Free tax advice is woirth every penny you pay for it.
Having said that, it is expressly stated in the Internal Revenue Code that the burden of proving a loss on any "sale of property" is solely on the taxpayer.
The tax is imposed by statute on "income from whatever source derived,"
26 U.S. Code § 64 - Ordinary income defined
For purposes of this subtitle, the term “ordinary income” includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b).
Sold goods aren't taxable as income IF you are selling a used personal item for less than the original value. If you sell it for more than the original cost, you have a taxable gain on which income taxes are due as long term or short term capital gains, depending on how long yiur held it between axcquisition and sale.
If you receive a bill from the IRS (and some bills they insist are not really "bills," but just "suggestions"), the computers will assume, even against all the undoubted facts, that everything that the bill states is true even when the bill internally ontradicts itself, and the offical IRS records,, And, again, the bill may be accurate. Even a blind swuirrel, and all that.
My saga. IRS computers and software, dating from the Nixon Administration, lose data regularly, incorrecly apply the law (such as by using the wrong tax rate for a given category of income), and cannot consistenty do accurate arithmatic. The employees know this and Congress klnows this, but the employees have no ability to control the computers, due to budget slashes, mostly under Obama, Congress refuses to increase their funding, cut one-third plus twelve years of inflation, becasue they think it would be unpopular. Thsi explans why IRS is behind by monre than a year in actyually procesing returns, and six million returns behind in sedning out refunds,. Dig it, yoiu may get a refund and be told years later ,as we were, that you owe much more than the refund already sent to you. THis could be accurate or due to some computer fanticised underreporting of income or overreporting of deductions.. Noone is left to check the aritmatic, tax rate calculations, or notice internally inconsistent claims IN THE SAME BILL: "You reported 0. "You should have reported a total of 43K, or 31K, or 29K,or 14K, or 1200 PLUS penalties and interest - all for the same year." That $1200 buienss REALLY made me crazy. We literally never made that little.
From my experience over a year, If you are reasonably polite, IRS personnel, beat uo all day, every day, by angry taxpayers will try to help. I talked to many front-line types, and a couple of "Directors." One of the latter got me to the Deputy Commisioner in chrge of collections, the civil service head of the IRS, who sees Predients come and go. This process resulted in five letters stating that we owed no tax. But the computer silll ground out ever-more-threatening notices. Your records are not the data that the computers recognize as reality. Indeed, IRS has no no consolidated data base. In a person, this is "psychosis." namely "schizophrenia.." At the IRS, this is the World that IRS employee must endure, and it has gone on for years and yearswith no hope of relief from them or taxpayers..
Unless some employee simply ignores the rules and pushes the right buttons to make a bill go away, which on of them did for us once ("Don't do anythoing. I'll take care of it.")., you likely will face a stressful choice. (I bless the name of my unknown friend. I recall nothing, nothing that would help identify him. Nothing!)
Choice One. (A) Pay what believe you do not owe and give up OR (B) pay and go the regular U.S. District Court - bery formal nd not happy to see lay people, who lagely donlt know the rules.. Not a big deal for me, but I was once a lawyer admitted to all the federal courts. No biggie even in my dotage.
Choice Two is somewhat less formal, less complicated, but less "just," to use a word. You can elect not pay and go the the IRS very own court, the U.S. Tax Court, where you get the fish eye as a presumed "Tax Protestor" and no jury but also get expedited proceedings, perhap even an informal arbitration, and the second team of U.S. lawyers. Their prejudice is understandable: they get the bulk of the aluminum foil hat crowd and delibereate tax evaders. Typical argyument for not reporting income or payinjg taxes: "I forgot." [But why are you suing. Forgetting does not satisfy tax debt.] "Ohio is not a state so none of my income is taxable by the U.S. Government." "I am a soverign individual, so no government can tax me," "There is gold fringe on the U.S. flag, so I don't have to pay U,S, Income Tax." "Tax is only due on income earned in a foreign country." " God told me I do not owe any tax." "My income was all in paper money that is unconstitutional so I do not owe taxes." Up to you, but all such arguments are guaranteed losers and make money only for thsoe selling books and "courses" urguing you to make such argumensts. A couple of them took their own advice and got to vacation in Hotel Fed.
I, foolishly, went to U.S. Tax Court. I wish I had not. A jury trial would have been great fun. But, a year later when I finally got a pretrial hearing, the USTC judge seemed rather PO'd,at the IRS lawyer in view of the five letters from her client saying we owned nothing AND the IRS computer notice stating that we had overreported income and overpaid taxes in the same year they said we had reported no income. Besides, I dressed up nicely for the frist time in years, did not pound the table, had my US. Supreme Court admission certficate in hand and "spoke legal," The IRS lawyer also seems nervious. Totally ignoiring the other side's formal "discovery" can start to look likie a big blunder when a non-nut shows up with the Federal Rules in hand talkng about contempt and "sanctions" [$$$].
After the IRS lawyer agreed IRS would go away, basically at the Court's demand ( "Counsel, we have no time for this nonsense" said the Senior Judge and former Chief Judge of the Tax Court.) , the IRS computer sent us another tiny refund.
The IRS begged me not so send it back. "The paperwork." "The search for someone to blame." "Please keep it." The check is taped to my computer. Too bad for IRS the Tax Court and IRS lawyer assumed I was some sort of nut case, or it could have been over eleven months earlier without the Judge having reason to recall how screwed up they are at IRS.
Few without experience "at the bar" would want to do what I did, but this was my experience for what it's worth. The amount at stake ranged from tens of thousands to about $500, depending on which totally fictional calculation was accepted. Oh, and after I sued, the IRS lawyer came up with that sixth imaginary figure of claimed underreporting -- AFTER the erroneous notice that we were due a refund of about $750 due to overreporting of income. (Their computer had lost a payment ["didistribution"]) from my 401K company retirement plan. They got the 1099R, I got the 1099R. I reported the amount on our 1040. They lost it. See, just too screwed up to be a conspiracy, unless it's by Congress.
