| TAX CRISIS RESOLUTION... CLICK ON THESE OTHER ISSUES OF INTEREST |
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The IRS is known to add gross receipts of all gambling winnings and stock/security
transactions directly to your tax return gross income. This is done either by the IRS
Service Center or during local audit or when the IRS files “substitute returns” for a
taxpayer who hasn’t filed tax returns voluntarily.
In either case the result can be devastating... Big Tax on Little or No Actual Net Profit.
Here are some common examples.
The IRS is known to add gross receipts of all gambling winnings and stock/security
transactions directly to your tax return gross income. This is done either by the IRS
Service Center or during local audit or when the IRS files “substitute returns” for a
taxpayer who hasn’t filed tax returns voluntarily.
In either case the result can be devastating... Big Tax on Little or No Actual Net Profit.
Gambler: Sharon loves to gamble. Over the last three years she received W-2s
from the Casino averaging about $85,000.00 a year, while her W-2s from her
employment showed she earned $50,000.00 gross income each year. Yet she’s
deeply in debt and hasn’t any property (assets) to speak of. Based on her those
employment earnings, her employer has adequately withheld taxes, social security
and medicare from her paychecks. Still, she has not filed her income tax returns for
those years so the IRS filed “substitute income tax returns” for her. Those returns
essentially acknowledge the gross value of all the W-2s she received in each year
and they took into account her personal exemption. The IRS determined the tax due
and assessed penalties and interest. In sum, the IRS is now demanding that she pay
$105,000.00.
But after she gathered and reviewed her records she established that she lost
$90,000.00 each year gambling (on the average) and she documented other
deductions. She also realized she lost far more at the casino than she realized and
that she wasn’t able to track all of her losses. Nonetheless, the losses she could
establish would eliminate her perceived IRS tax delinquency.
End Result: Sharon’s returns actually showed she had overpaid her taxes each
of the years.
Investor/Stock Sale: Tim is retired and receives a fixed income of a pension
and social security. When he is 65, he inherits $100,000.00 from his father. He
hires a stock broker to invest the money for him. The broker engages many stock
trades each year from 1999 through 2004. During this time Tim’s mental abilities
start to fail and he suffers from dementia. He does not file his tax returns. The
broker’s investments lose money year after year, but during this time the brokerage
company reports 1099 forms to the IRS that report the gross value of the traded
investments. Assume that in each of the years $50,000.00 of gross trading activity
occurs. When the IRS does not receive tax returns, it issues substitute return
notices that propose to tax Tim on the $50,000.00 of gross trading proceeds for
each year. Of course, this does not take into consideration Tim’s basis (the amount
he paid for the stocks) in the investments.
For instance, in 1999, the broker’s sales resulted in $50,000.00 of gross proceeds
from $60,000.00 that was invested, for a net loss of $10,000.00. However, because
a return was never filed, the IRS does not know Tim’s basis, assumes he made
$50,000.00 in net trading profit, and taxes him on the entire $50,000.00. As a result,
Tim receives a tax bill from the IRS for $195,000.00 for all the years.
End Result: Tim submits confirmation of his stock purchase price (basis) and the
Service adjusts his account to actually credit him for net losses. It determines that he
actually had refunds in the subject years. It issues Tim refund checks for each year
in which he is still eligible to receive a refund.
Note, this problem is common in falling stock markets. It is also common amongst
people who experience very large stock losses, and who are incapable (especially
psychologically) of addressing the losses. They can’t seem to get over “what they
did” to themselves. Commonly people with that history will not file tax returns.
transactions directly to your tax return gross income. This is done either by the IRS
Service Center or during local audit or when the IRS files “substitute returns” for a
taxpayer who hasn’t filed tax returns voluntarily.
In either case the result can be devastating... Big Tax on Little or No Actual Net Profit.
Here are some common examples.
The IRS is known to add gross receipts of all gambling winnings and stock/security
transactions directly to your tax return gross income. This is done either by the IRS
Service Center or during local audit or when the IRS files “substitute returns” for a
taxpayer who hasn’t filed tax returns voluntarily.
In either case the result can be devastating... Big Tax on Little or No Actual Net Profit.
Gambler: Sharon loves to gamble. Over the last three years she received W-2s
from the Casino averaging about $85,000.00 a year, while her W-2s from her
employment showed she earned $50,000.00 gross income each year. Yet she’s
deeply in debt and hasn’t any property (assets) to speak of. Based on her those
employment earnings, her employer has adequately withheld taxes, social security
and medicare from her paychecks. Still, she has not filed her income tax returns for
those years so the IRS filed “substitute income tax returns” for her. Those returns
essentially acknowledge the gross value of all the W-2s she received in each year
and they took into account her personal exemption. The IRS determined the tax due
and assessed penalties and interest. In sum, the IRS is now demanding that she pay
$105,000.00.
But after she gathered and reviewed her records she established that she lost
$90,000.00 each year gambling (on the average) and she documented other
deductions. She also realized she lost far more at the casino than she realized and
that she wasn’t able to track all of her losses. Nonetheless, the losses she could
establish would eliminate her perceived IRS tax delinquency.
End Result: Sharon’s returns actually showed she had overpaid her taxes each
of the years.
Investor/Stock Sale: Tim is retired and receives a fixed income of a pension
and social security. When he is 65, he inherits $100,000.00 from his father. He
hires a stock broker to invest the money for him. The broker engages many stock
trades each year from 1999 through 2004. During this time Tim’s mental abilities
start to fail and he suffers from dementia. He does not file his tax returns. The
broker’s investments lose money year after year, but during this time the brokerage
company reports 1099 forms to the IRS that report the gross value of the traded
investments. Assume that in each of the years $50,000.00 of gross trading activity
occurs. When the IRS does not receive tax returns, it issues substitute return
notices that propose to tax Tim on the $50,000.00 of gross trading proceeds for
each year. Of course, this does not take into consideration Tim’s basis (the amount
he paid for the stocks) in the investments.
For instance, in 1999, the broker’s sales resulted in $50,000.00 of gross proceeds
from $60,000.00 that was invested, for a net loss of $10,000.00. However, because
a return was never filed, the IRS does not know Tim’s basis, assumes he made
$50,000.00 in net trading profit, and taxes him on the entire $50,000.00. As a result,
Tim receives a tax bill from the IRS for $195,000.00 for all the years.
End Result: Tim submits confirmation of his stock purchase price (basis) and the
Service adjusts his account to actually credit him for net losses. It determines that he
actually had refunds in the subject years. It issues Tim refund checks for each year
in which he is still eligible to receive a refund.
Note, this problem is common in falling stock markets. It is also common amongst
people who experience very large stock losses, and who are incapable (especially
psychologically) of addressing the losses. They can’t seem to get over “what they
did” to themselves. Commonly people with that history will not file tax returns.
Copyright 2009; Richard Craig Krause.
the whole or any part of this material
without prior written consent is
prohibited. Taxpayer’s Voice is a federal
registered trademark. Copying and/or use
of the mark without prior written consent
is prohibited. Violators will be
prosecuted. "Tax Crisis," IRS "Black
Hole", IRS "Black Magic," "Taxpayer's
Voice Speaks," "Snowballing," "Cycle of
Destruction," the theme music, with and
without our Taxpayer's Voice lyrics, and
the Armored Man are also trademarks of
Richard Craig Krause. Copying and/or
use of same without prior written consent
is prohibited. Violators will be
prosecuted.
the whole or any part of this material
without prior written consent is
prohibited. Taxpayer’s Voice is a federal
registered trademark. Copying and/or use
of the mark without prior written consent
is prohibited. Violators will be
prosecuted. "Tax Crisis," IRS "Black
Hole", IRS "Black Magic," "Taxpayer's
Voice Speaks," "Snowballing," "Cycle of
Destruction," the theme music, with and
without our Taxpayer's Voice lyrics, and
the Armored Man are also trademarks of
Richard Craig Krause. Copying and/or
use of same without prior written consent
is prohibited. Violators will be
prosecuted.
Disclaimer.
Issues of the kind generally identified in
this website require expert legal help
which would be devoted to the specific
facts, circumstances and law that
present. Everyone must accept and in
this website does not apply to any
specific matter or person or legal entity,
present. Everyone must accept and in
with proofs or the administrative or this
website does not apply to any
jurisdictional issue or concern. The
specific matter or person or legal entity,
information provided in this website is
any applicable burden of proof, which
superficial and does not attempt to
address any or all possible factual or
legal issues, and further that it does not
identify all the law, conditions or other
requirements that must be met or may
apply to any matter or challenge, in
whole or in part. We are not responsible
for how you may use the information
reflected in this website.
Issues of the kind generally identified in
this website require expert legal help
which would be devoted to the specific
facts, circumstances and law that
present. Everyone must accept and in
this website does not apply to any
specific matter or person or legal entity,
present. Everyone must accept and in
with proofs or the administrative or this
website does not apply to any
jurisdictional issue or concern. The
specific matter or person or legal entity,
information provided in this website is
any applicable burden of proof, which
superficial and does not attempt to
address any or all possible factual or
legal issues, and further that it does not
identify all the law, conditions or other
requirements that must be met or may
apply to any matter or challenge, in
whole or in part. We are not responsible
for how you may use the information
reflected in this website.
| GAMING 1098s & STOCK INVESTMENTS 1-800-230-4747 |
Richard Craig Krause & Associates, P.C
| The Taxpayer's Voice |
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