I hear what you are saying. Just not sure that position, if taken by the IRS, would hold up in court.
If the IRS cannot prove their position, then any penalties or interest would be disregarded.
Obviously, we have to keep records of everything.
Remember the line from “The Firm”: “I don’t care about an audit, they just better not win.”
But how expensive is that fight? Attorneys want to be paid. We are self employed and our income is not always predictable. We overpaid on our estimated because our expenses on our farm business were greater than anticipated.
Going into this next tax season is going to be a mess for us until this is resolved.