Central District Consumer Bankruptcy Attorney's Association

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My prior one 2 years ago got the same coveted "no material
misstatements."
I hope for the same this time on both of them, however I just got off
the phone with one of the debtors and there was a $20,000 deposit which
was a gift from Debtor's father during the CMI period. $9,000 was used
for a short sale which the bank took and still foreclosed on them (in
Washington state) and the other $11,000 was used for the kids tuition.
I don't remember the Debtors telling me this prepetition. If they had,
I may have waited another month to file so as to not have any trouble.
Nevertheless, I am adamant that gifts are not "income" but rather
transfers of wealth. There is a reason gifts are not taxed as income.
I know taxability is not considered under 100(10A) definition of CMI,
but it still uses in subpart (A) the word "income" as opposed to the
more generic "money" or "funds." Also note, transfers of wealth can
be taxable, just not as income. Wealth was earned as income at one
point and became part of the estate of the earner. That person can
hoard that money and it is never income again. However, if it is then
transferred to someone who didn't earn it, it does not lose its
character.
The very reason some people become our clients is that they never
transition from merely earning an income to accruing wealth. Knowing
the difference between income and wealth is one the most fundamental
economic distinctions we have to make to get out of the income earning
hamster wheel, even if it's just for retirement. While the distinction
is metaphysical on some levels and therefore difficult to grasp and I
understand the misunderstanding of it-it is so fundamental that I find
the matter somewhat frustrating. Economically we live in a spectrum
from the insolvent to the very wealthy. We're so focused on the
insolvency side of the spectrum that we cannot see the other end of it.
Those who succeed at the economic game realize the game starts with
merely earning income and graduates on the other side with wealth.
I highly suspect I will have disagreements on this with some of my
colleagues here, and probably will with the UST if I get a "material
misstatement" report. I have also analyzed 101(10A) subpart (B) which
would make any gift that is given on a regular basis CMI, but this one
was just a one time gift.
Since I thought audits were relatively rare I didn't exclude them from
the flat fee. I am still reluctant to charge my clients the money for
my time, but I am considering it after having 3 of them.
Steven B. Lever

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They (and the IRS)claim they do random audits. However I have never had or heard of, an elderly low income employee scheduled for audit in 30 years. At the end of the audit, if you haven't figured it out for yourself, ask why they were audited. Sometimes they will tell you. Self employed people in fields where there is a possibility of cash seem to be the biggest target.
Margaret Norman, Attny
111 N. Sepulveda Blvd. #355
Manhattan Beach, Ca. 90266
310-376-7873
Fax 310-798-0846

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If consumer debt is over 100k, it may trigger an audit.
Shannon A. Doyle
Attorney at Law
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791-1600
Tel: (626) 646-2555
Fax: (626) 332-8644
www.blclaw.com

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I've had two audits on Chapter 7 cases, both about 2-3 years ago. Both debtor couples were self-employed and fortunately well-organized so both received the coveted "no material misstatements" finding by the auditor. These are very time consuming and our retainer agreement now excludes them from the flat fee.
James R. Selth
Weintraub & Selth, APC
Sent from my Verizon Wireless 4G LTE DROID
"Steven B. Lever" wrote:
Two of my clients have been selected for UST audits in the past 2 weeks. Prior to that Ive only had one audit, about 2 years ago.
I cannot believe I have been audited twice. It says right in the documentation At least one out of every 1,000 individual Chapter 7 and 13 cases will be randomly selected for audit. In addition, a case may be selected for an exception audit (audit of a case with income or expenditures above a statistical norm).
Neither of the cases have high income or expenses, so am I (and my clients) just lucky?
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
> Tel. (562) 436-5456 ext. 1
> Fax (562) 485-6886
> sblever@leverlaw.com
> www.leverlaw.com
>
I've had two audits on Chapter 7 cases, both about 2-3 years ago. Both debtor couples were self-employed and fortunately well-organized so both received the coveted "no material misstatements" finding by the auditor. These are very time consuming and our
retainer agreement now excludes them from the flat fee.
James R. Selth
Weintraub & Selth, APC
Sent from my Verizon Wireless 4G LTE DROID
"Steven B. Lever" <sblever@leverlaw.com> wrote:

Two of my clients have been selected for UST audits in the past 2 weeks. Prior to that Ive only had one audit, about 2 years ago.

I cannot believe I have been audited twice. It says right in the documentation At least one out of every 1,000 individual Chapter 7 and 13 cases will be
randomly selected for audit. In addition, a case may be selected for an exception audit (audit of a case with income or expenditures above a statistical norm).

Neither of the cases have high income or expenses, so am I (and my clients) just lucky?

Steve

Law Offices of Steven B. Lever
>
> Steven B. Lever
>(
Tel. (562) 436-5456 ext. 1
>(
Fax (562) 485-6886
>*

The post was migrated from Yahoo.

Two of my clients have been selected for UST audits in the past 2 weeks.
Prior to that I've only had one audit, about 2 years ago.
I cannot believe I have been audited twice. It says right in the
documentation "At least one out of every 1,000 individual Chapter 7 and
13 cases will be randomly selected for audit. In addition, a case may
be selected for an exception audit (audit of a case with income or
expenditures above a statistical norm)."
Neither of the cases have high income or expenses, so am I (and my
clients) just lucky?
Steve
Law Offices of Steven B. Lever
>
> Steven B. Lever
>( Tel. (562) 436-5456 ext. 1
>( Fax (562) 485-6886
>* sblever@leverlaw.com
> www.leverlaw.com
>

The post was migrated from Yahoo.