[jblake]

The way I set this up in my accounting system was to pile all first data deposits into an asset clearing account, create a bill to pay the client, and then record a payment from that clearing account. Since the IRS only sees income & expenses, I can understand the trigger for the CP2000. I didn't see a logical way to report this activity on my return.

I guess I need to write a short letter explaining it, saying I don't do it anymore, and include highlighted bank statements of the money coming in, and the money going back out. Unfortunately I don't have tax numbers for the clients.