[Dixielandjazz] 1099's

[Steve barbone]

Larry Walton at larrys.bands at charter.net wrote: (polite snip)

> Every so often the IRS likes to make an example of someone.

Yes, how true. In the 1960s, a friend of my sister's (a tax accountant)
asked me if I knew a trombonist named Al Grey.

To make a long story short, Al was in hot water with the IRS, and being
audited. He had a fair amount of 1099 income, but had not declared it all,
and had precious few receipts and virtually no records to support
deductions. 

He took a fair hit, but not as bad as it could have been.

As Tom Wiggins says, just have the receipts to back up what you deduct and
declare the income. Be aggressive in you deductions, no harm in that. Then
if they audit you, they'll just take a few bucks if they disallow. And like
John McLernan says, DO NOT VOLUNTEER INFORMATION JUST ANSWER QUESTIONS ABOUT
WHAT IS ON YOUR AUDIT NOTICE. Do not bring all records, just those which
they ask for.

I've was audited once, because I took, by mistake, a $10,000 1st year
tractor depreciation deduction giving me a $5000 farm loss for the year. No
sweat, just had to pay the tax on $5000. I had other income that year from
which I used the farm loss against and you can't use 1st year depreciation
if you have a loss in that business. So the farm broke even that year

Auditor was about 22, just out of college. I had a horse farm during those
years, breeding race horses. Made a profit about one year out of every five.
All legal. Deducted losses against other income, all legal. Auditor's remark
to me? "Horse Breeding is a tough business, nobody seems to make any real
money from it." Before retiring, we lived amongst a bunch of horse farms,
race horse breeders, racing stables and bloodstock agents and many were
audited. Not so many being audited now, even though they are highly visible.

Cheers,
Steve