http://www.nydailynews.com/ny_local...ader_nailed_with_172m_bill.html#ixzz0xcaSNfyW ET alias is ... ?
The feds tracked his every trade. But because Esparza Bofill never accounted for his losses or expenses in tax filings, the IRS presumed he made a pure profit - a staggering $500 million in income. _________________________________________________________ Humm, lets see. If they tracked him. I'm sure they have watched all of us at one time or another. Of course, most smart traders file per quarter. I wonder, when the GOV will come after Traders...beyond the NYSE tax they are talking about. The writting is on the wall. Tax Everyone and dig for reasons to Audit Hence the "IRS" hiring spree. Make sure you papers are in order ......my only advice. Oh yea, file even if you made NOTHING!
This is nothing new, The IRS always gets your 1099-B Gross proceeds regardless if you file a schedule D or not.
If he hasn't filed yet, he can still file. I'm sure the fine for being late will be a lot less than $172 MILLION.
this is a perfect example of how US tax system really works.... who in his right mind would make this kind of assumption? bought stock at no cost?
Only a retarded tax system does shit like this. Sadly, it only serves to drive those who actually owe/pay, opt out of the system completely.
I have had to deal with this to some extent, especially after Katrina which caused my 2006 and 2007 returns to be very late. I have found that the most important thing is to make sure you don't owe the IRS anything even if you haven't timely filed. You may have to pay a small fixed penalty for filing late, but that's it as long as you don't owe anything. In the meantime the IRS will assume that any proceeds from your trading activities are 100% pure profit and send you outrageous bills. You have 3 years from the time your return was originally due, including any extensions granted, to file. If you don't file within that period you will lose any refund due to you, but as long as you don't owe anything you'll be OK. But you will have to convince the IRS you don't owe them money to stay out of trouble. They have lots of little things they can do, at their discretion to punish and annoy you if you don't timely file, even when you don't owe them money. So it is best to timely file! I have only had to file in tax court once, and three days before the court date the IRS attorney called me and we settled the issue over the phone in my favor, but I still had to pay the filing fee. In another episode from many years ago, the IRS first said my refund had been disallowed because I had filed late. I then wrote citing the applicable code. They wrote back to say that my refund had been allowed. When the check did not arrive, I called them. The agent I talked to parroted back what was said in the first letter. I pointed out that I had a second letter saying that my refund had been allowed. The agent then told me that they had changed their mind. I said I hadn't received any correspondence to that effect. They then said, and I am paraphrasing because I can't remember the exact words, I only remember it was ridiculous: "Well sometimes we make decisions without sending a letter." At that point I knew the person I was dealing with hadn't a clue. I thanked them and hung up. After still another letter to a higher station, I eventually got the refund I was owed. I have always tried to follow both the letter and spirit of the IRS code to the very best of my ability and have never cheated on my taxes, always paying every cent that I owe. The IRS makes a lot of mistakes because the tax code is so complex (my returns are a nightmare of complexity between 50 and 100 pages long.). There are relatively few IRS employees at the lower levels who have anything other than a superficial understanding of the tax code. My advice to anyone who believes they are right and the IRS is wrong is to check the applicable code and make sure you are correct, then write citing the specific code that is applicable. Be persistent, and don't take "no" for an answer. You will win out in the end, as long as you have the code on your side. For most people with a single source of income reported on a W-2 the US tax code is not that complicated, however for anyone with multiple sources of income, including foreign, depreciable properties, multiple real estate transactions, investment and trading income, etc., filing a return can become a nightmare of record keeping, and rules and exceptions to rules. Why oh why do we have to have such a god awful complicated tax code?
It is a very ridiculous policy to only report sales to IRS, when they often have all the information available to send net gains. How much easier would it be for them to simply calculate FIFO, sale_price*(nshares_sold) -purchase_price*(nshares_purchased), along with any of the peripheral calcs (wash sale, short/long,etc). Anyone who's reconciled trades knows what a nightmare it is in current form-- year after year. Several IRS reps have told me that the basis and sales will be required from brokers around 2012 if I recall correctly (6045). It's about time.