2106 request for proof of expenses?

[ILLMAS]

Today I was speaking to with my former employer during lunch, and she has a TP who is a portfolio manager for a top stock broker and his salary is something I will never earn in my whole life time, even if I lived a couple of times :-). He has about 15K in unreimbursed employer expenses and only takes advantage of about $2,500, well apparently he recieved a letter from the IRS requesting proof of his expenses. He pays over 1.3 million in federal taxes and the IRS wants to see proof of his expesnes, you got be kidding me. Has anyone ever seen this nonsense before?

[jainen]

>>Has anyone ever seen this nonsense before? <<

You mean the nonsense of a professional casually discussing an easily-identified client's audit with an outsider?

Well, I don't see why the IRS shouldn't audit a high income taxpayer. Probably a small 2106 deduction is unusual at that wage level, and they may wonder what it means. Apparently the taxpayer himself has some issue with the deductibility of unreimbursed expenses, the tax preparer thinks it's a matter of special note, and even you find the setup surprising. Did your confidential source say how they would respond?

[ILLMAS]

>>Has anyone ever seen this nonsense before? <<

You mean the nonsense of a professional casually discussing an easily-identified client's audit with an outsider?

You mean the nonsense of a professional casually discussing an easily-identified client's audit with an outsider?

You mean the nonsense of a professional casually discussing an easily-identified client's audit with an outsider?

Ouch, you are right, my bad. Good point

Well, I don't see why the IRS shouldn't audit a high income taxpayer. Probably a small 2106 deduction is unusual at that wage level, and they may wonder what it means. Apparently the taxpayer himself has some issue with the deductibility of unreimbursed expenses, the tax preparer thinks it's a matter of special note, and even you find the setup surprising. Did your confidential source say how they would respond?

I believe they are going to comply with the request.

[jainen]

>>they are going to comply with the request<<

Is that because it's such a small amount anyway, or do they know what this is really about? You see, it could be just a routine computer-generated letter when some numbers (generally more than one) are outside statistical norms. But it could also be an outrider to some other investigation. Let's have some speculatory fun!

Maybe the IRS is interested in a partnership our friend has invested in, and needs a cover story to initiate contact. Or maybe the true target is somebody else, and they are looking for the restaurant tab that proves a connection. Maybe they want to learn some things about the employer's expense accounts. Paying the tax without further documentation might be the best plan for any of these scenarios.