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The IRS was looking to receive $102,000 from a husband and wife regarding their rental property! A husband and wife had a dreadful encounter with the IRS. The auditor looked over their rental properties, denied their losses, and informed them that they would be hit with a $102,000 tax liability. Based on that, The IRS is expecting to receive $102,000 from the clients. The IRS was in agreement that one of the spouses was a real estate professional. However, based on their documentation, the IRS, didn't believe that material participation has been met and disallowed the tax credit. They had several rental properties with zero personal use. The case for the hours we deemed irrelevant based on IRS own regulations.  They had several rental properties with zero personal use. The case for the hours we deemed irrelevant based on IRS own regulations.
As a starting point, we looked at another case, where the taxpayer had to count only the time that front-desk workers spent on their unit this particular court case., not the entire time they spent. Our client passed that test. At this point we have successfully shutdown the IRS claims for disallowance. We went on to disprove the remaining of their claims using our proven strategies. The audit was resolved in favor of the client and they received a no change letter. They won!
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances. AuthorKeana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients. 
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