Well it is a tax season once again. It is the time of year that I just drag my feet to sort out all our tax documents before filing our federal, state and deceasing S corp tax returns. Well I have to file my S corp return by 3/15, which is today. I failed to have it done past weekend when I planned and dragged until this morning.
The difference is that I did have an excuse this year. Once a while I receive some IRS letters for my S corp, which are all junk. Usually I did not even open it and throw right into my recycling basket. Well this one came several days ago and stayed on my desk unopened until two night ago. Before I was going to toss it, I opened the letter for no particuliar reason and read a few lines on the first page. I am just grateful right now that I did not have a heart attack then. I could not believe my eyes - OWE $24,334.xx to IRS. It tooks me a while to calm down and see what heck IRS wants from me.
Well the story is simple. I exercised and sold all my stock option before I left Earthlink. Since I did exercise and sell the stock at the same time, the profit was treated as ordinary income like my salary instead of capital gain. It was reported in my 2005 W-2. Supposedly that ends the story. However, the broker reported to IRS as well. Even worse, it only reported the total sale which was much higher than exact profit since the stock option had cost. Then IRS assumed that I did not pay the tax since Schedule D(for capital gain/loss) was not filed. I did not have choice but dig into my archive to find all the supporting documents. I barely slept last two nights to put all the information together to respond this IRS notification.
It does make me so mad that our government is capable of wiretaping anyone around the world. But can not avoid this stupid mistake. Instead it really can use this aggressivenes and our taxpayer's money to go after those real crooks.
I finally sent my response to IRS this morning and hope that It is good enough and do not have to deal with it again.
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2 comments:
Meanwhile, Halliburton gets to move to Dubai and forget about EVER paying any more taxes. All they do is suck up our tax revenues, never paying anything back.
I wonder how long it will take the IRS to respond. I'm betting it will be more than 3 months.
OUCH, that hurts. Godd thing you caught it though, it could have been much worse.
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