Course Information

Small businesses must calculate their yearly income and expenses for their tax returns.  These returns are unique to their filers and can represent businesses ranging from part-time teachers of trumpet lessons to large law offices operating as single member LLCs.  The books and records of these businesses can range from disheveled boxes of receipts, to Excel spreadsheets, to nice sets of financials generated from QuickBooks or similar software.  Certain issues or factors within a tax return are red flags, or triggers, to the Internal Revenue Service (IRS) that may increase the likelihood of an audit. Some of these triggers are newer, due to recent changes in tax law, while others have been around for so long that practitioners have grown bored with them and, perhaps, become a bit careless in confirming that their clients are complying with the requirements of the law.

The IRS has published auditing procedures in their Auditing Techniques Guides (ATGs), which are available on its website.  While these guides were designed for use by IRS examiners, they are also valuable sources of information for small business owners and tax practitioners who can use them when establishing their own procedures to ensure potential audit issues are addressed prior to filing tax returns.  Applying the ATGs benefits clients and also demonstrates practitioners’ due diligence in the preparation of tax returns.

The Department of Labor (DOL) has taken an increasingly larger role in determining how businesses should define their workers and how they should pay their workers.  Many small businesses could run afoul of the DOL rules and regulations with respect to their employee relations, and it is up to practitioners to educate them about these requirements and issues. This course provides the most recent news out of the DOL.

This course takes an in-depth look at audit triggers for cash intensive businesses, the hobby loss rules, the proper classification of independent contractors and employees, and the requirements of the recent Tangible Property Regulations. This course also briefly reminds practitioners of the requirements related to deductions for items such as meals and entertainment, travel, and offices in a home. At the end of each chapter is an Action Plan, which practitioners can use to develop procedures that properly address these potential audit issues.  By following these procedures, practitioners can go a long way toward helping their clients stay out of trouble with the IRS and the DOL.

• Identify taxpayers who are required to file a Schedule C.
• Identify industries for which the IRS has published ATGs.
• Recognize the important reasons for your clients’ careful recordkeeping.
• Recognize the techniques the IRS uses in an audit to identify underreported income.
• Recognize businesses the IRS considers cash intensive, along with businesses that are possible opportunities for underground activities.
• Recognize red flags on an individual tax return which can potentially alert the IRS to a hobby loss issue.
• Recognize how to report hobby income and expenses on an individual income tax return.
• Identify certain activities the IRS views as potential hobbies of taxpayers.
• Identify an IRS-proof profit motive using the nine factors listed in Reg. §183-2(b).
• Recognize when and how to make an IRC 183(e) election.
• Identify the far-reaching consequences for clients who have misclassified workers as independent contractors.
• Distinguish between statutory employees and statutory non-employees.
• Identify whether a worker can qualify for treatment as an independent contractor under Section 530.
• Recognize the common-law factors of behavioral and financial control, as well as factors that determine the relationship between the employer and the worker.
• Recognize which of your clients are candidates for the Voluntary Classification Settlement Program.
• Recognize the de minimis safe harbor to expense asset purchases below the safe harbor amount.
• Identify expenses as materials and supplies, and understand the tax treatment of materials and supplies, as defined by the Tangible Property Regulations.
• Differentiate the building systems that are separate from building structures in identifying units of property.
• Distinguish between improvements (betterments, restorations, and adaptations), repairs and routine maintenance expenses.
• Identify tax savings for your client using the partial disposition election.
• Recognize the importance of the DOL’s overtime rule that was effective beginning 1/1/2020.
• Identify required attributes of an accountable plan.
• Recognize the office in the home deduction requirements.