Basis and material participation in businesses will continue to be a focus for the IRS, Lutz said. “The IRS also plans to use artificial intelligence to examine the balance sheets of large partnerships,” he said.
Charitable contributions are another concern, particularly noncash charitable contributions, Taibi said.
“If there are any omitted items on this form, they’ll disallow the entire charitable deduction," she said. "This could be as simple as not stating the original cost of a work of art or antique donated, even though it’s the current fair market value that’s the deductible amount. This form also requires the signature of the donor organization.
“Charitable contributions of property over certain amounts require a valuation by a qualified appraiser,” Taibi said. “Failure to have an appraisal either attached ... or available for audit will result in a disallowance. It isn’t something you can decide to appraise if you’re audited.”
The IRS has indicated that they are planning more cross-division collaboration, “meaning that an individual taxpayer who gets audited may reasonably expect to have business entities, trusts, estate and gift and even foundation and non-profit entity returns opened for scrutiny as well,” Yamano said.