kimberlykrogers wrote:

- quote -

I encountered this type of situation only once when I worked
for the IRS. I ended up auditing BOTH the landlord (who
failed to report it) and the tenant (who took 100% of it as
"mortgage interest" and ANOTHER 25% as "home office rent").
Unfortunately, that was during my last month with them and I
didn't close the files. I was looking at possible fraud for
someone - and possibly BOTH since in that case, the tenant 2
years later (per a subsequent joint return) married the
landlord's daughter!

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- quote -

Thanks for the input. Of course, this handle is fictious.
I just really wanted confirmation of what I already know
to prove to my husband that the IRS is serious about this
kind of stuff. Anyway, thanks again.

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kimberlykrogers[at]hotmail.com (kimberlykrogers) wrote:

- quote -

Unless the IRS alleges fraud, the statute of limitations is
long expired.

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First, 1993 is unlikely to be audited.
Second, unless she can produce rent checks to her son (your
husband), she's the one in trouble for claiming. (He didn'
t claim non-esistant income so he's o.k.)

In SOME states, the state will go after owners of land with
rental property for tax returns. They have the RE records.
And if they do, IRS will follow. Usually the rule for filing
at certain incomes means GROSS income - the rental income -
not the NET rental income after expenses. It is up to the
taxpayer to show, by a tax return, that they didn't net any
profit. Dangerous situation, not filing.

Nan, EA in LA

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kimberlykrogers[at]hotmail.com (kimberlykrogers) wrote:

- quote -

It is good for you & your husband to be scrupulously honest
on your joint return, and, were the MIL ever to file again,
I'd advise both of you not to be associated with that in any
way.

However, it is bad that a CPA in Chicago (as well as the
other readers of this board) now knows that Kimberly K.
Rogers's mother-in-law is a penny-ante tax cheat, statute of
limitations notwithstanding. One hopes that you will now
tell me that your online handle is fictitious.

My advice: MYOB.

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"kimberlykrogers" wrote:

- quote -

3 years is the statute of limitations on your returns,
presuming any unreported rents are < 25% of gross income..

- quote -

More important question. There will a new employee audit,
which is no more thorough than normal. However, errors are
a problem if sufficiently serious to bar employment. Errors
are further viewed in light of tax law knowledge, and as to
errors of a spouse if a joint return filed, the extent to
which you knew or should have known.

Your husband says no rents were charged. But if you or
someone (or IRS) does mom's returns if due, and she has
monthly checks and says it's rent, then that's an issue to
resolve. I'll assume, though, your husband is receiving
nothing.

If her returns are filed, and rent is claimed, and she is
audited, then she has to verify it if a selected item. If
no checks and claimed paid to a relative, even oral
testimony is off the table. If they pull up your joint
return and see no Sch E rents, the examiner may be amused by
her liberal views on veracity. So no problem for you if
filed jointly; no rental income will be proposed..

Fred F.

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Another item in the mother-in-law story...

I saw that in 1993 she was claiming a rental expense that I
think she shouldn't be. Basically, my husband owns land
near her house. On his land, she put a mobile trailer and
rents that out to tenants. He doesn't charge her anything
to rent the land. However, (you guessed it!), she claimed
"land rent" as an expense on the trailer rental item. I
don't think it was that much in 1993 (the last year she
filed), but still. I'm pretty sure she got a tax benefit
out of it.

I tried telling her that if she ever gets audited that they
might inquire as to whom she paid rent. If she says her son
and he didn't report it as income, who is in trouble? I've
warned both her and my husband, but she doesn't seem too
worried about it. In my mind, the worse case scenario is
that the come after my husband for like 10 years of
back-taxes, interest, penalities all because of her supposed
expense.

Plus, I'd like to maybe one day get a job at the IRS and
don't want any crap attached to my tax return.

Thanks for any thoughts!

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