National Association of SeniorMove Managers (NASMM)

Avoiding the IRSAudit Avalanche

Guest Speaker:Joe Liss

Certified Public AccountantBennett and Liss, CPAs

Tax StrategistProfessional Speaker

Saving YouMoney, Hassle and Time504-455-6100 x202504-455-6127 fax

joe@bennettandliss.com

8829 Expenses for Business Use of Your Home OMS No. 1545-0074

Fonn ~ File only with Schedule C (Form 1040). Use a separate Form 8829 for each ~@O8Departmant or the Treasury

home you used for business during the year.Attachment

Internal Revenue Servfce (99) ~ See separate Instructions. Seouence No, 66Name(s) of proprlelor(s) Your social security number, ,, ,, ,

·· Part of Your Home.Used for Business

1 Area used regularly and exclusively for business, regularly for daycare, or for storage of inventory -- :.:

or product samples (see instructions) • · · · · · · · · · · · · 12 Total area of home · · · · · · · · · · · · 23 Divide line 1 by line 2. Enter the result as a percentage • · · · 3 %· · ·

For daycare facilities not used exclusively for business, go to line 4.All others go to line 7.

4 Multiply days used for daycare during year by hours used per day 4 hr.

5 Totalhoursavailablefor useduringtheyear(366days x 24 hours)(seeinslruclions) 5 8.784 hr.

6 Divide line 4 by line 5. Enter the result as a decimal amount 6 .7 Business percentage. For daycare facilities not used exclusively for business, multiply line 6 by

line 3 (enter the result as a percentage). All others, enter the amount from line 3 ••• 7 %·· Figure Your Allowable Deduction

8 Enter the amount from Schedule C, line 29, plus any net gain or (loss)derived from the business use of your ;;:;;1~:~:!-.,...:.:~;:;;;,:;:-,;.

home and shown on Schedule D or Form 4797. If more than one place of business, see instructions . · 8See instructions for columns (a) and (b) before [a) Direct expenses (b) Indirect expensescompleting lines 9-21.

99 Casualty losses (see instructions) · · ·10 Deductible mortgage interest (see instructions) 1011 Real estate taxes (see instructions) • · 11·12 Add lines 9,10, and 11. . · · · 1213 Multipiy line 12.column (b) by line 7 I~"I:!11!lli 13· · ~..E;:~

. . .•. - - -_ ..

14 Add line 12, column (a) and line 13 •-, ... ., 14· · · · .-

15 Subtract line 14 from line B. If zero or less, enter-o-~==~' . -.:;;.-~~.- - 15......... - ., .- . _.

16 Excess mortgage interest (see instructions) • 16 ~~-·

17 Insurance . · · · · · · · 1718 Rent . . - · · · · · · 1819 Repairs and maintenance · · 1920 Utilities . · · 20

21 Other expenses (see instructions) · 2122 Add lines 16 through 21 22· · · · ·23 Multiply line 22. column (b) by line 7 · · 23· · · ·24 Carryover of operating expenses from 2007 Form 8829, line 42 2425 Add line 22 column (a), line 23, and line 24 . · · · · · · · · · · 2526 Allowable operating expenses. Enter the smaller of line 15 or line 25 · · · · · 2627 Limit on excess casualty losses and depreciation. Subtract line 26 from line 15 . · · · 2728 Excess casualty losses (see instructions) . · · · 28 Ii29 Depreciation of your home from line 41 below . · 2930 Carryoverof excesscasualtylossesand depreciationfrom 2007 Form 8829, line43 3031 Add lines 28 through 30 · · · · · · · 3132 Allowable excess casualty losses and depreciation. Enter the smaller of line 27 or line 31 · 3233 Add lines 14.26, and 32 · · · · · 3334 Casualty loss portion, jf any, from lines 14 and 32. Carry amount to Form 4684,Section B • 3435 Allowable expenses for business use of your home. Subtract line 34 from line 33. Enter here - . ....-:=-

and on Schedule C, line 30. If your home was used for more than one business, see Instructions •• 35·· Depreciation of Your Home

36 Enter the smaller of your home's adjusted basis or its fair market value (see instructions) · 36

37 Value of land included on line 36 · · . · · · · · · · 3738 Basis of building. Subtract line 37 from line 36 . · · · · · · · 3839 Business basis of building. Multiply line 38 by line 7 . · · · · · 3940 Depreciation percentage (see instructions) · · · · · · · · · 40 %41 Depreciation allowable (see Instructions). Multiply line 39 by line 40. Enter here and on line 29 above 41• · Carryover of Unallowed Expenses to 200942 Operating expenses. Subtract line 26 from line 25. If less than zero, enter -D- · · 4243 Excess casualty losses and depreciation. Subtract line 32 from line 31. If less than zero, enter -0- 43For Paperwork Reduction Act Notice, see page 4 of separate Instnuctlons. Cat. No. 13232M Fonn 8829 (2008)

.. Vehicle ExpensesSection A-General Information (You must complete this section if you (a) Vehicle 1 (b) Vehicle 2are claiming vehicle expenses.)

11 Enter the date the vehicle was placed in service . . 11 / / I /12 Total miles the vehicle was driven during 2008 . 12 miles miles13 Business miles Included on line 12 . 13 miles miles14 Percent of business use. Divide line 13 by line 12 . 14 % %15 Average daily roundtrip commuting distance. . 15 miles miles16 Commuting miles Included on line 12 • 16 miles miles17 Other miles. Add lines 13 and 16 and subtract the total from line 12. 17 miles miles

Fonn 2106 (2008) Page 2

18 Was your vehicle available for personal use during off-duty hours? . • •19 Do you (or your spouse) have another vehicle available for personal use? .20 Do you have evidence to support your deduction? . . . . • • • •21 If "Yes," is the evidence written? • . . . • . . . • . . . • • .

DYesDYesDYes

Section B-Standard Milea e Rate See the instructions for Part II to find out whether to com22a Multiply business miles driven before July 1, 2008, by 50.5q: (.505). t-"22""""a+- +_b Multiply business miles driven after June 3D, 2008, by 58.5¢ (.585). w22~b!..1- -..l.__c Add lines 22a and 22b. Enter the result here and on line 1. . .

Section C-Actual Ex enses 7a~V~erhl""c""le,-1!...-,__ -.-_t:23 Gasoline, oil, repairs, vehicle

insurance, etc.24a Vehicle rentals. • .b Inclusionamount(seeinstructions)•c Subtract line 24b from line 24a •

25 Value of employer-providedvehicle (applies only if 100% ofannual lease value was Includedon Form W-2-see Instructlons)

26 Add lines 23, 24c, and 25. .27 Multiply line 26 by the

percentage on line 1428 Depreciation (see Instructlons) •29 Add lines 27 and 2B. Enter total

here and on line 1. . • .. 29Section D-De reciation of Vehicles Use this section ani

30 Enter cost or other basis (seeinstructions) • . . • . .

31 Enter section 179 deductionand special allowance (seeinstructions) . . . . . .

32 Multiply /lne 30 by line 14 (seeinstructions if you claimed thesection 179 deduction orspecial allowance) . • • . 1-=32=-+ .!..-_

33 Enter depreciation method andpercentage (see instructions) .

34 Multiply line 32 by the percentageon Une33 (see instructions) . .

35 Add Hnes31 and 34 • • . .36 Enterthe applicable limit explained

in the line 36 instructions .37 Multiply line 36 by the

percentage on line 1438 Enter the smaller of line 35

or line 37. If you skipped lines36 and 37, enter the amountfrom line 35. Also enter thisamount on line 28 above .

Form 2106 (2008)

~~CIQI

CjI,.;t.~

PersonalLiability'

r']

IRS Pub.IRS FormEntity

Descriptionrn:Illl::mc:~mo5-

~Iiit

I[~

Taxation

Sale Proprietorship-Tab 61 I Partnership-Tab B I C CorporatIDn-Tab ciS CorpDraUon-Tnb D I Limited Liability Company-Tab P

I In Ihe 1040 QulcJcJinde,c Handbook.1 IRS Pub. 589 regarding S corporaUons was lasllssued In 1995and Is no langer avalfable rrom Ihe IRS. h, \1/* II'£1_/n~" r ~ - IU,(J <Jfj,. (j.- to11-srO"3 AdIsregarded slngle-memberLlC Is Included on the tax ronn orns OWIlsr(1040, 1120, elo.). fUl.V vf-'\IJ"YfAl(j'" f'"(.N 1/./ I)4 The courts may dfsreoartl Ihe so-called ~corporale Ifablllty shield· In Iha case of slnglllsharahoider corporallons.I For purpases Df Ihls chart, the LLC Is assumed 10be a mulU-member LlC laxed as a partne~hlp.• The I1mlled Ifabully characlerlsHcs of cerlaln business BIlIIIIesshould nol be CDnslds/lld a 5ubsUluia ror prDper Insurance coverage. The businessOW/lBrshould consider coverage IDplCleat agelnsLlim and Ihel~ business InlerrupUon, emlls

and omIssions. amplClymenl pmcUce5,employee benafil plans and employee dlshonas\y. Ganarat nablUlycovBIilgs,lncludlng umbmlla poUDlaS for personal Injury and property damage, should also be considered.!la ••wnrr."",' r.nm",,"oalt,.., n" D=n•• lol..1n

Wagesand

SETax

Losses

FringeBenefits

(5eeTabK)

334 I 541 I 542 I None1 I 541Schedula C, Form 1040 I Fonn 1D65 I Fonn 1120 I Form 11208 I Fonn 1065' .

A sale prnpriatatShlp consists of one 1001- A partne~hlp Is an organlzallon having Iwo A colp!lrallon 15 a busIness eRllly thai A corporaUon asn elecllo be laxed as en An ue Is a lIablllly-llmlUng enltty rormedvIdual who carnes on an unIncorporated or mons ownetS thaI luncUons as a lrade or camoslls own legal slelus, soparate and S corporation by filing Fonn 2553. Only do- under stale law. It Is treated as a dlsre-bade or business. (Ira husband and wIre business. AloIn! undertaking merely 10 share dtsJlncl from IIlI oWner.;. A eorpoml/on mesUa CDrpomUonswllh ana class or stank gardedenUly,partne~lporcorporaUonCSflY on a business logether as partners, expenses or ownershIp or plCperly doss not csnnotelectoutarcorporale JaxaUo/l.See ara eligIble. An S corporation Is limited 10 for federal Income lax. Single-mamberthey should DIeFonn 1065, U.S. Relum or nece5sanly consUlulGe parlnershlp. An LLe wllh Ch6ck /he Box Rules on Page F·1. 100 sharehoklers, and may nat have anolher LLCs alii usually trealed as disregardedParlne~hlplncome.)ExceplfOlCHU9band lwoormo/ammnb~isgeneranycla5s(rll!dasa corporaUon as a shamholder. (An exception entiUes laxed dlfecUy ICllhelrowner. Seaand Wlie resIding In a communlly properly partne~hlp for lax pUlPoses. A partnership can exlsls forquaIifladsubchaplarSsubsldlarles.) lhe Lfmilecf Lfaalllly Company (LLC)slah! may treallhe business as a BOla elect 10 be taxed as a CDlpOraUon. Other restrlcUons IIpply. discussIon beginnIng on Page F-1.plCprielarshlp. Also see Dual/Red JolnlVen/uns on Paga B-2.NeLpraHtorloss Is compuled on SChed-l Partne~hlp Income and expenses Howthrough A e corporaUon pays tax on lis profits. An S corporallon 15 laxed similar ID a part-I &lme as a Partnership In Ihls chart.ule C and Is mported as Im:ome or loss to the partne~.lncame Is laxed LoIhe partner When shareheldem lake proms from nershlp.lncome and e~penses now Ihroughon the owner's fonn 1040. whather or not d1slrfbuLed.Pass-through lIems the corpomllon, the dlslrlbuUons ara 10 5hllJllholdaTS. Pass-through Items retaIn

relaln thesamecharaclerln the partner as they usuaUy laxabledMdends (double laxa- lhe cI1eracter In the hands oflne sham-had In the pertnershlp. lion). Personal service ccrpcraUons ara holder they had In the corporeUon.

taxed at a hIgh, flat rale.The ownerts 5ubJIWtto BE tax of15.3% A general partner's share of business Incoma Shareholders who perform services An employee-shareholder of an S corpora- Profits am subJeol to Income lax In theor net earnIngs from self·employment (IncludIng guaranteed payments) Is sublectlo for a corporallon, Including ofllcers. Uo['lreceIves wages ror servIces rendered. same way as a partnership. Membelll'SE tax 15 computed on Schedule SE SE lax. A limited partner's share of business am trealed as employees. Wage5 of These wages must be reasonable, Ad· busIness Incoma Qncludlng guaranteedand Is raported as 'Olher TaKes" on Incoma Is noLsubject La SE lax unless tha corporaLe emplDyees ans subject 10 dJUDnalprofits are passecf"lhrough to the payments) may ba subjaclla SE lax.Fonn 1040. Ceduct one·halr or SE lax partner performs servIces for the pertnershlp. payroll lax and withholding. Wages shareholder and are Ia~able for income IaK See Dlfferenr;a Between LLC Membersas an adluslment to Income on line 27 Olher Items, sucl1 as Intere5L and dividends, paid to employee-shareholders must purposes but not ror SE lax purposes. ancf Urn/lad Pariner.; on Page F·3 foror FDnn 1040. retain their character and are passed thlCugh be reasonable. Dividend dlslrlbuUons Couble laxation or profits laavolded. excepllons.

to the Dartner's IndIvidual Income tax relurn. am nolsubJeol to SE Ia~.Buslnesslcssescanolfsetotherlncome Losses Dow through to partners. Recognlllon Capllallosses ans allowed only 10 Ihe Losses flow through 10 shareholders. losses flow through 10 members. Reo-such as Interest, capllal gains or a of loss by a partner Isllmlled by the partner's axienl of capllal gaIns. Nel operallng Racognnton of JossIs limited by the share- ogniUen of loss by membars Is IImlLedspouse's wages If flilng a jolnl relum. besls, al·lfsk rules and passive acUvlly rules. loss of a corporaUon Is csrned back holder's basis, at-risk rules and passive by the member's beals, et-risk rules andSubjecllo hobby, passive acUvlty and Subject to 'hobby loss' ru!ea under SacUDn Dr lanYard against corporale Income. acUvily rules. Subject La 'hobby loss' rules passive acllvlly rules. SubjecL to "hobbyat risk loas rules under SecUons 183, 183. but Is not passed through Lo share- under Secl/on 183. loss" rules under SacUon 183.469 and 465. rasoecUvely. holders.Amounl5 paid on behalf or employees Generally Included In partner's Income as Owner-employees are enUUed10 Ihe Generally Included Inlncomeforemployea-I Same as a PartnershIp TnIhis chart.are deducllble: Ihose paid on behalf of a guaranLesd paymenL Excapllon: Nontax-· same IaK-fnse f1inge hanems as olher shamholdeTSOWIIlng mora than 2% of stock.prapllelofurenoLExcepl/on:Proprlelor able benefits Include, among olhara, legal employees (subject to dlscrimlnaUon Exceptions: CDnlrlbullons 10 retirementcsndaduct medical Insurance premiums service plans. educational and dependent rules). plans; compensaUon forlnjury or sIckness;and reimbul'5ement costs under an cara programs and certain working condition educaUonal and dependant care programs:accident and heallh plan lhat DoveTS and de minimIs fringe benefils and employee employee dIscounts: workIng condlDon andall employees. If proprielor's spause 15 achievement awards. de mInimis fringes and no·addlUonal-taslcoveted under a plan that alsD covers servIces.owner aa part of family, deduction Isallowed.The sale prcprlelorls liable for all bust-I General partner pl!lSonaUy liable for all part-I Shareholders nol liable for debls I Shareholders noL liable for debl!llncurred I The degree of nablilLyproleoUon rorLLCness debts and acllons. netshlp debL Umllad partner's lIablllly usually Incurred by cOIpDlilUon. Uablllly gener- by corporallon. LlablllLy generally nmlted 10 mamhe~ varies from stala 10 slale.

IImlled Loinvestment In Ilartnershlp. any IImlted 10 amount InvesIBd.~ emount Invested.4

~

Organ12aUon 'and

Administration

Bookkeepingand

Accounllng

Owner Controland

FloxlbllllyTransfer ofOwnership

Advan!agesand

Disadvantages

Sole Proprle\orshlp-Tab 6' L ~r!nershlp-Tab BAsolo proprfalolllhlp Is lI1eeasIest A parlner.;hlp Is easy 10 orgtmlza. AWIllianbusiness 10orgenlza.lnlermlngUng of parlnanlhlp egrasmtlntls 'recommended,business and person!!1 funds Is alloWlld but not requlrad. The agreement delennfnes(although not racomtnended). BusIness how !naoma and losses are allooe\ed 101110Income Is raporlsd on Schedule G, whlch parlner,;.lf a partnsllihlp egraamsnt dOBS notIs med wilh!he owner's Form 1040. exist, partnershIp Ih!ms pass through bsslJd on

lliners' ownership Inleresls.

C Corporation-Tab CIS CorporaUon-Tab DAcorpotaUon IsdJIfJDUllandexpensive An S CDlPorallonIs sel up asa regular10organIze. CorporeUolI!!must hold CllIpOreUon.5corporaUons must mekeperiodic baanI meaUnus and keep elaellon wIlli Ihs IRS 10be !realed as anmlnules. CorporaUons rnl1lltcom~y wllh S COlJIDreUonby mtng Fonn 2553. Cerlalnfederal and slale regulaUons. events will'cause aulDmalfo lennfnaUon Dr s'

sialus. See 1imnlna/lons [IRe §13fi2(d}1 onPane 0-4.

Umlted Uabtlll¥ Company-Tab FAn existing plIrtnershlp can genamllyreglsfer for LtC status In Ills elsie Inwhich It conducts buslOBSB,ReglstrallonIs generally Isss complJcatatilhan formingIi ccrporeUon.

The balance sheat on an S cOlplltaUon'slnCDmelax ralurn must agree with thecorpora1e books. An S corpora lion must usadoubllHlnlry bookkeepIng. An S corparaUonmust me all requIred payroll and Income laxralums.

Thalli! are fewBr requlrarnanls onWhat type of bookkeaplng sysfam oraccounUng ma!hlld Is used In soleproprialorahlps. ThBsyslem muslbacon5lsten~ clearly renecllncome andexpensss, and allow !he taxpayer10PIe an aecum1e ralum. The solePIOprlelorahlp must usa the same taKyear aslhe owner.

Dapandlng on Income and asselB"lhe The balanue aheet on a corporaUon'spartnershfp may be required IIIInclude a Incoma lax relum must agreB wilhbalanca sheal WIIhlis Income tax relum. Ihe corporsla books. ACClpotaUonTIlllrefore, the parlnershlp should use Iha must usa BdcublHnlry bookkeepIngdoubllH!nby bookkeepIng method. If a system. 11musllile all nllcasssl)'pertnarexci1angss properly other than cash employmenl and Income lax /lliums.In exchange for an Inlareslln a partnershIp,' ,specIal accounllng rules apply. Sea ContribuledPtollerlY~Jl PBlIe B-7.

Same !Illa pelinershlp.

The owner Is fltlllio make all businessdecisIons.

Control or Ihe bUsiness opelllUons Is divided~mDng pertnare.

Slmm~oldBrs havs control aver Ilm IShsraholdera have conlrol over IheCDipomUon10 the eKtenlthay own corparaUon 10 Iha e~lell! Ihey own vollngvoUngslock. slock.

Control Is divIded among members.

t In \he 1040 Qufckt1nde~ Handbook. ,IRS Pub. 509regarding S corporaUons was lasllssued In 1995and Is no /ongeravallable from,the IRS. A":iU (0K.IA;Joe;lO ., W,PJy/-l 18$- ~)/..,sroGA dIsregarded slngle-memberLLC is included on tha tax farm oflls owner (1040, 1120, alc.). r I...X \I ,r IThe courts may dIsregard the sCH:a!led 'cQrporata liability shield" In the' case of slngla shareholder corporaUons.Fer purpose or thIs chart, Iha UC Is assumed to be a mullJ-member LLC !axed as a partnershIp. .The limited tlablllly IlharactelisUcs oCoarlaln busIness enOOesshould not be considered a subsUMe for proper Insurance coverage. The bu51nBll5Dwner should consIder coverage 10 protect against Rra and lhen, business fnlanupUon, artOrsami omission!!, employment pracilcss, employee benem plans and employes dIshonesty. General liabilitycoverage, IncludIng umbrella polJclss for pelSOnal Injuryand property damage, shOUldalso be,consldllrad. 'See Workers' Com/lansstlon an Page M-10. ' ' ,

~CIC>

~if!!l

C/l3m,mc~mo

JA..51••IDo"""s:.tAl

A sala proprielomhlp Is not a sapaJale IThe paMerslllp agraemanl may reslrlcttheenUly fllJm Its owner.'·Sals" of a sole sale of a parlnelllhip Interest, and may controlproprtetorshlp Is BGtuaJlya sele of assels. !he terms or the saJe.

Advanlages;- MInimum lagel reslrlcUons.- Easy 10Conn.- Easy 10discontinue.- No corporalo TannsUon10conduct anddocumenL

- No addllJonaltax relum to file.

Advantages:- ApaMershlp comblnes lI1eskUls andlorIfnanolal abUIUa5of :;evacal people.

- Easy 10estabtlsh.- BUlIlnssBUlIuallybanefits from pertnsre whohave complementary skills.

- TermlnaUons can generslly occur wlfhDulIaxaUon.

DIsadvantages: DfsadvaniageS!- Unllmllad nablllty. - A partnership Is oRen easier to gat Into than- May no! bring InnllwDWIlers oraulslde aulof.capital conlribullons. - General partners ara lIabla for actions of

-Income lax cannol be deferred by a!harpaliners-unllmllad lIablllly.rslalnlng proOfs. - Sharing of prallis.

-Lack Dr business conUnully-enUty - DIsagreements In decIsion makIng,ceases When the owner dIes. '

.~I..•. ,'';

Advaolege:- Avoids cartaln S corpcrallonI8slr/ollans-.

- AvoIds doublBlaxaUon oJprofile.- Business uil\JaUybeneDts frommembelll who have complemental)'skUls.

DIsadvantages: Dlsadvanlage:- Shamholders pay lax on earnIngs even If -lncDnslalenllreatmonl slala 10stale.undIslJibulatl. - Must hava at least two owners to be

-less RBl!lbllltyIn choosing a lax year. Ial(ed as a partnsrshlp ror federal tax- ConlJibuUonlimIts 10IIquellfied raUmmenl pUrpDSas..plan BIB based on emplayee·sheraholdsr's - Sharing of proR15.wages, nel DVBIiIIIpllJijls auch as a Bole - DIsagreements In decision making.proprietor or partner. •

- Umlt on number of &hareboldelll canpalenUaUyRmllGaplIallnfuslona.

Ownership Is essny transrarred by OwnershIp Is saaDy transferred by salllnlJselllng shares of slock. The corporals shares of alack 10eligible sharehDlders.charler may plil!le cerli!1r]reslrfcUons on 111ecorporals charter may place carlaln!he sale of slock. mslricllona an the sa/a or slack.Advanlagas: Advantages:- Umlted Hablllly. - Umlted liabilityand perpetual IIfa.- Perpelusll1re. - Avelds dllubla laxsUon of proms.- Ablllty10raise capllal thllJugh - proms passed through ara not subjectlo 'Inuance of slack. , SE lax as In a partnership. '

- Ease of transfer of ownershIp. - AbUily la raJaa capllal by IssuIng slock.

DlsadvaniBgss!- Daublo laxation of proms.- CCrp'Jtalli charlarreslrlcls types crbusiness acUvJUes.

- Sublsc! 10varlaus slala and rederalGenlmls.

- Dissolution can lriggarlaxable gaIns.

The operaUng agrsemanl may mlneltransfer of ownership InlereslS.

;;~~~~~==========~52==3$sa~sa~~~3:~3S==~~__SXdWW~-~-~-_"'-~~~_t~_,In~~ I ~~~-=~====~~~~-~"*~.-----------------------------------------------------------------------

Audit Risk ChecklistYes No N/A

1. Is your social security number correct on your return? 0 0 0

2. Is the spouse's name the same as the social security card? 0 0 0

3. Have you claimed all your income? 0 0 0

4. Broker's Proceeds matches 1099? 0 0 0

5. Have you claimed all income from W-2s and 1099s? 0 0 0

6. Is all mortgage interest claimed on form 1098? 0 0 0

7. Do you claim large itemized deductions? 0 0 0

Medical $

Charity $

Taxes $ (200. averages)

Interest $

Total $

8. Do you report rental property? 0 0 0

9. Do you have complex tax transactions without explanations on return? D 0 0

10. Do you own or work in a business which receives cash and/or tips? D 0 0

11. Are you self employed? 0 0 0

12. Is your business unincorporated without an LLC? D 0 0

13. Are you an S Corporation Owner/Officer? 0 0 0

14. Do you co-mingle personal and business finances? 0 0 0

15. Have you claimed large business expenses? D 0 0

16. Do you use your automobile for business? 0 0 0

17. Do you claim an office in the home? D 0 0

18. Is your business home based? 0 0 0

19. Was there a prior IRS audit resulting in a tax deficiency? 0 0 0

20. Has an informant given information to the IRS about you? D 0 0

J

9595 OVOID o CORRECTED

~@08PAYER'S name, street address, diy, state, ZIP code, and telephone no. 1 Rents OMB No. 1545-0115

$2 RoyalUes

s3 Other income

Form 1099·MISC

MiscellaneousIncome

4 Federal income tax wilhlield

PAYER'S rederal identificationnumber ;':~:'::;::C;'~-:;:;X,_~-=U::;;'l;~/I

$

$RECIPIENT'S name 8 SubstiMe PilYmenl5 ill lieu 01

di~ojdends III interest

$ $9 Payer made direct sales of

55,000 or more of consumerproducls to a buyer(recipient) tor resale •. 0 $

~C~I~-,-s-la-te-,-2-nd~~~P-c-o~de------------------------------+-11~"~·~~ ·12

Street address (including opt no.)

o $15b Section 409A·lncome 16 Slate tax withheld15a Seclion 409A deferrals 17 Slale/Payer's stete no.

. .$ - .. - _...........•.•. _..•............ _.- _._ $ -_ _ .$ $s

Copy AFor

Internal RevenueService Center

File with Fonn 1096.

For Privacy Actand PaperworkReduction ActNotice, see the2008 General

Instructions forForms 1099,1098,5498,and W-2G.

18 State income

Form 1099-MISC Cat No. 14425J Department of the Treasury -Internal RavanuB Service

Do Ndt Cut or Separate Forms on This Page Do Not Cut or Separate Forms on This Page

Form 88-8 Determination of Worker Statusfor Purposes of Federal Employment Taxes

and Income Tax Withholding

Telephone number Qnclude area code) I Firm's emp;oyer Identmeation number

OMB No. 1545-0004(Rev. November 2006)Department altha TreasuryIntomal Revenue Servite

Name of firm (or person) for whom the worker performed services Worker's name

Finn's address Qnclude slreel address, apt. or suile no., city, state, and ZIP code) Worker's address Qncluae slreet address, apt. or suite no., city, state,and ZIP code)

Trade name Daytime telephone number I Worker's social security number, ,, I

Worker's employer Identification number Qf any)

Note. If the worker Is paid by a firm other than the one listed on this form for these services, enter the name, address, and employer identificationnumber of the payer. ~

Disclosure of InformationThe Information provided on Form S5-a may be disclosed to the firm, worker, or payer named above to assist the IRS In the determination process.For example, If you are a worker, we may disclose the information you provide on Form S5-a to the firm or payer named above. The information canonly be disclosed to assist with the determination process. If you provide Incomplete information, we may not be able to process your request. SeePrivacy Act and Paperwork Reduc.tfon Act Notice on page 5 for more information. If you do not want this Information disclosed to other parties,do not file FormS5-a.

Parts !-V. All filers of Form SS-B must complete all questions in Parts I-IV. Part V must be completed If the worker provides a service directly tocustomers or Is a salesperson. If you cannot answer a question, enter "Unknownft or "Does not apply." If you need more space for a question, attachanother sheet with the part and question number clearly identified.

ImI General Information1 This form Is being completed by: 0 Firm 0 Worker, for services performed ....,..-__ ..,....__ to __ -:---::-_,...,-:-- __

(beginning dale) (ending dale)

2 explain your reason(s) for filing this form (for example, you received a bill from the IRS. you believe you erroneously received a Form 1099 orForm W-2, you are unable to get worker's compensation benefrts, or you were audited or are being audited by the IRS). _

3 Total number of workers who performed or are performing the same or similar s.ervlces _

4 How did tha worker obtain the Job? 0 Application 0 Bid 0 Employment Agency 0 Other (specify)6 Attach copies of all supporting documentation (contracts. Invoices, memos, Forms W-2 or Forms 1D99-MISe Issued or received, IRS closing

agreements, IRS rulings, etc.). In addition, please Inform us of any current" or past litigation concerning the worker's status. If no Income reportingforms (Form 1099-MISC or W-2) were fumlshed to the worker, enter the amount of Income eamed tor the year(s) at Issue $ .If both Form W-2 and Form 1099-MISe were Issued or received, explain why. • • _

6 Describe the firm's business. ._ ._ •• ••• ._••• _._•• _. • _

7 Describe the work done by the worker and provide the worker's job title. __• • • ••• _

a explain why you believe the worker is an employee or an Independent contractor. ~_. •• •••• __

9 Did the worker perform services for the firm in any capacity before providing Ihe services that are the subject of this determination request?o Ves 0 No 0 NJAIf "Yes," what were the dates of the prior service? • • _

If "Ves," explaln the differences, if any, between the current and prior service. • • ._. __

10 If the work Is done under a written agreement between the firm and the worker, attach a copy (preferably signed by both parties). Describe theterms and conditions of the work arrangement. ••• _•• _._•• __• -.---.-------- •__•• •• • • •

For Privacy Act and Paperwork Reduction Act Notice, sea page 6. Cat. No. 16106T Form 55-8 (Rev. 11-2006)

Form SS-8 (Rev. 11·2006) Pege 2

Behavioral Control

1 What specific training anellor Instruction Is the worker given by the IIrm?

2 How does the worker receive work assignments? •••••••••••• _•••••• _•• _._••••••••••••••••••• _••••••••••••••••••••••••••••••• _••••••• _•••••• _

3 Who determines the methods by which the aSSignments are performed? •••• __••• •••••••••••••••••••••••••••••••••••••..••• __• •. _._.~.

4 Who is the worker required to contact jf problems or compiaints arise and who Is responsible for their resolution? •••••••••••••••••••••••• _

5 What types or reports are required from the worker? Attach examples. __•••••••• ._. •••• _._•• _•••• __• ._. __••••••••• __•••• •

6 Describe the worker's dally roullne such as, schedule, hours, etc. •__._ ••• _•• _••••••• •• _...• _••• __••••••••••••••••••••••••••••••••••• __

7 At what locatlon(s) does Ihe worker perform services (e.g., firm's premises, own shop or office, home, customer's location, etc.)? Indicatethe appropriate percentage of time the worker spends In each location, if more Ihan one ••• __••••••••••••••••••••••••• _._....• _•••••• _••••••

8 Describe any meetings the worker is required to attend and any penalUes for not attending (e.g., sales meetings, monthly meetings, staffmeetings, etc.). __._•• •••••• •••• _•• _.__.••••. _.••••••. _•••••••••••••••• _•••• _••• _. ••• __• •_••• _._••• _•••••• _•••••••••• _•• _•• ._

9 Is Ihe worker required to provide the services personally? • • 0 Yes 0 No10 If substitutes or helpers are needed, who hires them? •••••••••••••••••••••••••••• ._ ••••••••••••••••••••••••••••••• _._...• •••••••••••••11 If the worker hires the substitutes or helpers, is approval required? • 0 Yes 0 No

If ''Yes," by whom? _. •••• • •• __•••••• _••• _••• _•••••• _. __"""""'_' ••••••••••••••••••••••••••• • •• _••••••••••••••••••••••••• _

12 Who pays the substitutes or helpers? •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••13 Is the worker reimbursed if the worker pays the substitutes or helpers? • 0 Yes 0 No

If "Yes,n by whom?

IimIIIII Financial Control

1 Ust the supplies, equipment, materials, and property provided by each party:

The firm ••••••••••••••••• __••• __•_.•.• _._••••••••••••••••••••••••••••••••••••• _••••••••••••••••••••••••• _••••••••••••••••••••••••••••• , ••••• _'The worker ••• __••••••••••••••••••••• '_'.".' ••••••••••••••••••••••••• _••••••••••••••••••••••••••••••••••••••••••• _. _••••••••••••••••••••• _•••Other party •••••••••••••••••••••• _•• __••••••••••••••••••••••••••••••••••••••••••••••••••••••• _•••• _••• _.__.••••••••••••••••••••••••• _•• _••••••

2 Does the worker lease equipment? • • 0 Yes 0 NoIf "Yes:' what are the terms of the lease? (Attach a copy or explanatory statement.) •••••••• _••••••••••••••••••••••••••••• _•. _._••••••••.•••

3 What expenses are incurred by the worker In the performance of services for the firm? _••••••••••••••••••••••••••• ..•••••••••••••••••••.

4 Specify which, if any, expenstls are reimbursed by.

The firm ••••• _•••••••••••••••••••••••••••••••• __••••••••••••••••••••••••• _••••••••••••••••••••••••••••••• _•••••••••••••••••••••••••••••••••• _.Other party •••••••••••••••••••••.••... _••••••••••••••••••••••••• ""'.' __.••• _•••••••.••••••••••••••.•••••••••••••••••••••••••••• _•••••••••••••

5 Type of pay Ihe worker receives: 0 Salary 0 Commission 0 Hourly Wage 0 Piece Worko Lump Sum 0 Other (specify) ••••••••••••• _._.••••••••••••••••••••••••• __••••••••••••••••••••••••••• _•••••••••••••••••••••••If type of pay Is commission, and the firm guarantees a minImum amount of pay, specify amount $ _

6 Is the worker allowed a drawIng account for advances? • • 0 Yes 0 NoIf "Yes," how often? •••••••••••••••••••••••• _•••••••••••••••••••••••••••• _•••••••••••••••••••••• _•• _••••.••••••••••••••••••••••••• __.•••••••••Specify any restrictions. • ••••••••••••••••.••• _••••• _••••••••••••••••••••••.... _••••••••••••••••••••••• _•••••••••••••••••••••••••• _._. __••.•••••

7 Whom does the customer pay? •If worker, does the worker pay the total amount to the firm?

. .o Yes o No. 0 Firm 0 WorkerIf "No," explain ••••••••••••••••••••• _•••• __•••••••••••

8 Does the firm carry worker's compensation insurance on the worker? .0 Yes 0 No9 What economic loss or financial risk, If any, can Ihe worker Incur beyond the normal loss of salary (e.g., loss or damage of equipment,

material, etc.)? ••••••••••••••••••••• _••••••••••••••••••••••••••••••••••• _••••••••••••••••• _•••••••••••••••••••••••••••••• __•__••• _•••••••••••••

Form 55-8 {Rev.11-2006)

Form SS-8 (Rev. 11·2006) Page 3Iml!J Relationship of the Worker and Firm

1 List the benefits available to the worker (e.g., paid vacations, sick pay, pensions, bonuses, paid hoHdays, personal days, Insurancebenefits). ••••••••••••••••••••••••••••••••••••••••••••••••••• __• • • • • •__• ._ ••••• _••••••••••••••••••••••••

2 Can the relatronshlp be terminated by either party without incurring lIabnity or penalty? • • • • • • • • • 0 Yes 0 NoIf "No, n explain your answer. '_" . •••. __••••••• _••••••• _. __•• __••••••• _••• __._ ••••• _•• __• ••••• '" •• _•• _•••••••• _•••••••••• _••••••••••• _.

3 Did the worker perform similar services for others during the same time period? • • • . • • • • • • • 0 Yes 0 NoIf "Yes," Is the worker required to get approval from the firm? • • • • • • •• •••••• 0 Yes 0 No

4 Describe any agreements prohibiting competition between the worker and the firm while the worker Is performing services or during any laterperiod. Attach any available documentation. • •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• _•••••••••

5 Is the worker a member of a union? ••••• • • • • • • • • • •• ......0 Yes 0 No6 What type of advertising, If any, does the worker do (e.g., a business listing In a directory, business cards, etc.)? Provide eeptes, If applicable.

7 If the worker assembles or processes a product at home, who provides the materials and instructions or pattern? .••••••••••••••••••••••••

8 What does the worker do with the finished product (e.g., return it to the firm, provide It to another party, or sell it)? •••••••••••• _•••••••••••

9 How does the firm represent the worker to its customers (e.g., employee, partner, representative, or contractor)? ••••••••••••••••••••••••••

10 If the worker no longer performs services for the firm. how did the relationship end (e.g., worker quit or was fired, job completed, contractended, firm or worker went out of business)? •••••••• _•• _•• _•••••••••••••••••••••••• _•••••••••••••••••••• _•••••••••••••••••••••••••••••••••••

IlmIIII For Service Providers or Salespersons. Complete this part if the worker provided a service directly tocustomers or is a salesperson.

1 What are the worker's responsibilities In soliciting new customers? •• _. • • •• _••••••••• _•••••.••• _••••• _••••• __•••••.••••••••••••

2 Who provides the worker with leads to prospective customers? •• __••••••••• _.__•••• __•__••••••••••••••••••••••••••••••••••• __•••••• _••• _3 Describe any reporting requirements pertainIng to the leads •••••••• _•• __._ •• • __•••• _•••••••••••••••••••••••••••••••••••••••••••• _•••••••• _

4 What terms and conditions of sale, if any, are required by the firm? •••••••••••••••••••••••••••••••••••••••••••••• _.• _••• _•••••••••••••••••••5 Are orders SUbmitted to and subject 10 approval by the firm? . • • . • • • • 0 Yes 0 No6 Who determines the worker's territory? ••••••••••••••••••••••••••••••••••• __••• _•••.• _•••••••• _•••• __•••• __•••••••••••••••••••••••••••••••••••7 Old the worker pay for the privilege of serving customers on the route or In the territory? • ••••••• 0 Yes 0 No

If "Yes; whom did the worker pay? •••••••••••• __••••••••••••••••••••••••••••••• _•• _.•••••••••••••••••••••••••••••••••••. __•• ... _••• _If ·Yes," how much did the worker pay? • • • • • • • • • • • • • • • • $ _

8 Where does the worker sell the product (e.g., In a home, retail establishment. etc.)? •••••••••• __••••••••.••••••••..•••• _•• _.• _••••• _.__•••••

9 List the product and/or services distributed by the worker (e.g., meat. vegetables, fruit, bakery products, beverages, or laundry or dry cleaningservices). If more than one type of product and/or service Is distributed, specify the principal one ••• _. ••••••••••••••••••••••••••••••••

10 Does the worker sell life Insurance full time? • • • • • • • • . • • • •• •••• 0 Yes 0 No11 Does the worker sell other types of insurance for the firm? • • • . . • • •• •••• 0 Yes 0 No

If "Yes," enter the percentage of the worker's total working Ume spent In seiling other types of Insurance • %12 If the worker solicits orders from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar

establishments, enter the percentage of the worker's time spent In the solicitation • %13 Is the merchandise purchased by the customers for resale or use In their business operations? . 0 Yes 0 No

Describe the merchandise and state whether it is equipment installed on the customers' premises ••••••••••••••••••••••••••••••••••• _._••••

Under penalties of perjury, I declare that I have examined this request. including accompanying documents, and to the best of my knowledge and beilef,the facts presented are true. correct, and complete.

Sign ~Here r liUe •. Dale" _

Type or print name below signature.

Form SS-8 IRell. 11·2006}

TAX GAP MAP for Tax Year 2001 (in $ Billions)

T rTax Paid Voluntarily & Timely

$1,767

(Voluntary Compliance Rate: VCR = 83.7%)

l Enforced Net Tax GapGross Tax Gap: $345 & Other Late- - (Tax Not Collected)(Noncompliance Rate: NCR = 16.3%) Payments -$55 * $290

•I • I

Nonfiling t Underreporting I Underpayment I$27 $285 $33.3

I

• I • I I

Individual Corporation Employment Estate ExciseIncome Tax Income Tax Tax Tax Tax

Individual $197 $30 $54 $4 # IndividualIncome Tax t

I I 1Income Tax

$25 $23.4

Corporation Small CorporationIncome Tax Non-Business

Corporations FICA Income Tax# Income (Under $10M) Certainty of the Estimates $2.3

$56 $14Employment $5 DActual Amounts Employment

Tax Business Large Self-Employment o Reasonable Estimates Tax# Income Corporations Tax $5.0

Estate $109 (Over $10M) $39 oWeaker Estimates$25 Estate

Tax Tax$2 Adjustments, Unemployment $2.1

Deductions, Tax * IRS will continue to collect late paymentsExcise Exemptions $1 for TY01 for years to come. This category ExciseTax $15 includes tax paid late by taxpayers without Tax# IRS enforcement action. For comparison, $0.5

Credits Estimates in Bold Boxes $24.38 of tax was collected solelv throuqh

$17 Have Been UpdatedBased on Detailed TY01

NRPResultst Updated using Census tabulations

# No estimates available

Internal Revenue Service • February 2007

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Joe LissCertified Public AccountantBennett and Liss, CPAs

Tax StrategistProfessional Speaker

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