Question

Clients are always looking for ways to save money on their taxes. What obligation do we have to find and implement tax deductions for our clients, even if we consider them to be questionable? Is there any harm in trying to take a deduction knowing that the IRS may disallow it?

Answer 1

We have taken the complete details Generally, you are in a

passive activity if you have a trade or business

activity in which you do not materially partici-

pate, or a rental activity. In general, deductions

for losses from passive activities only offset in-

come from passive activities. You cannot use

any excess deductions to offset other income.

In addition, passive activity credits can only off-

set the tax on net passive income. Any excess

loss or credits are carried over to later years.

Suspended passive losses are fully deductible

in the year you completely dispose of the activ-

ity.

The Right To Challenge the IRS’s Posi-

tion and Be Heard. Taxpayers have the

right to raise objections and provide addi-

tional documentation in response to formal

IRS actions or proposed actions, to expect

that the IRS will consider their timely ob-

jections and documentation promptly and

fairly, and to receive a response if the IRS

does not agree with their position.