Certified Public Accountants
Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
David S. Nelson, CPA
PHONE: 253-752-9522
FAX: 253-276-0144
Edition 0805-1
August, 2005
Message From Nelson & Company, P.S., CPAs
Q & A ---Real Estate and Taxes
  Q:  Before my mother's recent death, she wanted to gift her house and some land to my sister and me. She wasn't able to complete the paperwork before she died. My CPA said that was good and that it will save me a lot of money. I don't understand.
It's called stepped-up basis. Someone dying during 2005 does not have to pay a dime of estate tax if their net assets are valued at less than 1.5 million dollars. However, you are allowed to step up the value of any inherited property to the fair market value (FMV) at date of death. Use the FMV to calculate a gain or loss on the subsequent sales. This could save you a tremendous amount of capital gains tax if you sell the property soon after probate closes.

Certified Public Accountants

AUGUST, 2005

Inside This Issue...


Demetrious Eugenios, a divorce attorney in San Juan Bautista, CA was convicted of income tax evasion. After deliberating one and a half hours, the jury found that Eugenios willfully attempted to evade the payment of $613,126 in income tax due for the calendar years 1989 and 1991 to 1999.

The guilty verdict followed a six-day jury trial before U.S. District Court Judge Charles R. Breyer.

Eugenios, 58, was indicted by a federal grand jury on Sept. 30, 2003. He was charged with willfully attempting to evade the payment of $613,126 in income tax due for the calendar years 1989 and 1991 through 1999.

The government also alleged that Eugenios concealed his assets and income and provided false statements to the IRS.

For the years 1989 and 1991 through 1999, Eugenios reported gross income totaling $2,561,656 and income taxes totaling $654,724, of which he paid only $43,202.

However, during the execution of a search warrant on Eugenios residence, IRS agents discovered $42,575 in cash and $10,686 in gold and silver coins. He faces up to five years in prison and a $250,000 fine for each count.

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IRS Times & Inquirer
253-752-9522 | 1-800-669-0137

Former ESPN Reporter Gets 11 Months for Evasion

Adrian K. Karsten, a former ESPN sportscaster and winner of a 1991 Emmy Award, was sentenced by a U.S. district judge in Wisconsin to 11 months in prison for tax evasion.

Karsten, who pleaded guilty to two counts of failing to file federal income tax returns for the years 2000 and 2002, was also sentenced to nine months of home confinement, which will include electronic monitoring, as part of his two-year probation.

During the two tax years in question, Karsten received more than $600,000 in income from ESPN, where he reported from the sidelines of football games and served as a writer-producer for SportsCenter.

By failing to file tax returns, Karsten did not pay federal income taxes totaling $167,000. Under the terms of his sentence, Karsten, who has now filed tax returns for the years in question, is required to cooperate with the IRS in the collection of these taxes as well as any penalties and interest.

Tax Fraud Promoters Get Prison Time

Five people associated with a tax fraud group known as "We the People" have been sentenced to federal prison for promoting bogus tax shelters that falsely promised to lower federal income taxes.

The leader of the operation, Lynne Meredith, 55, of Sunset Beach, CA was sentenced yesterday to 121 months in prison. A federal jury last year convicted Meredith of conspiracy, four counts of mail fraud, two counts of using a false social security number, making a false statement in a passport application and five counts of failing to file a tax return.

Meredith and her co-defendants - Gayle Bybee, 57, Gregory Paul Karl, 55, Teresa Manharth Giordano, 42, and Willie Watts, 46 - were sentenced in Los Angeles. In sentencing Meredith, U.S. District Judge Dean D. Pregerson said her ideas on tax laws were "delusional."

Meredith wrote books, including How to Cook a Vulture and Vultures in Eagle's Clothing, in which she falsely claimed that individuals could stop paying income taxes, stop their employers from withholding income taxes, and refuse to produce books and records to the IRS.


Question:     I'm at my wit's end. I owe a huge amount to the IRS in back taxes, thanks to a combination of unpaid income and capital gains taxes, and now I'm wondering if I'll ever get free of debt. Is there anything I can do? I simply don't have the money to pay the tax debt!

Answer:     You're not alone. Thousands of American taxpayers are in the exact same situation you are. For a variety of reasons, it's not uncommon for taxpayers to get way behind on their tax debt. At the same time, it's not the end of the world - although it might seem like it.

As a taxpayer, you have a number of rights and options available to you. Since you obviously owe a large amount in taxes, the first thing you should do is consult with a qualified tax professional. He or she will analyze your tax filings in question, ensuring that you are not paying even a penny more than you owe.

Once you have the exact figure of your tax debt, you and your qualified tax professional will meet with an IRS agent. You'll likely have two options:

1) An Offer in Compromise - This program allows taxpayers, in certain cases in which they cannot pay the debt they owe, to make a compromise offer. Often, this offer amounts to pennies on the dollar. That's right - you can reduce your tax debt to an amount you can afford. Once that new amount is paid, your tax debt is erased.

2) Installment Agreement - For taxpayers who still have the financial ability to pay their tax debt but cannot pay it all at once, the IRS offers this Installment Agreement. After negotiating an agreement with the IRS, you can begin to pay down your tax debt with small monthly installments. That way, you can settle your debt without, say, losing your house. As a tax professional, I handle cases like yours every day. That's what I do - I'm an IRS Problem Solver. For a free, no-risk consultation, call my office at 253-752-9522 or send me an E-mail at Do it today!

David S. Nelson, C.P.A.
Certified Public Accountants

Tacoma Mall Office Building
4301 South Pine Street, Suite #241
Tacoma, Washington 98409-7205
Phone: 253-752-9522
FAX: 253-276-0144