Pre-Audit Analysis assignment

i have a tax project that i need a writer who is familiar and professional to the tax concepts and tax return stuff. The instruction is long i am goining attach the requirement instruction and information. this homework project has 4 due dates begining next week and each week thereafter. The first part that is due next week i need to review form 1040 and each schedule carefully. See if any of the information from one schedule might relate to another schedule-in other words given what you see in one schedule does that information correspond or conflict with information on another schedule. the instruction for all part is below and i need someone to do all parts the entire instruction is attached. 1)Prepare a written Pre-Audit Analysis as follows (due Feb 10 before class) : a.Identify and prepare a list of all the items on the tax return that appear to be strange unusual questionable excessively large or excessively small in relation to other information on the return etc. To do this provide a one or two sentence explanation for each such item. That is tell me why you identified the item & what the item tells you about the taxpayer (meaning about his assets about his income about his standard of living/life style etc.) Also tell me if you are drawing any inferences from the dollar value of the item how it is labeled/described on the tax return how it is being reported or deducted. 2) Prepare an Audit Plan (due Feb 17 before class)a. Prepare a list of twelve (12) deductions shown on the return that you want to audit. For each of these deductions that you list provide a one or two sentences for each explaining why you have identified the deduction. In other words explain why you feel there is a possibility the deduction may be improper/non-deductible excessive/not reasonable etc. b.Prepare a list of five (5) income items shown on the return that you plan ask about during your interview of the taxpayer or his representative.For each item explain in one or two sentences why you selected these items and what inferences you are drawing from the amount of income from the manner in which it is reported from the label that is placed on it from the category of income it falls under etc. 3) Document Request and Background Research (due Feb 24 before class)c.For each of the 12 deduction items and 5 income items that you have selected for audit list in a few sentences list:i.What documents you are requesting that the taxpayer provide to you during the audit appointment(s) for each of the items you identified that you are examining/auditing.ii.What public records you will review before your interview to be armed with information so that you know whether the taxpayer or his representative is being truthful.iii.What internal IRS reports/transcripts can you review in to determine if the taxpayer reported all of his income and to determine the source of his income in case the source is not clear on the return.iv.With respect to the 12 deductions make one or two assumptions of what the taxpayer might tell you or the documents he might provide that would make the deduction entirely non-deductible (other than lack of proof of payment) or partially non-deductible. Tell me what your assumption(s) is/are and how that would influence the outcome of whether that particular expense is deductible.v.With respect to the 5 income items make one or two assumptions about what the taxpayer might tell you about the source or nature of the income. In other words give me one or two examples of what the taxpayer might say that may lead you to believe that: 1.there may be other unreported income2.there may be related persons or entities whose information may shed more light on this taxpayer and/or his income from other sources. If soa.what information or documents will you ask for relating to such related persons or entities. b.are there any related party documents you wish to review if so please explain in one or two sentences what these documents might be and what they might reflect about the taxpayer his business dealings etc. 4) The Pre-Audit Phone Call (due March 3 before class)Assume that you will be using a classic investigative technique – the Surprise Phone Call. You call the taxpayer at his home or his work. You identify yourself gently state that his 2014 return has been selected for review and that you are calling to set up an appointment in the next few weeks to meet with him at his residence for a few hours. After he recovers from the initial shock of the news you ask him if he has few minutes to go over some preliminary matters before you come out so as to help narrow your audit to no more than what is absolutely necessary. Assume he agrees to answer your questions. List fifteen (15) questions you would like to ask in of importance to pin the facts down before the taxpayer gets a chance to speak to a representative. Remember once he hires a representative your questions will primarily be answered by the representative.Good luck and keep in mind the following general directives of the IRS: The mission of the IRS is to “Provide Americas taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.” This mission statement describes the IRS’ role and the public’s expectation about how the IRS should perform that role.In the United States the Congress passes tax laws and requires taxpayers to comply.The taxpayer’s role is to understand and meet his or her tax obligations.The IRS’ role is to help the large majority of compliant taxpayers with the tax law while ensuring that the minority who are unwilling to comply pay their fair share.How this plays out in the tax audit world is as follows:1. It is the Revenue Agent’s duty to help achieve the taxpayer’s compliance with the tax laws.

2. The Revenue Agent must be courteous but firm with taxpayers

3. When a tax issue can go either way the Revenue Agent must protect the interests of the government.

4. Unless otherwise told to do so a Revenue Agent must not spend too much time on matters that will not yield tax dollars for the government.

5. The Revenue Agent must try to close the case in 6 months or less when possible and if that is not possible he/she must articulate to management why additional time is needed. And these more specific guidelines from the Internal Revenue Manual [next page]Section 4.10.2.3 (08-01-2007) — In-depth Pre-contact Analysis

1.The examiner is responsible for determining the scope of the audit beginning with the issues identified by the classifier on the classification check sheet. The examiner must perform a pre-contact analysis including a thorough review of the case file to identify large unusual or questionable items (LUQs) beyond those selected on the classification check sheet. The examiner should take the following actions:

A.Review the complete tax return including line items credits the balance sheet elections and schedules and any other items attached to the return.

B.[omitted]

C.Review internal and external data from the following sources:IRP TranscriptsAsset locator / people locator andInternet Research.

D. [omitted] —————————————

Section 4.10.2.3.1 (08-01-2007) – Large Unusual Questionable Items (LUQs) Defined 1.The definition of a large unusual or questionable item will depend on the examiner’s perception of the return as a whole and the separate items that comprise the return. Some factors to be considered when identifying LUQs are: A.Comparative size of the item — an expense item of $6000.00 with total expenses of $30000.00 would be a large item; however if total expenses are $300000.00 the item would not be generally considered a large item. B.Absolute size of the item — despite the comparability factor size by itself may be significant. For example a $50000 item may be significant even though it represents a small percentage of taxable income. C.Inherent character of the item — although the amount of an item may be insignificant the nature of the item may be significant; e.g. airplane expenses claimed on a plumber’s Schedule C. D.Evidence of intent to mislead — this may include missing schedules incomplete schedules mis-classified entries or obviously incorrect items on the return. E.Beneficial effect of the manner in which an item is reported — expenses claimed on a business schedule rather than claimed as an itemized deduction. F.Relationship to other items — incomplete transactions identified on the tax return. For example the taxpayer reported sales of stock but no dividend income.

G.Whipsaw issues — occur when there is a transaction between two parties and characteristics of the transaction will benefit one party and harm the other. Examples include alimony vs. child support sale vs. rental/royalty employee vs. independent contractor gift vs. income. H.[omitted]I.

Missing items — consideration should be given to items which are not shown on the return but would normally appear on the returns of similar taxpayers. This applies not only to the examination of income but also to expenses deductions etc. that would result in tax changes favorable to the taxpayer