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Summary: Shareholders of audited companies should expect some attention from the IRS. Learn how to handle the audit of a company of which you are a shareholder in this free personal finance video from an experienced accountant.
Diana Crawford is a CPA with more than 20 years of public accounting experience. She is a graduate of Georgia State University with a bachelor's degree in accounting.read more
"How to avoid an IRS audit. If you are a partner or a shareholder in an entity that has been audited by the IRs, you can expect to at least have a glance taken at your individual tax return if there is a problem identifying with the partnership or the corporate return. If you're a shareholder in one of these companies and there's an item noted in the tax return that let's say having to do with mileage, automobile expenses, and question about auto allowances per se that has been an issue on the corporate or the partnership return, then it very well could be that the IRS is going to have your return amended to go along with the items that have been amended on the corporate or the partnership return. So, if you're a member of a partnership or a corporation and that entity gets audited you might be aware that you could also be audited because of your relationship with that entity. How to avoid that, if that entity is audited and you know that that information is going to affect the change on your personal return, you want to be proactive and go ahead and make those changes to your return before the IRs comes knocking and wants to make those changes for you. That's how you can avoid an audit of your return."
eHow Article: How a Company Audit Affects Shareholders