Svetlana Kosmachevskaia has been charged with tax evasion for filing a false federal income tax return with the Internal Revenue Service (IRS) in which she failed to report income she earned from Lucky's, a "high-class" escort service, which she owned and managed. The government alleges that Svetlana failed to account for more than $300,000 in income the escorts generated in cash payments.
In her 2010 self-prepared federal income tax return, Svetlana only reported as income her W-2 wages, which she earned as an elementary school teacher. She stated that she didn't know she had to report her revenue from Lucky's on Schedule C of her 2010 federal tax return, since the business lost money that year. According to Svetlana, her posh lifestyle is the result of an inheritance received from her mother 10 years ago and alimony payments from her ex-husband (whom she suspects reported her to the IRS).
Svetlana's attorney has engaged you, a forensic accountant specializing in criminal tax matters, to assist in developing a theory of defense and countering the government’s allegations. He has requested that you review the government's proof of income and prepare an alternate proof.
What information will you require to review the government's proof of income and to prepare an alternate proof, and for what specific purposes will you require it?Copy and paste your question here...