Legal Question in Tax Law in California

rental income properties and write offs

A family member of mine may be audited this year. The concern is most receipts and proof of repairs made in 2001’ on a rental home were lost. Furthermore in that same year a new roof was written off as roof repair. What’s the most likely outcome if the audit happens in regards to payments, fines , criminal or civil prosecution.

Thank You

Asked on 1/18/04, 3:59 pm

1 Answer from Attorneys

Ken Koenen Koenen & Tokunaga, P.C.

Re: rental income properties and write offs

The roof should have been capitalized and depreciated over the expected lifetime of the new roof. They should try to get other receipts copies from whomever they made purchases from. They may have other deductions that they could have taken that could offset any changes made by the IRS.

Don't worry about criminal. There will be some interest along with the additional tax. Depending on how much it changed the overall amount of income, there may or may not be any penalties.

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Answered on 1/18/04, 6:33 pm

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