Recommendation for tax lawyer?

[Stealth Trader]

Can anyone here recommend a tax lawyer in the Atlanta area that is well versed in intraday trading accounting procedures and IRS litigation? I have an IRS agent who is refusing to accept an accounting of the year using all buy and sell transactions and is insisting that the 1099 from the broker is the correct accounting even though the 1099 doesn't include the cost basis. In other words, the agent is using the sales only as income without taking into account the acquisition price.

I've spoken with a few lawyers from the phone book, and even though they 'claim' they can resolve the dispute, I would prefer using an attorney that is either a CPA and/or has experience in both IRS procedures and stock/futures accounting.

Any references would be much appreciated.

st

 

[traderstatus]

Quote from Stealth Trader:I have an IRS agent who is refusing to accept an accounting of the year using all buy and sell transactions and is insisting that the 1099 from the broker is the correct accounting even though the 1099 doesn't include the cost basis. In other words, the agent is using the sales only as income without taking into account the acquisition price.

st, Virtually ANY tax practice professional can handle this easy situation. To get to the point you mention above it usually is the case that the taxpayer has ignored or not fully cooperated with the IRS. If by chance you were sent a "90 day latter" and ignored that too then you are probably correct that a good tax lawyer is needed to dig you out of the hole.

On the other hand if this is simply correspondence received from the IRS with a followup telephone conversation, before any certified mailings have been sent - then a less expensive EA or CPA can handle it. No special "trader status" expertise is needed from your description above. This sounds like a common correspondence inquiry resulting from not properly filing a matched trade report.

Of course you as the taxpayer must now provide the proper "schedule D" formatted list of matched trades, with supporting documentation such as the monthly brokerage reports.

If you really feel the need for more guidance, feel free to contact me privately.

 

[Stealth Trader]

Quote from traderstatus:

st, Virtually ANY tax practice professional can handle this easy situation. To get to the point you mention above it usually is the case that the taxpayer has ignored or not fully cooperated with the IRS. If by chance you were sent a "90 day latter" and ignored that too then you are probably correct that a good tax lawyer is needed to dig you out of the hole.

On the other hand if this is simply correspondence received from the IRS with a followup telephone conversation, before any certified mailings have been sent - then a less expensive EA or CPA can handle it. No special "trader status" expertise is needed from your description above. This sounds like a common correspondence inquiry resulting from not properly filing a matched trade report.

Of course you as the taxpayer must now provide the proper "schedule D" formatted list of matched trades, with supporting documentation such as the monthly brokerage reports.

If you really feel the need for more guidance, feel free to contact me privately.

Thanks for the reply. To date, all I have received was a '30 day' letter stating that they were adjusting my tax return to include the difference between what I reported on the 1040 and what was reported on the 1099 they received from the broker. I promptly replied and forwarded them a complete accounting of all transactions with a detailed explanation that the brokers 1099 didn't include the cost basis thinking this would take care of the matter. About a month later I then received another letter stating that they were unable to match my cost basis with the 1099 and included a form they want me to sign agreeing to the tax increase. I then called the agent whose name was on the letter directly, and it became quite clear to me that he wasn't going to accept the summary of trades I provided "because it does not match the 1099." When I explained that the sales did match the 1099 and that I was merely giving him the cost basis to offset the sales, it became obvious to me he didn't understand. I then thanked him for his time and explained I would be getting back to him in a few days. I have since decided to retain competent counsel to address this simple issue as to prevent it to escalate any further. For me, the cost of doing so is insignificant compared to the ineptness of the government and power they yield.

Regards,

st

 

[shfly]

Stealth Trader,

though I have no tax lawyer to recommend, thought you might learn something from Active Trader mag for April-06, as they have an interesting article penned by Robert A. Green.

This article deals with an IRS change from summarizing capital gains and losses, to line-by-line reporting.

I had a run-in with the IRS a couple of years ago. They wanted taxes for a short-sale in Dec-03, as the brokerage statement showed a "sale"...I covered in Jan-04. The IRS wanted 8K+ late fees, total over 10K. My accountant just shrugged it off, saying something to the fact that "it happens all the time".

Less 8 months later, I got back $7.42...(yes, seven bucks...)



Good luck.

 

[fhl]

Quote from Stealth Trader:

Thanks for the reply. To date, all I have received was a '30 day' letter stating that they were adjusting my tax return to include the difference between what I reported on the 1040 and what was reported on the 1099 they received from the broker. I promptly replied and forwarded them a complete accounting of all transactions with a detailed explanation that the brokers 1099 didn't include the cost basis thinking this would take care of the matter. About a month later I then received another letter stating that they were unable to match my cost basis with the 1099 and included a form they want me to sign agreeing to the tax increase. I then called the agent whose name was on the letter directly, and it became quite clear to me that he wasn't going to accept the summary of trades I provided "because it does not match the 1099." When I explained that the sales did match the 1099 and that I was merely giving him the cost basis to offset the sales, it became obvious to me he didn't understand. I then thanked him for his time and explained I would be getting back to him in a few days. I have since decided to retain competent counsel to address this simple issue as to prevent it to escalate any further. For me, the cost of doing so is insignificant compared to the ineptness of the government and power they yield.

Regards,

st

Did you match up the cost(purchases) with the sales which were on the 1099? If you just sent them the cost basis and expected them to match them up, I can see why he did what he did. If you matched them up, and put them in sch d format, I don't understand why he will not accept the net income rather than the gross.

 

[fhl]

traderstatus said:
"Of course you as the taxpayer must now provide the proper "schedule D" formatted list of matched trades, with supporting documentation such as the monthly brokerage reports."


Why do monthly brokerage reports have to be included? This would seem to be something "extra". Because there is a dispute?

 

[traderstatus]

Quote from Stealth Trader:I forwarded them a complete accounting of all transactions

I then received another letter stating that they were unable to match my cost basis with the 1099

he wasn't going to accept the summary of trades I provided "because it does not match the 1099."

st, reading between the lines here, perhaps you did not yet prepare a Sch D format trade matching report that has total sales that equal or exceed the 1099-B sales. If you did not yet do this, it simply will not go away until you comply with the law and get it done.

If I am correct so far, then you have two general choices: (1) hire a tax lawyer, pay them $3,000 to $7,500 and then provide the lawyer with the Sch D formated trade matched report. or (2) Do the Sch D formated trade matched report now to be submitted to the IRS (with supporting monthly brokerage stmts now that it has gotten this far) and either handle it on you own if you feel comfortable doing so, or retain an EA to represent you for for maybe $500 to $1,200ish or a CPA for maybe $750 to $2,000ish.

 

[traderstatus]

Quote from fhl:traderstatus said:
"Of course you as the taxpayer must now provide the proper "schedule D" formatted list of matched trades, with supporting documentation such as the monthly brokerage reports."

Why do monthly brokerage reports have to be included? This would seem to be something "extra". Because there is a dispute?

Exactly. The monthly brokerage report MIGHT be requested so have them ready!

Since this is now in the hands of an agent with a taxpayer (no disrespect meant here) who perhaps either is not fully cooperating or does not understand fully what is expected, the IRS often will do a mini-audit of sorts to assure themselves that the taxpayer indeed now is fully complying with the law.

 

[Ebo]

I had this exact same request from The IRS in 2002. I just resubmitted an Excel spreadsheet in Schedule D formatted columns and the problem went away like magic.

I also get the impression the OP is not submitting an IRS compliant Schedule D.

It's not rocket science. This is fairly Black and White information the IRS is asking for. The brokerage firm's 1099 merely lists your trades, not creates them! Why do you need a lawyer or CPA to create a document that lists every transaction from the 1099 and a corresponding Buy transaction?

Good Luck.

 

[Stealth Trader]

Quote from fhl:

Did you match up the cost(purchases) with the sales which were on the 1099? If you just sent them the cost basis and expected them to match them up, I can see why he did what he did. If you matched them up, and put them in sch d format, I don't understand why he will not accept the net income rather than the gross.

I used GainsKeeper to format the trades in Schedule D and also included the yearly summary reports from the broker. I even highlighted the numbers that matched the 1099. I don't speak 'accounting,' and he wasn't questioning the format as presented, but the impression I got was that the agent simply didn't have a clue. That said, I fully understand that perception could be a result of my own ignorance, thus, the reason I shut up, thanked him for his time, and decided to get professional help. (not the mental kind just yet!)

In the past, I've always put the net proceeds on my Schedule D with the knowledge that if I was ever questioned I would then provide the accounting of each trade for the calendar year. I am certain that once we all get on the same page, I will be cleared and the 'proposed tax increase' will be dismissed, as I haven't hidden anything or avoided contacting them when directed to do so. I believe this is nothing more than an agent not well versed in his job description and too egotistical to seek advice on how to proceed. I'm thinking a simple letter from a lawyer will get it to legal, and at that point it most likely will be squashed. Then again, I am clueless to the inner workings of the IRS and am making my 'assumptions' based on common sense. I'm not losing sleep over this, but know I need to address it effectively, thus my inquiry for a lawyer acquainted with IRS/trader issues.

Thanks to all for the input. It's much appreciated.

st