Received IRS CP105 Notice - Parents Owe more than 100k for Gift Tax Miscalculation

The CP105 notice is basically the IRS saying they found issues with the gift tax return. You're right to be concerned about the single 709 form - for gift splitting, each spouse needs to file their own Form 709, even though they're splitting the same gift. For a life estate deed situation, there are specific valuation methods that need to be followed. The difference between the purchase price and current value isn't always what determines the gift tax. It depends on the value of the remainder interest being transferred and the retained life estate. I'd recommend getting a tax attorney who specializes in gift tax issues to review everything ASAP. With a $135k assessment, you don't want to rely just on the original accountant who made the mistake. The IRS allows you to challenge their findings, but you'll need proper documentation and correct valuation methods to support your case.

I had a similar nightmare with a gift tax form last year. The IRS calculations seemed completely wrong, and I was panicking about owing tens of thousands. I tried calling them myself but kept hitting dead ends. I finally used this service called taxr.ai (https://taxr.ai) that helped analyze my CP105 notice and gift tax forms. They identified exactly where the miscalculations happened and helped me understand what documentation I needed to respond. Their system caught that my accountant had used outdated valuation tables for the life estate calculation, which was throwing everything off. They even helped draft the response letter explaining the errors in the IRS assessment. Saved me so much stress trying to figure it out myself!

Just wanted to follow up - I decided to try taxr.ai after my initial skepticism. Honestly, it was a lifesaver for a similar issue with Form 709 gift tax problems. I uploaded my parents' CP105 notice and the original 709 form, and the analysis showed exactly where the valuation method for the life estate was incorrect. The accountant had used a simple property value difference instead of the proper actuarial tables for valuing the remainder interest. The service walked me through preparing a response that included the correct calculations based on IRS Publication 1457 tables. We're still waiting for the final determination, but the IRS agent I spoke with acknowledged our calculations looked correct and said the assessment would likely be reduced significantly. Wish I'd known about this earlier before spending weeks stressing about it!

For anyone dealing with these CP105 notices - I highly recommend trying to get an actual human at the IRS on the phone before doing anything else. They can sometimes explain exactly what triggered the notice and the specific issues they found. That said, calling the IRS these days is practically impossible. I spent 3 weeks trying, waiting on hold for hours only to get disconnected. Finally tried Claimyr (https://claimyr.com) after seeing it in a YouTube video (https://youtu.be/_kiP6q8DX5c). They basically hold your place in the IRS phone queue and call you when an agent picks up. Once I actually spoke with someone at the IRS, they explained that the gift tax calculation on my parents' life estate was using incorrect remainder interest factors, which was a totally different issue than what their accountant thought. Having that conversation saved us from going down the wrong path with our response.

I need to eat my words here. After posting my skeptical comment yesterday, I decided to try Claimyr as a last resort for my own tax issue (not gift tax, but I had a CP2000 notice). I've been trying to reach the IRS for WEEKS about this notice. Used Claimyr this morning and got connected to an actual IRS agent within 90 minutes. The agent was able to put a temporary hold on collections while I gather documentation to respond to the notice. For what it's worth, the agent also mentioned that gift tax issues with Form 709 and life estates are extremely common right now because property values have increased so much and many accountants aren't using the correct valuation methods. He suggested getting a tax attorney who specializes in gift tax rather than just an accountant if the amount is over $100k.

Some practical advice from someone who went through almost the exact same situation last year: 1) Don't panic - the IRS assessment is often negotiable with proper documentation 2) Get copies of all paperwork your parents and accountant submitted 3) Find out if gift splitting was properly elected on the 709 4) Verify which IRS life estate valuation tables were used (they should use Table S from Pub 1457) 5) Calculate the actual value of the remainder interest using current ages and interest rates 6) Determine if your parents' lifetime gift tax exemption was properly applied In our case, the accountant had used outdated valuation tables and completely missed applying the lifetime exemption. We ended up owing nothing after submitting the corrected calculation.

Just wanna say that the accountant should pay for this mess if they screwed up! If they submitted incorrect forms or calculations, they should at least help fix it for free or compensate for any penalties. Accountants carry professional liability insurance for exactly this reason. Don't let them off the hook if they made a serious error that's costing your parents $135k!

This is a really complex situation, and I feel for your parents dealing with such a massive assessment. Based on what you've described, there are definitely red flags with how this was handled. The single 709 form issue you mentioned is huge - when couples elect gift splitting for life estate transfers, each spouse absolutely needs to file their own Form 709 with proper consent elections. This isn't optional. A few immediate steps I'd recommend: 1) Don't wait to respond - CP105 notices typically have 30-day deadlines 2) Get the exact language from the notice about what the IRS thinks was miscalculated 3) Gather all documentation about the original property purchase, current appraisal, and the life estate deed 4) Find out what actuarial factors and interest rates were used in the original calculation Life estate valuations are incredibly technical and use specific IRS tables that change regularly. The $220k increase in property value isn't necessarily the taxable gift amount - it depends on your parents' ages, current interest rates, and whether they properly retained life estate rights. Given the amount involved, I'd strongly suggest getting a second opinion from an estate planning attorney who specializes in gift tax, not just another accountant. This is way too much money to leave to chance, and the original accountant clearly made some serious errors.