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I was audited last year for 05 and it took literally 9 months because the IRS is so slow and I was a "low priority" supposedly. Luckily I hand my records to my accountant every year and let him do everything because he handled the whole audit. I was required to dig up bank statements for EVERY account, have accounting of all cash on hand, provide copies of all leases, etc, etc. I knew I was fine because a decade ago I decided I like to sleep at night and its not worth the price to have the IRS looming over your head. That background silent stress is a killer. Be aggressive and write off everything you can substantiate. Always imagine yourself in a room with your accountant and an IRS auditor and explaining your deduction and if passes the "I can say this out loud in front of a room full of people" go ahead and deduct. Stories like hardship are usually inaccurate. If you're making $ the IRS will NOT discount. They do have one time freebies for fees & interest that can really add up for some people. My guess is that his losses were more substantial than what they thought he owed and they were generous on their valuations. THERE ARE NO FREE RIDES.
Bottom line is that "If you are paying taxes that means you're making $ and billions of people would happily switch places with you." Everyone in the Adult industry needs to be extra vigilant in paying taxes, no one is granting us any favors.
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