JohnAlanCohan@aol.com 310.278.0203 Probate/Conservatorships IRS Audits IRS Collection IRS Appeals U.S. Tax Court IRS Criminal Investigation Tax Litigation Tax Opinion Letters Business Plans Aviation Law Tax Exempt/Nonprofit Organizations All aspects of equine and livestock law, particularly tax matters, syndications, business plans, tax opinion letters, and drafting of business documents.		How to Handle an IRS Audit Excessive business deductions by owners and breeders of horses, livestock or general farmers--or in other businesses activities-- can be a red flag that triggers IRS audits. Read More Activity for Profit Measured by Time Spent An area of concern in IRS audits of farming, livestock and horse activities is the amount of time expended by the taxpayer in the activity. Read More Are More People Being Audited in the Startup Phase? I have been asked to comment on what appears to be an upsurge in audits by the I.R.S. with respect to startup horse and farming activities. During the past few years there has been an unusually high number of taxpayers in the early startup phase of their activity being subjected to audits. Is this a trend? Is there some reason for this? Is it simply a coincidence? Read More The Case of Joe Frazier, Boxing Champion Since 2000, the IRS has nearly tripled the number of audits of tax returns filed by people making $25,000 to $100,000. Kevin Brown, the IRS deputy commissioner, stated that this is an effort to run a "balanced audit program". Last year the number of audits in this category was approximately 436,000, up from about 147,000 returns in 2000. Read More Farmer's Third Tax Case Goes Against Him Some people are unlucky enough to get audited on multiple occasions. Austin Mitchell's family has owned and operated a farm in Salem, Missouri, for over 100 years. Mr. Mitchell is also a lawyer and CPA. He grew up on the farm, and returned to live there in 1991 when his mother took ill. After her death, he inherited the farm and continued living there and managing it. The farm has had prodigious corn harvests, and trees in various stages of maturity that are sold for lumber. Mr. Mitchell also sought to make money with haying. Read More Hobby Loss Rule Applied to Farms Richard Kaehn of Kampton Pennsylvania, worked as a cargo pilot. He and his wife decided to purchase a farm to supplement his income and to provide income after his retirement. He ended up contesting an IRS deficiency in Tax Court, and lost. [Kaehn v. Commissioner, 54 TCM 1293, T.C. Memo. 1987-608.] Read More What is a Tax Opinion Letter? An area of concern for people in the horse, livestock and farming industries--among many other fields--is how to withstand IRS scrutiny in the event of an audit. Read More The Definition of "Profit". Many years ago a federal court defined the word "profit" as "the advantage or gain resulting from the investment of capital, or the acquisition of money beyond the amount expended; a pecuniary gain." The meaning of "profit" is important not only in computing tax liability, but in determining a taxpayer's motive for entering into a transaction, or establishing a livestock or other farming business. Read More