War Against the Wannabe Rich – Punishing success with Marxist “progressive” tax rates has long been the cornerstone of tax policy in this country and will only get worse with an openly Marxist administration and Congress in charge of our lives.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/27/2009 07:17:00 PM Send this post:

Just as with other kinds of entities, there are pros and cons for using LLCs.  As with any entity choice, there is no such thing as a cut and dried selection process.  It requires an intelligent judgment from an experienced professional tax advisor after asking a lot of questions, as I explain in this vidcast.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/26/2009 01:36:00 PM Send this post:

Q:

Hello Kerry,

I was wondering if you could help me out with a few questions. I have been doing quite a bit of extensive searching for the maximum gift exclusions for years 1994, 1995, and 1996 and haven’t been able to get anywhere. Was wondering if maybe you might know what these numbers would be? I found your website during the many searches I’ve done.

Thanks so much for your help in advance.

It was $10,000 for each of those years, as you can see in the attached chart, which was part of the more extensive history of the gift tax that you can download from here.

Good luck. I hope this helps.

Kerry Kerstetter

Labels: Gifting

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/26/2009 01:05:00 PM Send this post:

Q:

Subject: Section 179 question

I found your organization via Google, and the information is very helpful!
I own a Dental Laboratory, and want to purchase a $33,000 cad cam system.  My question:  can I take advantage of a year-end purchase incentive by the manufacturer, and have the purchase documents dated December 2009, but take advantage of the section 179 deduction in 2010?  I won't begin using the new equipment until January.
 
Thank you for your help!

A:

You seem to have the opposite situation than most people present; when they want to claim Section 179 in the year prior to actually using the equipment.

If you don't actually place the new equipment into service until 2010, you shouldn't have any problem setting it up on your 2010 tax return's depreciation schedule and claiming Section 179, subject to the other limitations that could affect the actual deduction.

Your own personal professional tax advisor should be able to give you more specific advice on this.

Good-luck.

 Kerry Kerstetter 

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/26/2009 12:58:00 PM Send this post:

Santa Harry’s Sleigh Full of New Health Taxes – Another look at some of the new taxes we will have to cope with thanks to our new socialized health care system.

Labels: TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/23/2009 06:37:00 PM Send this post:

Comprehensive List of Tax Hikes in Reid-Obama Health Bill UPDATED – As always, much more work for us in the tax profession.

Labels: TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/21/2009 10:29:00 AM Send this post:

From the latest issue of Intuit’s ProConnection newsletter: 

Quick Tax Relief for Clients with Net Operating Losses. Longer Carryback, Larger Scope

Three Versions of Homebuyer Credit May Confuse Clients  – On a related note, the folks at Jennings Seminars have a handy table of the different applications of the homebuyer’s credits available for download.

New Law Mandates Electronic Filing by Return Preparers If Filing Ten or More Returns – As a stubborn hold-out on e-filing so that I can attach a lot of explanatory details to tax returns, this was something I was not happy to see.  I will be investigating the penalties for not complying with  this request and will most likely continue to only prepare paper tax returns. The Bob Jennings seminar speaker a few weeks ago mentioned that e-filing is going to allow attachments of pdf pages in the next few years, so that may be what I need to be able to attach all of the self defense documents that I like to include with tax returns.  Until that is possible, I will continue to refuse to e-file.

Labels: NewTaxLaws

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/19/2009 01:53:00 PM Send this post:

At the risk of further offending stockbrokers, there are enough of them who worry about their own commissions more than their clients’ welfare to be concerned when they advise a lot of sales without proper substantiation. 

This letter from a client is typical of many that we will be seeing as the year comes to an end and the stockbrokers need to get their own numbers up.

Dear Kerry:

Keep coming back to doing absolutely nothing in regard to what I am presenting to you.  But want to out fox Congress and Obama, I had planned to sell stock and take profits.  But recall, we sold and closed on our rent house and $46,000 profit without calculating 2009 expenses.  This rental profit may affect these stocks sales.

 

Should we sell some stock for $25,000+/- Net Gain (Gross = $105,000+/-) so as to take the 15% Capital Gains instead of the 25% retro 2010 Capital Gains?  Our Financial Advisor (who is merely an order taker) claims we have $20,000. profit for 2009.  In fact, he called and asked if we wanted to sell some stock at a $20,000. loss so to pay no Capital Gains for 2009.  This seems stupid and I have yet to explore his assertion.  But he would get his commissions. I am not feeling benevolent to him.

 Following is his message.  If we sold stock we would propose selling all Home Banc (3,302 sh)$75,000) Apple. (120sh),$24,000 & Acxiom (1,600 sh) $18,900.

I would look at selling 1/3 of your HOMB or $25,000.  Your cost basis is 8.60 and it is currently at 23.00.  Sell 1/2 your Apple or approximately $11,600.  Your cost basis is 120.57 and is currently at $195.  Sell ACXM or %19,200.  Cost basis is 9.64 and is currently 12.02.  This would take about $55,000 out of the market.  I think we should take it and look at something more conservative or in the bond market as you need to get your assets larger in that area.   Call me and we can go over it.

My Reply:

 While there have been indications that Obama wants to raise long term capital gains (LTCG) tax rates as part of his twisted concept of "fairness," nothing has been done yet to change what we have for the next few years.  2010 rates are scheduled to be the same 15% max as they are for 2009.  If no new legislation is enacted before 2011, the LTCG rate is scheduled to rise to a 20% max for 2011 and beyond.

While I have seen a lot of people advising investors to sell off appreciated assets in 2009 and 2010 so they can avoid the higher rates in future years, I'm not a big fan of intentionally paying a lot of taxes sooner rather than later.

As I constantly have to remind people, any sane investment strategy should be based on the fundamental economic realities and not on tax aspects. This means that you should sell off stocks when they appear to have peaked in value and are close to dropping.

The other reason to sell prematurely would be if there is an alternative investment opportunity for the money you have tied up in stocks that will be much more profitable than you are currently earning, including enough extra to cover the taxes you would have to pay on the sale of the stocks.

I don't want to accuse your stockbroker of partaking in the time honored tradition commission based professionals have of churning your account simply to generate commissions, but it is smelling a lot like that to me.

Danger sign #1: If the stocks he is advising you to sell have peaked and will soon be on their way down, why is he only advising you to sell off part of your holdings in those stocks?  If they are still a good stock to hold onto for basic investment fundamentals, why sell off any?

If he has a new investment opportunity that he can guarantee will outperform the stocks you currently have, a wiser move would probably be to invest new money into some of that rather than selling off stocks that are still doing well.

While it has always been a truism to diversify investment portfolios and not keep all of your eggs in one basket, the stockbroker comments about this are a little too vague to give me any confidence that moving the money from the stocks to something else will be any better for anyone other than his commissions.

I don't have a crystal ball in regard to predicting future stock values; but I have developed a keen sense of smell for churning.  It may sound extremely cynical, but I have seen so many cases where clients' accounts have been literally wiped out by transaction costs that served no purpose other than to generate commissions for the stockbrokers that I wouldn't advise making any such trades until he can make a strong and valid case for the deal on its basic investment principles, regardless of the tax consequences.

Using vague and possibly nonexistent tax savings as the reasoning for a sale of stocks is another big danger sign that you are dealing with an incompetent or unscrupulous advisor.

This is obviously another one of my vague replies to your investment inquiries; but I hope you understand the gist of my philosophy in regard to this kind of thing and it is of some help to you.

Let me know if you have any other specific questions or ideas you want to discuss.

Kerry

Labels: stocks

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/18/2009 12:29:00 PM Send this post:

Each taxpayer can only have one primary residence at a time.  However, if a married couple can prove that they lived in separate homes, a couple can have two primary residences, as discussed in this vidcast.

Labels: 121, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/17/2009 06:38:00 PM Send this post:

Labels: comix, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/17/2009 12:58:00 PM Send this post:

Taxes and the Family – Interesting look at the family aspects in our tax system from National Affairs.

Postal Service Employees Owed $300M in Taxes, IRS Data Shows – It’s not just cabinet secretaries who are allowed to avoid paying their taxes and still hold onto their lucrative Federal government jobs.

How Many Ways Can You Tax the Rich? – The most politically correct target for fiscal rape continues to be the evil rich.  Exploiting class envy never goes out of style with leftists.

IRS hires "hundreds" for new wealth unit – The infrastructure is being expanded for nailing those evil rich folks who have to carry most of the tax load in this country.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/14/2009 07:44:00 PM Send this post:

Labels: audits, IRS, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/13/2009 05:42:00 PM Send this post:

The Highest Tax Increases Ever. State and local governments demand that their residents shut up and pay up during a recession. – An interesting look at some of the recent State tax hikes.

Labels: StateTaxes, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/12/2009 04:14:00 PM Send this post:

If the future plans for a business include taking it public or bringing in venture capitalist funding, those will materially affect the most appropriate entity to use, usually ruling out an S corp, as I discuss in this vidcast.

Labels: corp, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/11/2009 07:19:00 PM Send this post:

Life insurers lobby to save the death tax – Another example of “follow the money.” As if the insurance companies don’t already have enough bad press.  They are openly supporting the Marxist grave robbery as a means of making money selling insurance policies to offset those same taxes. 

Labels: DeathTax

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/11/2009 07:07:00 PM Send this post:

Labels: comix, Crooks, politics

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/10/2009 09:54:00 PM Send this post:

Labels: comix, TaxCuts

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/10/2009 09:46:00 PM Send this post:

Announced today by IRS:

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 50 cents per mile for business miles driven


• 16.5 cents per mile driven for medical or moving purposes


• 14 cents per mile driven in service of charitable organizations

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/03/2009 07:08:00 PM Send this post:

I thought I made the tax rate schedules easy to follow on my website; but some people still get confused, as I address in this vidcast.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/02/2009 06:39:00 PM Send this post:

2010 estate tax may go from 0 to 45 percent – You had to know that the tax free year wasn’t safe from attack by our money starved rulers in DC.  They simply can’t resist the urge to raise taxes on the “evil rich.”

For them, promises are meant to be broken and they have no qualms about backing off of lower tax promises.  As I have been warning since the inception of Roth IRAs, I wouldn’t be surprised to see their tax free status removed for those considered by our rulers to be evil rich.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/02/2009 12:53:00 PM Send this post:

Labels: audits, comix

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/30/2009 08:16:00 PM Send this post:

Tax planning and ensuring that you have enough paid in to avoid penalties has never been crazier.  The Feds have reduced withholdings and given rebates to encourage spending in the economy; while the geniuses in Sacramento are trying to force California taxpayers to intentionally overpay their withholdings as an interest free loan to Governor Arnold and his fellow idiots in control of that sinking state.

That’s the subject of this vidcast.

Labels: video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/29/2009 08:58:00 PM Send this post:

War Is the Health of the Taxman. Democrats want a temporary war tax on the rich, like the one from 1898. – Kevin Williamson gives an excellent recap of the “temporary” taxes that were supposed to be only for the evil rich over the past 150 years in this country.  As should surprise nobody, temporary taxes live on forever and slowly grow to apply to just about everybody.  No sane person should expect any different result from the new proposed tax by the DemonRats.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/29/2009 01:27:00 PM Send this post:

Labels: comix, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/25/2009 03:45:00 PM Send this post:

Q:

Tax Guru
 
In 2005 you recommended the use of the BeneTrends rainmaker plan for using your 401k funds to finance a company.  Have you had anymore experience with them in the last four years?  I am thinking of using them, but am worried that there may be some problems with the IRS.
 
Any help you might give would be appreciated.
 
Best Regards,

A:

I haven't heard of any problems with the BeneTrends program, and in act I am still recommending it, as in this recent vidcast.

Good luck.

Kerry Kerstetter

Labels: Retire, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/23/2009 09:10:00 PM Send this post:

Labels: comix

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/23/2009 02:16:00 PM Send this post:

Labels: comix, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/22/2009 08:07:00 PM Send this post:

Using multiple entities for tax, liability, and other business reasons has been a very common and useful strategy for longer than I’ve been in this business.  Why many tax pros are unaware or unwilling to recommend them is still surprising to me.

YouTube page

Labels: 179, corp, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/22/2009 03:08:00 PM Send this post:

Q:

Subject: Estate Tax Exclusion

Mr. Kerstetter,
I found your writeup on estate and gift taxes via google search, and then I read your blog with great interest.
Thank you for publlishing it.
 
You have this text on your page:

If you do give any one person more than the $13,000 during a single calendar year, you must file a 709 and either pay gift tax or use part of your lifetime exclusion.  When you pass away, the amount of exclusion that will be available on your estate tax return (706) will be whatever the exclusion is at that time reduced by the gifts you reported on 709s during your lifetime, where you opted to offset them with part of your lifetime exclusion.  If you never used any of the credit by keeping your gifts below the annual limits, the full amount of the credit will be available to your estate

My wife and I have six children, so we're trying to get some intelligent estate planning done. The lifetime exclusion I understand is now $3.5M.  Is this $3.5M total for the estate, or $3.5M for each heir?
 
Thanks for your help.

A:

I have a chart of the annual estate tax exclusions on my website.  

For people passing away in 2009, there is an exclusion of $3.5 million of net estate value per decedent.

The lifetime exclusion on gifts is set at one million dollars.

You should be working with an estate planning professional because there are a lot of changes on the horizon; so you want to make sure any plan you set up is flexible enough to be able to handle the changes.

Good luck.

Kerry Kerstetter

Labels: Estates, Gifting

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/21/2009 07:26:00 PM Send this post:

Snipes Appeals Overly Taxing Prison Sentence – The Hollywood lunkhead’s tax planning strategy is still on course for him to stay at Club Fed for at least a few years.

Labels: Crooks, Morons

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/20/2009 08:31:00 PM Send this post:

CCH has calculated the inflation adjustments for the depreciation limits on business vehicles first placed into service in 2010.  Based on past experience, they expect IRS to release their official version of the calculation in April 2010.

Ever since the ridiculously low luxury car limits on depreciation were initiated in 1984, we have had to break the news to clients that they were driving luxury cars in the eyes of the IRS, even though that wasn’t reflected in reality.

The new limits per CCH:

Passenger Vehicles:

Year 1                            $3,060
Year 2                              4,900
Year 3                              2,950
Year 4                              1,775
Year 5                              1,775
    Five Year Total         $14,460

Trucks & Vans:

Year 1                       $3,160
Year 2                         5,100
Year 3                         3,050
Year 4                         1,875
Year 5                         1,875
    Five Year Total    $15,060

Labels: 4562, Vehicles

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/19/2009 12:18:00 PM Send this post:

You need to be careful about violating anti-churning rules.

YouTube page.

Labels: 179, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/18/2009 07:45:00 PM Send this post:

From the latest issue of Intuit’s ProConnection Newsletter:

What's New on the 2009 Form 1040

If you haven’t seen the 2009 1040, here’s the most recent version from the 2009 Lacerte program.

New Rulings Impact 2009 Form 1040

Labels: TaxForms

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/15/2009 07:11:00 PM Send this post:

I’ve lost track of the number of CPAs and tax professionals who have asked me for advice on building up a clientele.  I always advise against paying those “marketing” firms that promise to attract new accounting and tax clients via their deceptive advertising.  Those are scams. 

I have been telling several people that doing a blog and showcasing what you know and how you feel about tax and business issues is the best way to attract new clients.  In spite of the fact that I have made it known for the past few years that I am not accepting any new clients, I continue to receive requests from people to take them on as clients on practically a daily basis.

In fact, if blogs had been around in the early 1990s, I could have saved a lot of time driving around Arkansas, Missouri and Oklahoma presenting my Realtor seminars and built up my practice via the internet.  That’s how I would do it if I were starting out in a new market today.

I mention these obvious points in conjunction with this article on CPA blogging from AccountantsWorld that Ohio CPA Dana Stahl forwarded to me.  It has some excellent tips and creative ideas on how to overcome the “writer’s block” that scares most tax pros from undertaking a blog.

Labels: Accounting

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/13/2009 10:13:00 AM Send this post:

Labels: comix, IRS

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/11/2009 08:32:00 PM Send this post:

Another question that really depends on multiple factors.

YouTube page.

Labels: 179, Vehicles, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/10/2009 09:42:00 PM Send this post:

If the embedded player doesn’t work, go to the YouTube page.

Labels: Reference, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/09/2009 08:40:00 PM Send this post:

Labels: comix, payrolltaxes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/09/2009 04:49:00 PM Send this post:

It’s not a cut and dried answer as to the maximum that can be claimed, as I explain in this vidcast Q&A.

If the embedded player doesn’t work, you can access the video directly on YouTube.

Labels: 179, Vehicles, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/08/2009 05:41:00 PM Send this post:

This is going to be an evolving process as we become more proficient in utilizing this medium and our skills with the software and equipment improve.  Our goal as of now is to do the same kind of Q&As as I have been posting for several years on my blog in these free short YouTube videos.  

As we become more comfortable with this technology, we also plan to present some more intense live online webinars on some of the topics that seem to have the most interest around the country. There will be a charge for these to cover the costs, as well as for our time.  As charitable as we are, we are evil capitalists and do intend to make a profit on this venture.  The mini-classes will be of particular interest to small business owners and investors who are interested in learning techniques on how to minimize their taxes, as well as professional tax advisors with whom I can share my 34 plus years of experience.  The costs will be very reasonable and much less than the $250 per hour that clients are paying me for one on one consulting.   

This first batch of VidCasts that we produced are rough as we learn how to operate everything; but the information they contain should be useful for anyone wanting to keep their taxes down.

If the embedded player doesn't work in your browser, you can go directly to the YouTube page to watch it.

Labels: LLC, Vehicles, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/07/2009 07:55:00 PM Send this post: