TAX 700_ Discussion_ Week 2_ Post 7

Usinga ana examplea ofa ana audita froma youra worka experiencea ora youra research,a explaina thea

circumstancesa thata leda thea IRSa toa issuea aa NOPA.

Bauscha Healtha Companiesa Inc.a (Bauscha Health)a discloseda ina aa securitya linga ona Septembera 30,a 2021,a

thata ita hada beena issueda ana IRSa nocea ofa proposeda adjustmenta (NOPA)a whicha contesteda thea validitya

ofa aa capitala lossa incurreda ina 2017.

Thea 10-Qa reporta fora thea thirda quartera ofa 2021a bya Bauscha Healtha revealeda thata thea NOPAa isa aa

consequencea ofa ana internala restructuringa undertakena bya thea companya ina 2017,a specicallya througha aa

Granitea Trusta transacon.a Thisa transacona leda toa aa capitala lossa fora Bauscha Health,a referreda toa asa thea

"Granitea Trusta transacon"a bya Bauscha Healtha indicatesa thata thea companya approacheda thea

transacona asa thea dissoluona ofa aa regulateda corporaona ina accordancea witha secona 332.a

Furthermore,a thea interpretaona ofa thea IRS'sa stancea bya Bauscha Healtha pertainsa toa secona

368(a)(1)(C),a whicha statesa thata thea exchangea ofa aa signicanta porona ofa aa targeta corporaon'sa assetsa

exclusivelya fora vonga stocka ina thea acquiringa corporaona (ora itsa parent)a qualiesa asa aa tax-exempta

reorganizaon,a specicallya referreda toa asa aa Ca reorganizaon.a Ifa thea transacona thata tooka placea ina

2017a werea toa bea classieda asa eithera aa secona 332a liquidaona ora aa Ca reorganizaon,a ita woulda qualifya

asa aa non-recogniona transacon,a therebya disallowinga thea recogniona ofa thea capitala lossa fora Bauscha

Health.

Also,a explain,a ina layman'sa terms,a thea purposea ofa aa NOPAa anda whethera issuesa listeda ina thea NOPAa area

sucha asa responsea obligaonsa anda avenuesa fora appeals.

Aa NOPA,a alsoa knowna asa IRSa forma 5701,a isa toa nofya taxpayersa abouta proposeda adjustmentsa thea IRSa

intendsa toa makea toa theira taxa returnsa anda providea instruconsa ona howa toa disputea ora agreea witha thea

proposeda changes.a Thisa nocea isa senta whena thea IRSa idenesa discrepanciesa ora errorsa ina thea

taxpayer'sa reporteda income,a deducons,a credits,a ora taxa liabilitya duringa ana examinaona ora audit.a Ita

allowsa thea taxpayera toa reviewa thea proposeda adjustmentsa anda providea anya addionala informaona ora

argumentsa toa supporta theira posion.a Thea purposea isa toa iniatea aa dialoguea betweena thea taxpayera anda

thea IRSa toa resolvea disputesa anda reacha aa faira anda accuratea resoluona regardinga thea taxpayer'sa taxa

obligaons.a

Thea issuesa listeda ona aa NOPAa area negoable.a Taxpayersa havea thea righta toa disputea thea proposeda

documentaon,a ora requesnga aa meenga witha thea IRS.a Thea taxpayera anda thea IRSa cana engagea ina

negoaonsa toa resolvea anya disagreementsa anda reacha aa mutuallya acceptablea resoluon.a

Aa Nocea ofa Proposeda Adjustment,a ora NOPA,a isa parta ofa thea execuona phasea ofa IRS’sa audita process.a a

Thea purposea ofa thea NOPAa isa toa providea aa taxpayera witha aa computaona ofa proposeda adjustmentsa toa

theira taxa return.a a Ifa thea taxpayera agrees,a theya signa anda returna thea agreementa forms.a a Ifa theya don’ta

IRMa 4.46.4.2(5)a statesa thata thea IRSa willa solicita ana acknowledgementa ofa thea factsa froma thea taxpayera toa

thea proposeda adjustmentsa (IRMa 4.46.4.13.3).a a a a

federala incomea taxa returna wasa beinga audited.a a Thea nocea containeda aa proposeda changea toa thea

taxpayer’sa returna resulnga ina taxa duea froma incomea relateda toa aa 1099-Ra thata wasa issueda toa thea

taxpayer,a buta thea incomea wasa nota claimeda ona hera return.

Thea nocea provideda thea taxpayera witha instruconsa ona whata toa doa ifa shea eithera agreeda ora disagreeda

witha thea proposeda changes,a anda aa deadlinea toa respond.a a Thea taxpayera disagreeda witha thea NOPAa

becausea thea 1099-Ra shoulda havea beena issueda toa hera deceaseda husband,a whoa leda aa separatea return.a

a Shea aempteda toa geta thea payera toa correcta thea 1099-Ra toa noa avail.a

Documentaona anda ana explanaona werea provideda melya toa thea IRSa ina responsea toa thea NOPA.a a Thea

processa tooka aa longa me,a buta eventuallya througha wriena anda verbala communicaona thea taxpayera

wasa ablea toa providea thea propera supporta toa thea IRS,a anda theya eventuallya agreeda witha hera posion.

whicha area generallya belowa $a 50.a Asa aa result,a thea solea tradera hasa nota leda thea currenta amounta ofa taxa

toa ita withina aa perioda ofa twoa months.

Aa Nocea ofa Proposeda Adjustmenta refersa toa ana instrumenta thata cana bea useda eithera bya thea IRSa ora

taxpayersa toa starta aa formala taxa dispute.a Thea Internala Revenuea Servicea maya issuea aa NOPAa ina casea thea

taxpayera hasa submieda dierenta informaona thana whata isa expecteda bya thea IRS.a Bya issuinga aa NOPA,a

thea IRSa basicallya startsa aa taxa disputea processa formally.a Thea fundamentala purposea ofa thea NOPAa

instrumenta isa toa givea advicea ina ordera toa makea changesa toa thea taxa posiona whicha thea issuinga partya

intendsa toa make.a Ita alsoa capturesa thea basisa ona whicha thea changesa needa toa bea made.a Ina thea NOPA,a ita

isa vitala toa includea appropriatea factsa toa supporta thea changea thata thea issuinga partya wantsa toa bea made.

Whilea thea NOPAa isa issueda toa thea taxpayer,a ita isa necessarya fora thea issuea teama toa starta earlya issuea

resoluon,a i.e.,a asa soona asa thea taxa determinaona hasa beena reached.a Thea amounta thata hasa beena

proposeda ina aa Nocea ofa Proposeda Adjustmenta isa negoablea ina nature.a Sincea therea exista aa fewa

Internala Revenuea Servicea needa toa arrivea ata ana amicablea resoluona ora agreementa ona thea maera

withina thirtya days.

4.46.4a execunga thea examinaon:a Internala Revenuea Service.a 4.46.4a Execunga thea Examinaona |a

Internala Revenuea Service.a (2021).a hps://www.irs.gov/irm/part4/irm_04-046-004

Guidea fora complenga NOPAa fora disputea abouta unreturneda businessa income.a Inlanda Revenue.a (2022).a

hps://www.ird.govt.nz/managing-my-tax/disputes/when-you-start-the-disputes-process/guide-for-

4.46.4a Execunga thea Examinaona |a Internala Revenuea Service.a (n.d.).a Www.irs.gov.a

hps://www.irs.gov/irm/part4/irm_04-046-004

26a U.S.a Codea §a 6213a -a Restriconsa applicablea toa deciencies;a peona toa Taxa Court.a (n.d.).a LIIa /a Legala

Informaona Instute.a

hps://www.law.cornell.edu/uscode/text/26/6213#:~:text=26%20U.S.%20Code%20%C2%A7%20621

3%20-%20Restricons%20applicable

26a U.S.a Codea §a 7602a -a Examinaona ofa booksa anda witnesses.a (n.d.).a LIIa /a Legala Informaona Instute.a

hps://www.law.cornell.edu/uscode/text/26/7602

Lesser,a J.a A.a (2022,a Maya 26).a Liquidaonsa anda Ca Reorganizaonsa Througha thea Prisma ofa thea IRSa 2021a

Audita ofa Bauscha Health’sa 2017a Granitea Trusta Transacon.a Www.americanbar.org.a