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Author: tmeri Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Avoiding An Audit For Unusual Deductions? Date: 2/18/2004 12:11 AM
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I am in the process of making drastic changes to my finances as a result of quitting my job last year. One of the things I did was to set up a charitable trust last year while I was still employed to fund my future charitable giving. I donated the equivalent of a very large fraction of my AGI for last year to set up the trust. I normally donate cash to charity each year, but this was appreciated stock, and it was much more than I normally give.

Based on what I have read, I've set off a red flag with the IRS for an audit. I would like to avoid an audit. I'm trying to figure out if I can include a letter with my tax return explaining what is going on to reduce the chances of getting audited, and if so, what should I say in it?

I called the IRS today, and they said I needed to fill out some form (I don't have the number in front of me) but that I did not need to submit any documentation on this, that they just take my word for it. Documentation would be presented in an audit.

Given the size of the numbers, I have a hard time believing they are just going to "take my word" for it. Should I send a letter with my return, or should I just go by the rules and hope that they somehow don't select me for an audit?

The audit thing--I'm not wanting to avoid it because I've done anything wrong (I haven't, in fact, done anything wrong and know I will pass), I just generally get stressed out if someone is questioning me--it feels like being accused, and I don't like that. Furthermore, it is time-consuming and I just would rather not do it if I can avoid it, so I'd like to reduce the chances.

- tmeri
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