30655 Audit Reconsideration Memorandum Baker SCRIBD

7/31/2019 30655 Audit Reconsideration Memorandum Baker SCRIBD

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REQUEST FOR AUDIT RECONSIDERATION

JOE BAKER

SS#: 123-45-6789

Tax Year: 2005

Submitted by:30655Name

Address1Address2

Ph. - (000) 000-0000Fax (000) 000-0000e-mail: [email protected]


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TABLE OF CONTENTS

REQUEST FOR AUDIT RECONSIDERATION..............................................................................................3

RELIEF REQUESTED...................................................................................................................................3

PROCEDURAL BACKGROUND OF TAX ISSUE...........................................................................................3

STATEMENT OF FACTS...............................................................................................................................3

APPLICATION OF THE LAW TO THE FACTS..............................................................................................6

CONCLUSION...............................................................................................................................................7

Exhibits

A. Income Tax Examination Changes for 2005 and Related CorrespondenceB. Power of Attorney IRS Form 2848C. Affidavit of Jane BakerD. School Admission History Records for Sandy BakerE. Account Transcript

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REQUEST FOR AUDIT RECONSIDERATION

RELIEF REQUESTED

Joe Baker (Taxpayer) respectfully requests the Internal Revenue Service toreconsider its denial of his Head of Household filing status under I.R.C. 2, dependencyexemption under I.R.C. 151, and Child Tax Credit under I.R.C 24 for tax year 2005,and eliminate the deficiency and related interest and penalties for that year. Taxpayerwas entitled filing Head of Household, the dependency exemption, and the Child TaxCredit because he met the requirements.

PROCEDURAL BACKGROUND OF TAX ISSUE

In a Notice of Income Tax Examination Changes for tax year 2005 datedSeptember 17, 2007, the Internal Revenue Service (IRS) notified Taxpayer of denial ofhis filing status as Head of Household, dependency exemption, and Child Tax Credit.See Exhibit A, Income Tax Examination Changes for 2005 and Related Correspondence.Taxpayer did not submit timely documentation proving he was entitled to the filing statusas Head of Household, dependency exemption, and Child Tax Credit, because of aserious medical condition. Taxpayer suffered a stroke and was unable for a significantperiod of time to work or manage his financial affairs. Taxpayer did attempt to correspondwith the IRS, but was notified via letter from the tax examiner, dated March 21, 2008, thatthe information Taxpayer submitted to IRS, which was dated February 17, 2008 accordingto the letter, was insufficient to support changing the IRS examination adjustments toTaxpayers 2005 income tax return.

Taxpayer took no further steps to address the 2005 tax return and IRS-imposedadjustments, and the IRS credited the Taxpayers refunds for tax years 2007 and 2009toward payment on the 2005 tax liability. See Schedule E, Account Transcript.

STATEMENT OF FACTS

Taxpayers 2005 tax return indicates that he had adjusted gross income for 2005 of$42,540. See Exhibit A. Taxpayer filed Head of Household status, elected the standarddeduction, and took two exemptions one personal exemption for himself, and the other

for his daughter. Id. During the tax year in question, Taxpayers daughter, who is alsohis dependent, resided with him from January through September of 2005. See ExhibitC, Affidavit of Jane Baker; see also Exhibit D, School Admission History Records forSandy Baker. Taxpayers daughter was in the fourth grade during 2005 and attendedAdams Elementary School from August 27, 2001 through September 6, 2005. See ExhibitD. Taxpayers address, which is the same as the address he provided on his 2005income tax return, is the address listed for his daughter. Id. Taxpayer is the only personlisted as his daughters parent / guardian. Id. Taxpayers daughter was born on October

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Dependent Exemption:

I.R.C. 151 of the Internal Revenue Code provides that exemptions are allowedas deductions in computing taxable income. A taxpayer filing a separate return is entitledto an exemption of the exemption amount for himself. The taxpayer is also entitled to anexemption of the exemption amount for each individual who is a dependent of the

taxpayer for the taxable year.

Pursuant to I.R.C 152, a dependent is a qualifying child of the taxpayer. Thefollowing requirements must be met for a qualifying child:

[1] The child is a child of the taxpayer or a descendant of such child, or a brother, sister,stepbrother, or stepsister of the taxpayer or a descendant of any such relative.

[2] The child has the same principal place of abode as the taxpayer for more than one-half of the taxable year.

[3] The child is younger than the taxpayer claiming the child, and (a) the child has not

reached the age of 19 at the beginning of the taxable year, or (b) the child is a studentand has not reached the age of 24 at the beginning of the taxable year.

[4] The child has not provided over one-half of his or her support for the taxable year.

[5] The child has not filed a joint return (other than a claim of refund) with his or herspouse.

Child Tax Credit:

I.R.C. 24 of the Internal Revenue Code provides that a taxpayer is entitled to acredit of $1,000 against the tax imposed for the taxable year with respect to eachqualifying child of the taxpayer for whom the taxpayer is allowed a deduction under I.R.C. 151. Additionally:

[1] The tax credit is reduced by $50 for each $1,000 of adjusted gross income exceedingthe threshold amount.

[2] The threshold amount for an individual who is not married is $75,000, and thethreshold for a married individual filing separately is $55,000.

[3] The child must be a qualifying child of the taxpayer and the child must not havereached the age of 17.

[4] The taxpayer must include the name and taxpayer identification number of thequalifying child on the tax return.

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APPLICATION OF THE LAW TO THE FACTS

Taxpayer is entitled to file Head of Household. He was separated from his wife atthe close of the 2005 tax year, and he maintained a household that was the principalplace of residence for his daughter, Taxpayers dependent. See Exhibit C, Affidavit of

Jane Baker attesting that Taxpayers daughter resided with him at this residence for eightor more months of the 2005 tax year; See also Exhibit D, School Admission HistoryRecords for Taxpayers daughter, Sandy Baker, which lists Taxpayer as his daughterssole parent / guardian and that his daughter resided at the same address as Taxpayerduring the 2005 tax year. Further, Taxpayer had earned income and furnished more thanhalf of the cost of maintaining the household during the 2005 taxable year. See Exhibit C,Affidavit of Jane Baker attesting that Taxpayers daughter resided with him at thisresidence for eight or more months of the 2005 tax year; see also Exhibit D, SchoolAdmission History Records for Taxpayers daughter, Sandy Baker, which lists Taxpayeras his daughters sole parent / guardian and that his daughter resided at the sameaddress as Taxpayer during the 2005 tax year; see also Exhibit A, Income Tax

Examination Changes for 2005 and Related Correspondence, showing Taxpayer hadadjusted gross income for tax year 2005 of $42,540.

Taxpayer is entitled to claim an exemption for his dependent daughter who is aqualifying child. The child claimed on Taxpayers tax return for 2005 is his daughter,Taxpayer is the childs parent / guardian, and the child resides with Taxpayer atTaxpayers address. See Exhibit C, Affidavit of Jane Baker attesting that Taxpayersdaughter resided with him at this residence for eight or more months of the 2005 tax year;See also Exhibit D, School Admission History Records for Taxpayers daughter, SandyBaker, which lists Taxpayer as his daughters sole parent / guardian and that his daughterresided at the same address as Taxpayer during the 2005 tax year. Taxpayers daughteris younger than Taxpayer; she was born on October 10, 1995, and turned ten during taxyear 2005. See Exhibit D, School Admission History Records for Taxpayers daughter,Sandy Baker, which lists Taxpayer as his daughters sole parent / guardian, that hisdaughter resided at the same address as Taxpayer during the 2005 tax year, and thatTaxpayers daughters date of birth is October 10, 1995. Given Taxpayers daughtersage, it is impossible for her to have been married and to have filed a joint return duringthe 2005 tax year. Further, Taxpayers daughter did not provide any of her own supportduring the 2005 tax year, given her age, status as a full-time student, and lack of income.

Taxpayer is entitled to the Child Tax Credit of $1,000 against the tax imposed forthe 2005 taxable year. Taxpayer is entitled to the Child Tax Credit because Taxpayerschild is a qualifying child for whom Taxpayer is allowed a deduction for the 2005 taxable

year. Please see preceding two paragraphs detailing Taxpayers right to claim Head ofHousehold and claim an exemption for his dependent daughter who is Taxpayersqualifying child. Taxpayers daughters date of birth is October 10, 1995, and she wasunder the age of 17 during the 2005 taxable year. See Exhibit D, School AdmissionHistory Records for Taxpayers daughter, Sandy Baker. The Child Tax Credit for the2005 taxable year should not be reduced, because the Taxpayers adjusted gross incomefor tax year 2005 of $42,540 does not exceed the threshold at which the credit would be

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reduced. See Exhibit A, Income Tax Examination Changes for 2005 and RelatedCorrespondence, showing Taxpayer had adjusted gross income for tax year 2005 of$42,540. Finally, Taxpayer included his daughters name and social security number onthe 2005 tax return Taxpayer timely filed with the Internal Revenue Service.

CONCLUSION

Internal Revenue Service examination changes to Taxpayers 2005 income taxreturn are not justified.

Based on the evidence provided it is the Firms position with respect to the tax year2005, that Taxpayer is entitled to:

[1] File as Head of Household;[2] Claim an exemption for his dependent daughter; and[3] Claim the full amount for the Child Tax Credit.

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Documents

30655 Audit Reconsideration Memorandum Baker SCRIBD