Use IRAC (Issue, Rule, Application, and Conclusion) to answer the following)
1. Taxpayer has a margin account with Investment Co. The stocks and bonds in the account earned dividends and interest of $10,000 in 2014. The $10,000 was paid directly to the margin account and used for reinvestment purposes only. Taxpayer received a substitute form 1099-DIV which indicated the composition of the $10,000. However, taxpayer did not report the $100,000 as income in 2014 but rather in 2015 when taxpayer closed the account. The IRS has indicated that Taxpayer must include the $10,000 in 2014 and in additional to taxes assessed interest and penalties. Taxpayer seeks your advice.
2. Taxpayer is a growing contractor business and seeks to add additional staff. Taxpayer has heard that there can be major ramification on if she hires employee’s vs independent contractors. Explain to Taxpayer the difference between them and how to structure her contracts to achieve one designation versus another.
3. Jane was notified by the IRS that she should appear at the local IRS district office with records supporting travel expense deductions taken on her 2012 tax return. Because she had to meet with some clients, she did not appear at the IRS office, nor did she bother to make an appointment for an alternative time. To what penalty or penalties could Jane be subject?