Tax Guru-Ker$tetter Letter
Saturday, November 24, 2001
For decades, I have been on the warpath against abusive charities, who use well intended donations to feather the nests of their officers and support unsavory organizations. A few years ago, I riled supporters of United Way by pointing out in my newsletter that it is nothing more than an expensive middleman in the processing of charitable donations.
Nothing has changed since then. In this time of massive outpourings of public support for the victims of the terrorists, donors are being exploited once again. Although the fundraising appeals by the large charities (United Way & Red Cross) claim to be specifically for the 9/11 victims, that is not how the money is being distributed. They are giving the money to their same pet projects, many of which are outright anti-American and Communist in nature. David Limbaugh has more details on some of these donations in this column.
I have always been a rabid believer in controlling how one's money is spent, which is the genesis of my hatred for taxes, which transfer control to corrupt politicians. Of course, if your personal beliefs are in synch with those of the Red Cross and United Way, you have the choice of continuing to send them your money and letting them disburse it for you. However, if you want to ensure that the funds reach the actual charities and people that you believe deserve it, you will have to bypass the big guys and send the money directly to the individual charities yourself.
Wednesday, November 07, 2001
2002 IRS Mileage Rates
IRS has announced its official standard rates for deducting vehicle expenses on 2002 income tax returns. This trend of IRS releasing this info ahead of time makes it much easier for companies that base their employee reimbursements on the official IRS rates to make the appropriate adjustments. Of course, there are still some employers that make up their own reimbursement rates. I have some clients who are paid 18 cents per business mile. These people are allowed to deduct the under-reimbursed portion on their 1040s (using Form 2106).
As always, the offical rates for 2002 depend on what the miles are for. The wise folks at IRS long ago determined that vehicles use more or less fuel based on the purpose of a trip.
Business Trips will be 36.5 cents per mile (vs 34.5 cents for 2001)
Medical Related Trips will be 13 cents per mile (vs 12 cents for 2001)
Miles Driven While Moving will be 13 cents each (vs 12 cents for 2001)
Trips On Behalf of Charities will be 14 cents per mile (vs 14 cents for 2001)
Tuesday, November 06, 2001
Smaller Is Better
As I mentioned earlier, the large charities aren't doing as effective a job with helping the victims of the 9/11 terror attacks as are the smaller organizations, which are not as top heavy with bureaucracy. Here's a good piece on that subject from World Net Daily.
Monday, November 05, 2001
IRS Is Ahead of the Game
I normally consider myself to be on the cutting edge when it comes to twisting the tax laws & regulations in strange & unintended ways. I have developed scores of creative interpretations of the tax rules. Most of the time, IRS never has a problem with them. Occasionally, IRS or Congress changes the law to shut the door. This usually takes a few years for IRS to catch up with us.
In what may or may not be a trend, IRS has closed a loophole even before it could be used. As this article from the L. A. Times indicates, people who were planning to use the new (for 2001) provision to report make-believe (aka deemed) sales of appreciated primary residences are out of luck.
However, this has started the wheels turning in my mind. IRS has ruled that the tax free exclusion may not be used for a pretend (deemed) sale of a home. What if a home is sold for real for $500,000 above its costs basis, this is treated as a tax free sale, the home is repurchased for the same amount as it was sold for (causing no taxable gain for the temporary owner), and then it is sold (for real) two years later for $500,000 higher than the last sales price? Conceivably, this could happen every two years.
A word of caution: contrary to popular belief, the burden of proof in tax matters still rests with the taxpayers. If you are considering such a creative and/or aggressive interpretation of the tax law, you should definitely work with a like-minded tax advisor to prepare things to survive any IRS challenge.
My short description of the current residence sale rules can still be found here.
Why I Prefer Real Estate Investing
I have yet to play the stock market. I even resisted the feeding frenzy of dot-coms during the late 1990s. Having grown up in the San Francisco Bay Area, and having seen first-hand that more people make more money fom real estate than from stocks or anything else, I have always believed that to be the more reliable path to wealth.
According to this article from the Wall Street Journal, things are getting back to normal, with more real estate out-performing stocks.
It's Time To Deport Peter Jennings
For several years, I've ranted about what a disgrace ABC News' Peter Jennings is in his open hatred of the USA. He has consistently advocated the superiority of the Socialist programs of his homeland of Canada over the capitalist approaches normally used here in the USA. Unlike other Canadian transplants, such as Alex Trebek, Jennings has refused to become an American so that he could maintain his objectivity to criticize the USA.
My disgust for Jennings reached new extremes on September 11, when he continuously called George W. Bush a coward and incompetent to lead the country in times of crisis. The policy of ABC News to not allow any of its on-air personnel to display USA flags, as well as recent revelations of the opinons of the head of ABC News, that the attack on the Pentagon was not a bad thing, prove that Jennings isn't alone in his hatred of the USA.
I have long had serious problems with so-called journalists who believe that it is more important to remain completely objective than to support the US. In fact, I have always believed that the entire premise of complete objectivity is 100% pure bogus. The members of the media who claim to be such are liars and in fact advocating their leftish views. If a person is alive, it is an absolute impossibility to have no opinions on things. Under this premise of remaining detached from the story, an objective journalist who sees a car heading straight towards a person on the street would not be able to do anything to save or warn that person. The journalist could then report on the death or injury with complete objectivity.
During the entire Clinton regime, when the media did everything possible to assist the Clinton gang in breaking laws and avoiding punishment, it was obvious that their love of their Fellow Travelers was more important than any regard for the truth or the U.S. Constitution. As always, my favorite online writer, Jonah Goldberg, has nailed this topic; people who claim it is more important to be a journalist than to be an American. What has always been so ironic in the leftish leanings of the media is that they are so oblivious to the fact that they are allowed to do what they do specifically because of the US Constitution. If their wishes were to come true and their esteemed Fidel Castro were to take over this country, the first thing that would happen is to strictly censor all of the press and imprison any who dare to criticize the infallible government leaders.
On the day before our counter-attack in Afghanistan started, we finally got FoxNews service on our big satellite receiver. It has been a very welcome breath of fresh air. For well over a year, I had been hearing so many great things about FoxNews from fellow fans of Rush Limbaugh and Lucianne.com. Since that day, we have watched nothing but FoxNews, except for a few Larry King shows on Ted Turner's Communist News Network to see some friends of Sherry's. FoxNews is not in the least ashamed to show their support of the USA. Brit Hume must feel like he's gone to Heaven, compared to his old job as ABC News White House correspondent.
A side benefit is that Rush Limbaugh watches FoxNews while he is doing his radio show. Having the video of FoxNews on while listening to Rush adds an extra dimension to his comments.
I find it so ironic that the most patriotic news service is owned by an Australian (Rupert Murdock) and the most anti-USA service is named the American Broadcasting Company and is owned by a company named for one of this country's most successful capitalists, Walt Disney (who has been spinning in his grave over the denigration of his name).
Sunday, November 04, 2001
New Version Of QuickBooks On Way
Every year, Intuit puts out a new version of its Quicken and QuickBooks (QB) programs. To maintain my cutting edge status with these programs, I have always purchased the newest version each year. In fact, I am currently running several versions of each program on my computer in order to be compatible with client data files. However, most normal people don't really need to upgrade every year. I know of several people still using extremely old versions. Intuit suffered quite a bit last year by overestimating the number of users who would automatically upgrade to the 2001 version of QB. There simply weren't enough improvements to motivate many people to upgrade.
That should change with the 2002 version, which is scheduled to be released in early December. What is even more important than the normal bells & whistles for small business users is the way QB is becoming the standard accounting program for us professional accountants to use with our clients. Ever since the 99 version, it has become easier to share data files between the clients and the pros. However, we pros have been using the same programs as the clients were. For 2002, Intuit is finally releasing a special Accountants Edition of the program for professional accountants who work on several company files. You can see some details on this new version here.
This is very shrewd on Intuit's part because it will require that the clients of the pros who use this new version each upgrade their programs to the 2002 version.
I will be posting more updates as I learn of them.