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  • 1.  IRS CP14 NOTICE

    Posted 05-23-2023 04:01 PM

    Has anyone received a 2022 CP14 notice from the IRS ? It changed my client's tax calculation without any explanation whatsoever. I called the IRS tax practitioner hotline and they told me it involves form 8960(Net Investment Income Tax). They took my client's LOSS on Schedule C and made it into a profit on line 8 subject to the 3.8% net investment income tax ! First  of all, it is NOT passive income, it's a business loss where my client materially participated. Second of all, how can the IRS change a LOSS into a Profit ?  I have been practicing for 40 years and this is the craziest thing I've ever seen! Any feedback would be greatly appreciated !



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    Norman Jacobs
    CPA
    JACOBS & COMPANY, CPAs PC
    Merrick NY
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  • 2.  RE: IRS CP14 NOTICE

    Posted 05-24-2023 01:58 AM
    So, its in error. just respond to it like any other notice, with copy of your original tax return, with the loss highlighted,. Be sure to mark the copy as copy so if somehow separated in the mail processing it is not processed again. Also, do not use your own envelope. Many people don't realize. Those notices come with a pre-addressed bar-coded envelope for a reason. 
    It helps to get your response to the right person and area of the building that it came from. If you don't and you use your nice pretty professional looking envelope, that printed letterhead envelope, can cause your response to get lost and not get to where it has to go, and hence in a month your client might get  a letter saying you did not respond when you did. 
    Again, instead of dwelling on how they made a mistake, just answer it. Its not like as humans none of us have ever made an error. 





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