Our office has successfully advocated for our clients in audits where the result was no change on the tax returns. Additionally, multiple clients came to our firm acknowledging the FTB’s position was proper and sought our assistance in representing them to close the audit and continue with the eventual collections representation. Instead of resigning our client to agree with the FTB, we examined the client’s returns and records and successfully reduced any new potential liability from the audit. Sample cases include: the FTB taxing an out-of-state shareholder taxpayer who did not report on its non-resident California return the proceeds from $40m+ business sale. We reviewed prior tax returns and determined prior business losses from sales of subsidiary businesses were not used. The FTB auditor accepted use of those losses, which reduced any additional FTB tax liability of tens of thousands of dollars. Another case included the taxpayer client reporting a sale of his home, where he reported a high tax cost basis, which reduces taxable income, on the advice of a prior tax professional. The property had gone through multiple sales and 1031 like-kind exchanges prior the client receiving the property as a gift. Instead of accepting the FTB’s reduced tax basis, we determined the property had hundreds of thousands of property improvements that weren’t reported on the return, which if they were, would have increased basis and reduced the taxable income. Additionally, we found the prior tax preparer reported real estate rental income on two separate schedules on the return, thereby reporting the taxable income twice. The FTB auditor again agreed, and that additional income was removed.
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“TAX-DEAL”: 829-3325
“TAX-DEAL”: 829-3325
