September 26, 2015

Internal Revenue Service

Group Manager
Attn: IRS Employee
700 E San Antonio Ave C-101
El Paso, TX 79901
Re: Form 4945- E
Han Solo
1200 Luna Street
Las Cruces, NM 880021
SSN: 555-12-3456
Daytime number: 915-578-9000
Examination for Tax Years Ended: December 31, 2013
To Whom It May Concern:
Han Solo hereby protests the proposed adjustments to income and
expenses as set forth in the Form 4945- E. This protest is filed with
respect to the 30-Day Letter dated September 22, 2015 and the
accompanying explanations, which is included with this protest letter.
The taxpayer reserves the right to file one or more supplements to this
protest.
Han Solo is a calendar year-end taxpayer, and filed his federal income
tax return Form 1040 on April 15, 2014. The taxpayer requests a
conference with the Internal Revenue Office of Appeals in the El Paso,
Texas office with respect to the findings of the examining Revenue
Agent.
Taxpayer does not agree with, and hereby protests, all proposed
adjustments to income/ expenses:
Filing Status: Married Filing Jointly
Spouse: Chewy Chewbacca
SSN: 777-44-2345
Schedule C:

Earnings from taxpayer: Chewy Chewbacca

Schedule C: Net Profit- $83, 490
Self Employment Taxes Line 56: $11, 797

Gambling Winnings: $20,000 line 21 on 1040

Negligence Penalties

General Background:
Issue 1:

Filing Status- Married Filing Jointly

Spouse: Chewy Chewbacca
SSN: 777-44-2345

Facts:
The spouse listed on the Form 4945-E is incorrect, the taxpayers
spouse is Leia Organa, SSN: 555-21-5418. The taxpayers filing status
on his 2013 tax return was correct. The taxpayer has been separated
from his wife since 2009 and has full custody of the couple son Joun
Solo. Chewy Chewbacca is not the taxpayers spouse, Leia Organa and
Han Solo are married, and neither spouse has filed for divorce. In the
state of Texas, spouses are considered married until a spouse files for
divorce. An individual cannot remarry until the divorce is finalized.
Because of these facts listed, Star Chewbacca will not be included as a
dependent in the 2013 1040X that will be filed.
Law:
Texas Law, Family Code
Title 1. The Marriage Relationship
Subtitle C. Dissolution of Marriage.
IRS Tax Tip 2013-13
Issue 2:

Earnings from taxpayer: Chewy Chewbacca

Schedule C: Net Profit- $83, 490
Self Employment Taxes Line 56: $11,797

Facts:
On the Form 4945-E you are adding Schedule C earnings from taxpayer
Chewy Chewbacca on Han Solos tax return. The business has a net
income of $83,490 and self-employment taxes of $11,797. Chewy
Chewbacca is not the taxpayers spouse. This income is not related to
the taxpayer therefore he should not have to report the earnings nor
pay tax on the income. IRS code 61 defines gross income as any
amount received as compensation, interest, rents etc. to the taxpayer.
Chewy Chewbaccas income should not be included in the taxpayers
return because he is not the taxpayers spouse. Han Solos adjusted
gross income should be reduced by $83,490; the self-employment
taxes should be removed also. According to IRS code 1402 net
earnings from an individual who is conducting business related to a
Schedule C are subject to self-employment tax. The IRS addition of the
Schedule C earnings are invalid therefore the self-employment taxes
should be removed. This action will lower the taxpayers tax liability by

$11,797.
Law:
IRS Code Section 61. Gross Income Defined
26 U.S. Code Chapter 2- Tax on Self-Employment Income
Issue 3:

Gambling Winnings reported on line 21

Schedule A Miscellaneous Deduction

Facts:
The taxpayer won $15,000 from Enoor Casino and $5,000 from Blue
Moon racetrack. IRS Topic 419 states gambling winnings are fully
taxable, but a taxpayer can offset any gambling losses suffered. The
taxpayer lost $25,000 in Enoor Casino; the loss is limited to the
amount of winnings. A $15,000 loss will be reported on the taxpayers
Schedule A. Topic 419 also states that the gambling loses are not
subject to the 2% miscellaneous deduction rule. The taxpayer can
receive the full $15,000 deduction, which will offset the $20,000
gambling winnings, which will increase his adjusted gross income by
$5,000.
Law:
IRS Topic 419- Gambling Income and Losses
IRS Publication 504 Schedule A
Issue 4:

Negligence Penalties under IRC 6662

Facts:
The taxpayer relied upon tax professionals to prepare his tax return. He
asked questions about the preparation of his tax return and was
assured by the tax professionals that the tax returns was being
prepared correctly and meeting the reporting standards. The taxpayer
has acted reasonably in having his tax return prepared by qualified tax
preparers and should not be liable for the accuracy-related tax
penalties for the 2013 audit. Taxpayer reserves the right to file one or
more supplements to this protest, as appropriate. The negligence
penalty of $13,695 should be removed and the client should be given
an opportunity to file an amended return to reflect the items being
adjusted on the Form 4945-E that are not being challenged. The
taxpayer is within the three-year statue of limitation to be able to file
an amended return and to pay the difference if tax is owed according
to 6511.

Law:
IRC Section 6662
IRS Chapter 6. Statute of Limitations
25.6.1.10.2.7.2 Limitations on the Amount of a Claim
Please direct all future correspondence concerning this matter to:
Sofia Chavez, CPA
The Rebel Tax Alliance
A Non-Profit Tax Support Organization
123456 Red Street
El Paso, TX 79936
Under penalties of perjury, I declare that this protest was prepared
under my supervision and although I do not know of my own
knowledge if the facts contained herein are true, on the basis of the
information furnished me, I believe them to be true and correct.

Sofia Chavez