July, 2007

Message from Nelson & Company, P.S., CPAs

Q & A ---Stock to Sell

  Q:  I have a stock dividend reinvestment account. I plan to sell the stock this year. How do I figure the gain?
  A:  Hopefully, you kept all of the yearly statements showing the amount of dividends used to purchase shares of stock. If you don't have the records, contact Shareholder Relations or the Trust Company that administers the plan for your company to obtain the purchase records. Once you know the total cost of the purchased shares you want to sell, subtract the sales price to compute your gain.

NELSON & COMPANY, P.S.
Certified Public Accountants
www.DNelsonCPAs.com

JULY, 2007

Inside This Issue....

Telecom Executive Indicted for Evasion
CEO Guilty of Hiding $1.1m
Former Lawman, Politician
Pleads Guilty to Fraud
IRS Question Corner

"As a pastor, I've always wondered if I was filing my income taxes right. It's kind of a relief to find out for sure!"

COP SENTENCED TO
HOME CONFINEMENT

James Estrella, a former San Diego Police Department officer, was sentenced to serve 21 months in home confinement after the former lawman was convicted of attempted tax evasion. He was also ordered to pay $220,000 in restitution to the IRS.

Estrella failed to file income tax returns for the calendar years 2001 through 2003 and failed to pay federal income taxes totaling more than $63,000 for those three years. Estrella also acknowledged that he knowingly sold stolen property on eBay during the years 2001 through 2003.


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IRS Times & Inquirer
NELSON & COMPANY, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
253-752-9522 | 1-800-669-0137

Telecom Executive Indicted for Evasion

The president of California-based Allied Telecom was indicted on two counts of evading her federal income taxes for the years 2000 and 2001.

The 39-year-old Diana Hojsak - aka Diana Lu or Jing Jing Lu - was also charged with two counts of filing false federal income tax returns for her wholly owned corporation, Allied Telecom International Inc.

Hojsak is charged with diverting commission payments payable to Allied Telecom to her personal bank account in Hong Kong. The diverted commissions did not appear on her federal income tax returns or on the tax returns of Allied Telecom International, as required by the law. While working for Allied Telecom International, Hojsak traveled extensively in Asia. Hosjak used her personal bank account in Hong Kong to conceal the funds she diverted from her corporation. Hojsak hid the diverted commissions from the accountant who prepared her personal tax returns and the tax returns for Allied Telecom.

If convicted, she faces up to five years in prison.


CEO Guilty of Hiding $1.1m

The chief executive of a California startup company pleaded guilty to tax evasion after not reporting more than $1.1 million in income.

John Frances Griffin, 44, of Orinda, CA, was charged with 15 counts of mail fraud, two counts of tax evasion and one count of wire fraud in connection with a scheme in which he allegedly lied to investors and employees about making significant loans to the company he was running.

According to the plea agreement, Griffin was the CEO of VaporTech Inc., a start-up company in Livermore, CA, involved in the research and development of technology, which converts fuel to hot water, high-quality steam or superheated water vapor. From 2004 to 2005, Griffin received taxable income in excess of $1,198,700 yet failed to file federal income tax returns.

Griffin faces up to five years in prison for each count of tax evasion.


IRS QUESTION CORNER...

Question:   I've heard the Internal Revenue Service is getting incredibly aggressive. Then I read about the Offer in Compromise. That doesn't sound like the IRS I've come to understand. What's the deal? Is there really such a thing as the Offer in Compromise?

Answer:   The Offer in Compromise started as an IRS program after tax-collection agents learned a hard lesson: The strong arm isn't always the most effective one.

After years and years of beating on doors in an effort to chase down those who owe back taxes, the IRS realized that, in some situations, a gentler approach can be more effective.

Enter, the Offer in Compromise. If you think you might benefit from this program, the first thing you should do is consult a qualified tax professional. He or she will go through your previous returns line-by-line to determine the exact amount you owe the IRS. Once that figure is determined, you and the tax professional will meet with the IRS to discuss an Offer in Compromise. This offer is the amount of money you will pay to settle your tax debt once and for all.

Believe it or not, the Offer in Compromise can reduce your tax debt by pennies on the dollar. It is, without doubt, one of the best ways to eliminate nagging tax headaches and start over fresh with the government.

However, not everyone qualifies for the program. It is intended for taxpayers who, for whatever reason, no longer have the financial ability to pay their tax debt as it is. But for those who do qualify, it can be a life-changing program.

If you or someone you know thinks this program is for them, I can help. For a free, no-risk consultation, please call my office at 253-752-9522 or send me an E-mail at Firm@DNelsonCPAs.com. Do it today!


 

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Nelson & Company, P.S., CPAs Since 1979

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