If you filed your business income and expenses as a proprietor in 2004 and reported $100,000 or more in gross receipts, your chances of IRS audit in 2005 were 3.68% (2004 returns are still open for audit).1 Had you reported this income as an S corporation, your chances of audit were only 0.30%.2

You have probably read that the home office increases your chances of IRS audit. We’ve read that, too, but we don’t believe it. Regardless, let’s assume that ... Log in to view full article.