10 way to avoid an audit by WSJ

[AZ-Tax]

http://finance.yahoo.com/taxes/article/111960/avoid-tax-audit-wsj?mod=taxes-advice_strategy

Your thoughts on # 8 below from the article?

8. Change your business status. IRS Statistics show that you are 10 times as likely to be audited as a Schedule C filer than if you incorporate your business and elect S corporation status. While it costs a bit of money to incorporate, the move affords you greater personal liability protection and reduces your chances of being audited. In deciding whether to change your business status, include both tax and non-tax factors.

Note: Forming a limited liability company for one owner will not give you any audit protection, because the owner still files a Schedule C.

[taxmandan]

Probably written by a corporate lawyer to gin up some business. Last year theIRS announced an audit focus on S-Corp. returns, don't know how much it increased the audits on corps though. Around here the lawyers set up LLC for new businesses, usually without tax effects being considered for the business owner.

I was told by an RA that theIRS is targeting DIY returns with Sch C, they KNOW those have big 'errors' on them and lots of taxes to collect. May be why some of us are seeing clients return after trying the box for a couple of years. It's too bad theIRS won't publish the figures on audits of professionally prepared returns vs. DIY returns, that would give many of us a boost in business!

[joanmcq]

S-corps are audited less than Sch Cs, but there has been a big push on low/no salary, especially for single shareholder S-corps. And I was in the middle of a big S audit at the firm where I used to work when I abruptly left. Very low income for the initial year, very high expenses.

[jimmcg]

http://finance.yahoo.com/taxes/artic...dvice_strategy

Your thoughts on # 8 below from the article?

8. Change your business status. IRS Statistics show that you are 10 times as likely to be audited as a Schedule C filer than if you incorporate your business and elect S corporation status. While it costs a bit of money to incorporate, the move affords you greater personal liability protection and reduces your chances of being audited. In deciding whether to change your business status, include both tax and non-tax factors.

Note: Forming a limited liability company for one owner will not give you any audit protection, because the owner still files a Schedule C.

A generalization that has always been true (especially for higher sales volume clients) but may not apply to your specific client situations.

[taxxcpa]

10-times more likely

Maybe there are ten times as many audits of Schedule C businesses because there are ten times as many of them as there are of S-Corporations. Probably more than ten times as many.