I know of a man and this is a true story who took the advice of his CPA that he knew for years. Now there is nothing unusual about that. I personally have been using the same source for over 25 years and I am very pleased at her expertise. However this other fellow trusted his source who told him about a way to shelter Real Estate monies that was perfectly legal
TAX PLAN ACTIVATED
The idea was well thought out, was at work already with many others and then implemented by this "man" in my story. Year after year, they used this ingenious plan and managed to offset paying taxes, deferring gains and as a result this "man" put away close to $350,000 for his retire after many years..
WE NEED TO TALK...says IRS
Well one day he gets an AUDIT letter and a quick follow up after that demanding to meet and discuss with an IRS agent right away these goings on. What had happened was that they investigated this earlier and found the idea, this tax scheme to be without merit when they came across it in a routine audit on someone else.
AN AUDIT TRAIL
From there, they pulled the CPA records of all the taxes prepared by this CPA firm over the years and after determining that the CPA used the same scheme, they went about going after their long over due money from everyone...with a vengeance I might add.
THE POWER
You know a IRS agent can be a mouse, can be ugly, can stutter or perhaps just plain be not likable but that doesn't interfere with the power that these agents wield. It is formidable and they have a standard warning they issue you at the beginning of the audit.
DON'T LIE TO ME
Answer my questions truthfully and it will go better for you. They say it and it is on the record. Now the person who is being audited has to make a decision. Can he hide something from them? Should He? Will they ever know? Whats the harm? If I get caught, I will confess etc etc.
WHOOPS...
Well the "man" had to pay back over $325,000 dollars in retirement money. During the course of the audit, he was asked questions...many many questions. It turns out that this "man" decided to answer truthfully and went about it that way. Here is the result
CANT BEAT THE IRS
They found much more damage than $325,000. The agent said this to the man: Because you didn't hide anything, you didn't fudge or double talk, you answered all my questions truthfully and to the best of your ability...because of all that, I am not proceeding further nor will I go all the way. The agent then said, you have no idea how many people think they can beat us and find out the hard way (and expensive way) how wrong they were.
EPILOGUE
The man in the story had no resource against his CPA who ended up leaving the country to escape the collapse of his empire and the wrath of his creative bookkeeping. This CPA was not a fraud in his mind. He thought he came up with a way to save people money. Instead of proving it out, he left it to chance and advised others irresponsibly....As to the "man" in this story, he started over again and is doing fine
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