes can review depreciation schedules, closing papers, and exchange arrangements before proceeds are received.

For a deferred exchange, replacement property generally must be identified within 45 days and received within 180 days or the applicable return due date, if earlier. Access to sale proceeds can also jeopardize the exchange.

A Roth conversion generally makes previously untaxed amounts taxable. Nondeductible contributions and balances across traditional, SEP, and SIMPLE IRAs may affect the taxable share under aggregation rules.

An attorney examines Form 8606 and earlier returns for basis errors. Roth conversions completed after 2017 generally cannot be reversed through recharacterization.

A missing basis record may lead a taxpayer to overstate taxable conversion income. Checking account balances across relevant IRAs is more reliable than calculating tax from the converted account alone.

A CP2000 notice identifies differences between a return and third-party reports; it is not itself a bill. An attorney reconciles Forms 1099, reported income, cost basis, and claimed deductions before preparing a response.

IRS audit defense may include reviewing document requests, organizing evidence, and disputing proposed changes.

A response should identify each proposed adjustment and attach records addressing the examiner's reasoning. Unrelated financial records may not resolve the dispute.

When an examination remains unresolved, an attorney can evaluate review by the IRS Independent Office of Appeals. A statutory notice of deficiency generally allows 90 days to petition the Tax Court, or 150 days for certain notices addressed outside the United States.

IRS discussions do not extend the petition deadline. An attorney can prepare an administrative protest or court petition when appropriate and challenge unsupported adjustments or penalties.