Over all those years, Marie never claimed any of the monies provided to her by Dustin as income on her individual tax returns, instead electing to treat the cash, rent, and cars as “gifts” excludable from income. She never received a Form 1099 from him for any of the payments. However, Marie was recently contacted by the IRS. Apparently, the IRS was auditing Dusting’s finances and found the payments made to her. The IRS is considering treating the transferred amounts as taxable compensation to Marie, which would mean she would owe a significant amount of tax, interest, and penalties. Also, Marie says doesn’t know if Dustin reported the amounts on a gift tax return. Marie has engaged you to research this matter and, hopefully, find a way to support treating the payments she received as gifts.