Case Study 46: Calculation of Offer in Compromise
Index - https://steemit.com/tax/@alhofmeister/rqgmk-tax-blog-index
Introduction
After concluding my last series on back taxes, I felt unsatisfied with the projected tax savings. As a result, I've decided to do a second series on back taxes with a more extreme example. After filing the missing tax returns & calculating the necessary penalties and interest, an offer in compromise is drafted to settle the liability. This article will cover the offer in compromise.
Problem
Taxpayer A did not file their tax returns for 2013, 2014, 2015, or 2016. In 2018, Taxpayer A decided to settle with the IRS before they received a notice. Note that these calculations assume that the taxpayer files on February 28, 2018. The following fact pattern describes Taxpayer A's financial situation:
- $1,000 cash in the bank;
- A car worth $12,000 with an outstanding loan of $15,000 and monthly payments of $400;
- Car insurance of $150 a month with gas expenses of $40 and repair expenses averaging $10 a month;
- Miscellaneous personal items (furniture, etc.) worth $1,000;
- A monthly salary of $2,500;
- Rent of $800 per month with $200 of utilities;
- Food, clothing, misc expenses of $400 a month;
- Daycare costs of $400 a month; and
- Average monthly state taxes (sales, income, etc.) of $40.
Calculations
References
https://steemit.com/tax/@alhofmeister/case-study-44-calculation-of-penalties-and-interest
https://steemit.com/tax/@alhofmeister/case-study-36-failure-to-file-2009
https://steemit.com/tax/@alhofmeister/case-study-37-failure-to-file-2010
https://steemit.com/tax/@alhofmeister/case-study-38-failure-to-file-2011
https://steemit.com/tax/@alhofmeister/case-study-39-failure-to-file-2012
https://steemit.com/tax/@alhofmeister/case-study-40-failure-to-file-2013
https://steemit.com/tax/@alhofmeister/case-study-41-failure-to-file-2014
https://steemit.com/tax/@alhofmeister/case-study-42-failure-to-file-2015
https://steemit.com/tax/@alhofmeister/case-study-43-failure-to-file-2016
Disclaimer
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.
very good
Much appreciated.
Very nice work,as always
Thanks!
@OriginalWorks