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California Personal Income Tax Audit Issues: Why the tax man cometh!

These issues typically involve substantiation or interpretation of the facts:

    •    Gains and Losses from Sales of Stock: When shares of stocks are sold, FTB will ask for substantiation for the gains/losses. Adjustments are typically found in the computation of stock basis.

    •    Real Property Sales: FTB will typically ask for substantiation of purchase costs, improvements, and repairs. Adjustments are made when the documentation provided does not reconcile to the amounts claimed.

    •    Like-Kind Exchanges: FTB will look at all aspects of the exchange. Common adjustments are for certain requirements not being met, when there is a difference in the calculation of boot, or when the property basis is unsubstantiated.

    •    Charitable Contributions: FTB will ask for appraisal reports for large non-cash donations to support the claimed fair market value (FMV) of donated items. Adjustments occur when they find that FMV is overstated.

Check out this Tax News article!

Common Audit Issues and Audit Tips:

https://www.ftb.ca.gov/professionals/taxnews/Editions/2017/September.shtml#Article01

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