Tax Guru-Ker$tetter Letter
Monday, September 29, 2003
Harrison Abstract hearing Oct. 10 - List of some of the people with claims against the company.
Sunday, September 28, 2003
Alabama Lawmakers Cut Budget 18% - The responsible answer to a budget imbalance. Luckily, the voters had a chance to force their rulers in this direction rather than their first choice, a humongous tax increase.
CAGW Releases California Piglet Book - As Tom McClintock has been saying, there is so much fat and waste in the PRC's budget that it could be balanced by some fiscally responsible (an oxymoron for most politicians) trimming and not by raising taxes as most of the other candidates are advocating. You can download the actual pdf booklet here.
SBSC Releases Its 8th Annual State by State Rankings of Small Business Climates - Interesting look at how friendly the different states are for running a small business. Number one friendliest is South Dakota, which has no income tax, as do many of the top ten. Arkansas is 25, while the PRC is 46, five spots above the worst location for small biz, Washington DC. You can download the actual pdf report here.
Is our economic freedom eroding?
Recall election shows too much democracy is dangerous - Jonah Goldberg echoes my sentiments that using recalls too frequently is a dangerous thing for our electoral system; but since it's underway, the only logical choice is Tom McClintock.
California Deficit Caused by Surplus Democracy
Huge PRC State Budget Gap Rooted in Three Major Spending Areas - And only one candidate seems to understand this.
Taxes the DemonRats want to Increase
Peer Pressure In The PRC
It's disappointing to see the fatalism among the GOP on the Left Coast, with more and more holding their nose and backing RINO Arnold, even though they admit Tom McClintock is the better conservative. Their claim that Tom can't win is ridiculous. If everyone who has said that would just vote for McClintock, he'd be in.
As I've been saying for a long time, the entire discussion of McClintock dropping out and supporting Arnold is bass-ackwards. Arnold should campaign for Tom and then he will be able to continue his movie career.
Dennis Miller has an interesting take on last week's debate, although I'm very disappointed in his uncharacteristic conformity with those who are buying the line that McClintock is unelectable and Arnold is the lesser evil when compared to that slimy crook, Cruz Bustamante. I particularly liked Miller's description of the Green Party's candidate.
"The Green Party guy. He doesn't just fan the class warfare fire, he brings out the industrial-sized bellows and gets it white hot like those glass blowers in Venice. I thought the Green name had something to do with the environment but obviously it's all about envy. There are a lot of problems in California, but under-taxing is not one of them."
Saturday, September 27, 2003
Bonus depreciation and the passenger automobile - The new 2003 tax law made this much more complicated, but also potentially much larger.
Alarm Greets Prop. 13 Tax Case - Another double standard by the tax vampires. It would supposedly create an undue hardship for them to refund the illegally overcharged property taxes. On the flip side, if a person were to not pay his property taxes to the government, the property would be seized and sold out from under him. I'm sorry to sound harsh; but this media attitude of always feeling sorry for the poor overspending governments, while not caring a whit for the taxpayers has always rubbed me the wrong way.
This is a perfect metaphor for the status of the PRC and how the different political parties view the solution.
Experts Question Calif. Anti-Spam Law
I agree that it will be extremely difficult to track down and stop the slimy sleazeballs who mass mail the crap that crams our email. I still believe that working with the legitimate vendors and giving them an incentive to police those who are promoting their products via spam will at least make a dent.
As I mentioned earlier, I have been forwarding spam advertising Stamps.com to that company's business development department. Yesterday, I received another response from Mr. Bowman. He thanked me for sending him those spams. He said they were each from different affiliates and they will be investigated and hopefully terminated.
I am still waiting for a formal response to my letter to NetFlix on the same issue. My next target will be eBay. I receive several spams each day advertising ways to use it to make money.
Friday, September 26, 2003
Working With Small Corporations
On my main web site, I've posted some guidance on how to handle corporate expenses paid from personal accounts.
More On Section 179 Expensing
I recently received another question about the Section 179 expensing election that should be useful in clarifying some of its technical applications for the benefit of the many other tax pros who read this.
I have been advised that multiple corporations owned by the same person or up to the same five persons, will be considered a controlled group and will be taxed as a one large corporation. Tax wise, they would be limited to only one Section 179 expenses election and there net income would be grouped together for tax purposes. Would you be so kind to help me understand this matter a little better.
You are correct that among a group of C corps, the $100,000 Sec. 179 must be allocated.
My comment was meant to contrast with the use of pass through entities, such as S-corps, where the net effect is to limit the total combined Sec. 179 deduction to $100,000 on the 1040. A majority of my clients have closely held C corps, where the corp can claim up to $100,000 and they can also claim another $100,000 on their 1040s. If they had used an S corp or 1065 LLC, their total Sec. 179 would be only $100,000. This in effect allows a doubled maximum amount ($200,000).
I still see too many people jumping into S corps without considering the fact that C corps can reduce their taxes dramatically over an S.
I do occasionally speak with a client who thinks he can do even better by setting up several C corps and claiming $100,000 on each of their 1120s. When I explain the limit of one $100,000 to be spread among all of the controlled corps, they drop that idea.
I hope this clears up any confusion.
Harrison Abstract Update
Dian Brown sells property - More on the lingering fallout from the looting and collapse of Harrison Abstract.
We have discovered that Ms. Brown wasn't just fast and loose with the escrow funds. She was very loose on how to handle 1031 exchanges. Sherry's company, Tax Free Exchange Corporation, has had to recently bail out a number of former clients of Ms. Brown's who are in the middle of doing 1031 exchanges. While we weren't surprised that she had copied her documents from ours, as many others in this area have, we have been appalled at how terrible her application of the rules for 1031 exchanges had been. We are having to educate her former clients on the proper 1031 procedures, as if they had never heard of it, even though many claim to have done 1031s with Dian Brown. They need to keep their fingers crossed that their tax returns aren't examined by IRS, because their sloppy "1031" exchanges won't stand up to much close scrutiny.
Thursday, September 25, 2003
Democrats: Repeal some tax cuts - Why it's not safe to trust the DemonRats with the economy any more than with our defense.
Our Over-budget Government - As I've always said, the projected costs of government programs are always heavily understated. They always turn out to be hundreds of times higher. Of course, by then, the rulers who used those numbers, as well as the mind-numb sycophants in the press who accept them as legitimate, are long gone from the scene.
The Nevada tax increase - A big disappointment to the tax refugees who fled the PRC to relocate to the low tax neighboring state.
Grover Norquist's Schwarzenegger campaign - Trying to get Arnold to take the no new taxes pledge.
When Texas Governments Compete with the Private Sector, We All Lose
Benefit Cuts for Baby Boomers? - What I've always predicted would be in the future for Social Security. Also why I've considered it insane for people to continue to flush their money down this sewer when there are so many very easy ways to hold onto the money and preserve a more secure future for themselves.
ACU Applauds Senate's Delay of $13 Billion Tobacco Tax Increase - Nicotine addicts are such tempting targets for the money sucking vampires at all levels of government.
U.S. Income Gap Widening, Study Says - Any time you see a story like this, especially from an openly socialist publication, you know they are trying to set the stage for the inevitable solution to this "problem," wealth redistribution by our imperial rulers.
Millions of Micro-Managers Share Blame for State's Crises - To be fair, the governor isn't the only one who needs to be recalled. He had plenty of help from the legislators in screwing up the state. Toss them all out and pick names at random from the phone directory, and there will be a better chance of fixing things than allowing the same crooks to stay in Sacramento, regardless of who, if anyone, becomes the new governor.
Sherry has completely revamped her Mother Earth's Treasures website to focus on the popular slide bracelets and other jewelry items that she has had such good success selling on eBay. She has been scouring all of her suppliers and buying up all of their inventory of the most popular styles. Cutting out the middleman (eBay), she passes the savings on to everyone by selling directly from her newly redesigned website.
Thanks to StangeCosmos for the following quotes:
"The government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other." --Ronald Reagan. .........This reminds me of my infamous poster.
"If you think health care is expensive now, wait until you see what it costs when it's free." --P.J. O'Rourke
Your Tax Dollars at Work - Remember these big wastes of tax dollars next time you hear some lefty whine about the tax cuts for the rich taking food out of the mouths of starving babies. How many school lunches can be paid for from the money being flushed down the toilet on stupid studies and other boondoggle projects?
Political spin tiring as lies, damned lies - A tired old tactic to defend high taxes is to point out how they are even higher somewhere else. This is easy to do with each individual type of tax because they vary drastically all over the country. However, when it comes to overall combined tax burden, as well as the hidden tax in the form of endless regulations micro-managing every aspect of life in that state, there is no way to defend the position that the PRC's taxes are too low. Unless, you are a socialist like the two nut-jobs (Huffington and Camejo) in the debate last night.
Congress Asked About Internet Sales Tax - This is a big issue for several reasons, not just the fact that State governments are desperate for new tax revenues. As an accountant, I just dread the thought of vendors having to keep straight all of the sales tax rates all over the country and needing to file hundreds of different sales tax returns for each of the cities, counties and states in which their customers reside.
There are arguments on both sides of the fairness issue related to this. Local in-state retailers can make the claim that it's unfair competition for out of state vendors to be able to offer tax free sales. However, the flip side is that out of state vendors are not using any of the local state's infrastructure (roads, police, etc), which is paid for by those sales taxes. There is also the convenience factor to consider. Buying from out of state, you have to pay for shipping costs and wait for your item to arrive. Buying from a local retailer, you can take the product home right away.
Wednesday, September 24, 2003
Going To The Source Of Spam
There has been a lot of news coverage of the recently signed law in the PRC that will supposedly penalize spammers $1,000 for each message they send. Enforcing that new penalty, which is supposed to take effect 1/1/04, against the scumbags who churn out the actual email will be difficult. What has more potential than hitting those spawns of Satan in the pocketbook is penalizing the vendors of the products they are advertising.
I have been noticing over the past several months dozens of spam messages each day trying to interest me in signing up for the Stamps.com service. I know that these spams were being sent by freelancers, but they do reflect badly on the Stamps.com management. This morning, I sent the press contact office at Stamps.com the following message.
I am currently working on an article on ways to deal with spam. One is to prosecute and in other ways punish the advertisers who allow their products to be promoted via spam.
I receive well over two dozen spams each day pushing your service. I have been using your service for a few years, so I am already a customer. I do find it quite annoying to have to wade through dozens of spam solicitations every day.
As you may have heard, the governor of California just signed a law, effective 1/1/04, that will penalize spammers and the advertisers $1,000 per item.
For my article, I am interested in learning what, if anything, you are doing to police your affiliates from the abuse of spam. I would also be interested in knowing if you have a mechanism for recipients of spam advertising your service to forward those emails to a special email address for you to follow up on.
I am hoping to publish this article over the coming weekend. Your comments on these points would be greatly appreciated.
A few hours later, I received the following reply from Stamps.com, expressing complete ignorance of the spam being sent on their behalf.
We received your complaint regarding an affiliate that may be using
unsolicited email addresses to send our offer. This would certainly
violate the rules of our affiliate program and I would be interested in
getting the original email that you received so that we can aggressively
pursue the responsible party. Thank you for taking the time to bring
this to our attention as we do not support the use of unsolicited bulk
3420 Ocean Park Blvd. Ste. 1040
Santa Monica, CA 90405
To show Mr. Bowman exactly what I was talking about, I am now forwarding him each of the spams I receive advertising the services of his company. If others do the same thing, there is a better chance of Stamps.com exercising some of its clout to shut down those affiliates. Mr. Bowman's email address is: rbowman@Stamps.com
My next target will be NetFlix, which is advertised in at least a dozen spams a day.
Terminating Taxes In The PRC
Arnold has obviously been receiving some good advice in his campaign to improve his focus on battling taxes and try to convince Republicans that his isn't just a typical RINO. If what he claims in this column for the Wall Street Journal is true, that is step in the right direction. He does still need to counter the fact that he supports larger and more expensive government programs.
The newly increased limits on the Section 179 expensing election have generated some confusion. One is the effective date, mainly for corporations that have fiscal years ending in a month other than December, which is how I advise most of my C corp clients to set theirs up. Since almost all of my C corp clients are wisely using a non 12/31 fiscal year, I have had to break the bad news that the tax returns I am now preparing, for years ending in 2003, have a Section 179 limit of $24,000. The new $100,000 limit will apply to the next year, that starts in 2003 and ends in 2004.
There is also some confusion regarding the purpose and benefits of the Section 179 expensing election, such as in this email I received last week from a reader:
With the new limit of $100,000 to expense equipment - - - -
Is my understanding correct that you can only expense items purchased up to $100,000 so long as it does not result in a negative or loss for the business. Any amounts that can not be expensed must then be depreciated as normal over their life. If this is truly the case - what good does that do for the small business guy - who does not make enough to expense anywhere near that amount against?
You are correct that the Section 179 expense allowable in any single year is limited by the overall taxable income. Any excess can be carried over to future years; or what often do, is opt out of the Sec. 179 and claim normal depreciation, that often gives a higher net loss, which can be carried back to recover previously paid taxes.
The reasoning and potential benefit behind having larger immediate deductions for new equipment purchases is to avoid the situation where a small business owner has plowed all of his/her profits and liquid cash into those purchases. If they are not immediately deductible, there could be a paper net taxable profit; yet there might be no cash left with which to pay the taxes. This kind of thing does happen a lot, plus situations where there is a paper taxable profit, but because the owner used all of the available cash to stock up on inventory (not deductible until sold), there was no money left to use to pay the taxes. Including the cost of new equipment along with other operating expenses does usually give a better representation of net cash generated from the business and thus makes it easier to pay the taxes on any net income.
Tuesday, September 23, 2003
Wasting a good opportunity - The mere thought of reducing government waste by just one percent panics the libs, who literally scream bloody murder every year if the expenditures for their many government give-away programs isn't increased by at least twice the inflation rate.
Backers of tax-freeze plan offer way - Colorado's version of Proposition 13, to limit the growth in property taxes.
Greenpeace Accused of Violating Tax Law - There's about as much chance of this and other eco-terrorist organizations being disciplined for breaking the laws related to their tax exempt status as there is for anything to happen to the black churches who allow themselves to be used by DemonRats for their political campaigns. In other words, none.
Monday, September 22, 2003
A big difference between real hurricanes, which are acts of God, and the ever increasing deficit in DC, is that it is caused by careless spendaholics with no fiscal discipline. While nothing can be done to prevent hurricanes, deficits can be controlled, if the right people are in office.
Deficit dimensions . . . and cure - More on how ridiculous it is to blame the huge deficit on the tiny tax cuts that have already taken effect.
Krugman's Conundrum. He's bent out of shape by supply-side economics. - The New York Slimes' official economic writer can't stand any opposition to his own Marxist belief.
IRS claims Blagojevich owes $8,032 in taxes. - IRS will even go after a governor's campaign fund if they forget to pay taxes on their unrelated interest income.
Sunday, September 21, 2003
GOP'd rather be right than in office - We already have more than enough RINOs in high elected office around the country to think that adding another one will do anything but dilute the conservative message that the GOP used to stand for under Reagan.
If Arnold truly wants to help the GOP, he will continue to campaign hard for the recall, but also for Tom McClintock as the replacement for Gray Davis.
Big companies vs. big government - The Left, in true Marxist fashion, believes there is no such thing as too large a government, while condemning capitalism and private ownership.
Saturday, September 20, 2003
No Fat Lady Singing
In spite of losses at the polls around the country, the pro-tax forces will never give up. They are persistent and will find ways to get those taxes in other, sneakier ways, on which voters will have no say whatsoever, such as adding them to utility and phone bills.
Friday, September 19, 2003
2004 Tax Info
I've added a page to my main site with the 2004 tax rate schedules and related figures in the easier to follow format I have been using for the past several years.
I also updated the page on the Section 179 expensing election for the 2004 inflation adjusted limit of $104,000, as well as explanations of the phase-out of the Sec. 179 deduction and a general description of what kinds of things qualify for this expensing election.
Thursday, September 18, 2003
Annual List of Richest Americans Released
YMCAs: From Community Service to Community Disservice - Nonprofits aren't supposed to compete directly with regular tax paying businesses.
A new 'commandment' from Alabama - It's the same one Bush 41 violated and lost his job as a result, No New Taxes.
California's real problem - Why I decided to leave the PRC 11 years ago.
House Approves Tax Cuts - We may see a limited deduction for charitable contributions for non-itemizers.
House Votes Unanimously to Permanently Ban Internet Access Taxes
Davis/Clinton Church Rally Sparks Call for IRS Investigation - The way DemonRats routinely violate the laws against running political campaigns in churches is not likely to stop.
At the trough - The reckless spending spree by our rulers (GOP & Dims) in DC shows no sign of slowing down.
2004 Tax Rates
Every year, the IRS is required to adjust the tax brackets for inflation in order to prevent "bracket-creep," where people are pushed into higher brackets just for having their income keep pace with the cost of living. CCH has an early look at what those brackets should look like for 2004. I will be adding a page for this on my main web site in the next few days.
Woman tried to file 10 fake tax returns online
- Contrary to what the authorities claim in this article, fraud is much easier and faster with electronic filing. Most of the perpetrators are a lot smarter at covering their tracks than this woman was, and are thus never caught.
Wednesday, September 17, 2003
For those who admire money (cold hard cash), here are some interesting pictures of some greenbacks that you aren't likely to come across in real life; the discontinued, but still valid $500, $1,000, $5,000, $10,000 and $100,000 bills.
The newspaper of record for Socialists, the New York Slimes, is continuing its campaign against lower taxes by portraying the poor downtrodden as defenseless victims of the mean heartless evil rich people who would rather keep their own money instead of sending it to DC where it will save lives. It's always been interesting in this propaganda that the left can so easily identify each tax dollar and connect it to its alternative use. What a coincidence that every dollar that an evil rich person doesn't have to send to DC is the exact same dollar that would have prevented some little child from starving to death. It's never a dollar that would have gone for some congressional junket around the world or another pay raise for the rulers in DC. It's always something that results in death for the innocent little poor people.
Monday, September 15, 2003
Lower IRS Interest Rate
Each quarter of the year, IRS re-evaluates the appropriate rate of interest it charges on late payments and pays on refunds from amended returns. For the first three quarters of 2003 (through September 30) it's held steady at five percent (5%). IRS has just announced that the rate will be reduced for the fourth quarter (October 1 to December 31) to just four percent (4%).
War and Taxes - David Frum's take on the idiocy of the argument that the Bush tax cuts have caused the budget deficit.
Sneak Attack in Oregon. The state legislature just piled on the tax increases. - The Left Coast is just very expensive for taxpayers.
The Tax-Cut Con - Marxist Paul Krugman tries to make a case for why the tax cuts were bad and we should soak the evil rich even more. It's true to the spirit of the anti-capitalism New York Slimes.
Dizzying Dive to Red Ink Poses Stark Choices for Washington - With its typical journalistic credibility, the NY Slimes has the nerve to refer to the projected budget surpluses as if they were really attainable. Those predictions by the Clinton gang were 100% bogus and were based on the unchallenged underlying assumption that the stock market would rise in value at over 20% per year for all time. To blame the fact that such moronic pie in the sky predictions didn't come true on Bush is nothing short of insane.
Tax wealthy to pay for Iraq war - Standard soak the evil rich socialist bilge from the Marxist dwarf who served as Clinton's Labor Secretary.
Sunday, September 14, 2003
Coffee Addicts in Froth Over Espresso Tax
They're still trying for that 10 cents a cup in Seattle "for the children." A reminder why this case is important to watch. If it passes, the floodgates will open all over the country for every possible little add-on fee on every possible product and service to benefit every possible "good cause."
It may not seem like much money, but add ten cents to everything you pay for each and every day, and you are talking about real money for most people. In addition, the bookkeeping burden such things would place on vendors would be horrendous. This is the true hidden cost of the tax system, the time and expense to just comply with the rules. Imagine you are a small retail store owner and each item you sell has its own special 10 cent tax that you have to charge customers and then send to the appropriate agencies. You'd be pulling your hair out trying to keep it all straight.
Saturday, September 13, 2003
Tax Preparer-Client Privilege?
Payment as phony as, well, a $200 bill - Proving once again that our government educational system is succeeding at turning out a country full of brain dead morons. You can see a picture of the phony $200 bill and read more about what happened at The Smoking Gun.
California Could Start Recall Trend - They're still on the warpath against the governor in Nevada over his support of higher taxes. He's in for a fight if he doesn't realize that a lot of the new Nevada residents are tax refugees from high tax states, such as the PRC. The last thing they expected when relocating was a jump in the Nevada taxes.
Friday, September 12, 2003
Reaction To The Anti-Tax Vote In Alabama
This really looks like it's worth $1.2 billion.
Gov. Riley says he's giving voters their wish: smaller government
Fed 'strike force' targeting tax reformers?
Is the IRS finally getting serious about shutting down the tax protestors who advocate willful violations of the laws? I have been telling IRS for decades that their silence on these matters only makes the tax protestors appear more legitimate. Their continuing operation gives people the impression that what they are preaching must be okay. A sane person would surmise that if those tactics were illegal, IRS would close them down in a heartbeat.
Notice the bogus use of the word "reformers" in this article. It's being used as a euphemism for "scamming tax cheaters."
Never Let Down Our Guard
Even when we are able to achieve a tiny bit of relief from the ever increasing tax burden, that's no reason to relax and bask in the success. The DemonRats have been very open with their desire to repeal all tax cuts and add new taxes on top of that.
Part of their game plan is to blame the huge Federal budget deficit on the recent tax cuts, which is compete hogwash. The tax cut laws were heavily back-loaded, with the bulk of the real reductions not kicking in until several years down the road. The actual cuts that have already taken effect are nowhere near the amount of the deficit. The deficit is purely based on out of control spending by our rulers in DC, including the President, who has opened the Treasury to buy votes from traditional supporters of the JackAss Party.
Tax Cuts Split the Democratic Presidential Field
Thursday, September 11, 2003
California's recall election -- Are voters truly tax-weary? - The weariest in the country.
Wednesday, September 10, 2003
Interesting choice of words by this cartoonist. While the word "reform" really means to form again, its common usage in this country is to signify an improvement. Sticking the taxpayers for $1.2 billion of new taxes isn't an improvement in the minds of those of us who believe in smaller less costly government. It's only an improvement for those who see the role of government as to run and control all of our lives in every way possible.
The Day After Alabama Voters Turned Down Higher Taxes
Victory for Small Businesses in Alabama
IPI Salutes Alabama Voters for Rejecting Riley Tax Increase
Voters To Governor: Take a Hike
Alabamians defeat $1.2B tax hike
Alabama Voters Crush Tax Plan Sought by Governor
Alabama Voters Reject Tax Hike
Riley hears message; cuts coming
Tuesday, September 09, 2003
Alabama Voters Reject Record Tax Hike - Good news from the South. That has to make Alabama much more attractive to people in high tax places, such as the PRC. It was amazing to see the governor and his spokespeople actually complaining that their state has the lowest tax burden in the country and how they needed to raise taxes high enough to move into the middle of the list. It was if they were discussing something like education scores, where being at the bottom is a bad thing to be embarrassed about.
New, colorful $20 bills to hit street in October - Greenbacks wil now be referred to as peach-backs as our real life currency morphs into Monopoly money.
Decision day on tax plan in Alabama - It's not often that the little people can vote directly on tax hikes. Those decisions are normally made by our rulers.
Taxes for God? A bit of a stretch in Alabama
The Senate Minority Leader is anti-tax; at least, for himself. - Little Tommy Dashole is a typical liberal hypocrite. He'll raise everyone else's taxes every chance he gets, while stretching the rules to save on his own personal taxes.
Hint of Higher Taxes Could Terminate Arnold's Campaign
JFK Used Audits to Silence His Critics - Another trait emulated by Bill Clinton.
Alabama voters decide Tuesday on $1.2 billion tax increase
Jesus Christ Tax Collector? - The Alabama governor believes that the Marxist philosophy of soaking the evil rich came from the Bible.
Monday, September 08, 2003
Why is it that, the more things get screwed up in DC, the more our rulers are rewarded? What kind of incentive is that for them to even try to fix things? Any real world private company operating that way wouldn't last long.
Sunday, September 07, 2003
New Lotto millionaire is 91 and says he lacks nothing -- except maybe a wife - He made the proper, obvious, choice to take the lump sum of $10 million rather than the 30 year long payout of $16 million.
Tax Relief Did Not Cause Budget Deficits
Your Tax Dollars at Work. Rep. Jim Nussle takes on wasteful and fraudulent spending.
State budget crisis a taxing worry
Wake-Up Call on Spending
The "Party of Reagan"? - The current incarnation of the GOP is looking less and less like Reagan's.
Old Wine in New Wineskins--Tax Seduction in Alabama
Threat to Term Limits Is Seen. An advocacy group acts to block what it sees as a plan to weaken state restrictions. - Mandatory term limits are necessary to ensure turnover in elected office and prevent the ruling elite (career politicians) from becoming even more like the royalty our founding fathers tried to protect us from.
Schwarzenegger woos key corporate donors. He vowed to 'not take money from anyone' - Arnold's seems to have a good grasp on typical Kennedy hypocrisy.
Voter wrath now veering toward state Legislature - Tossing all of the rulers out of Sacramento would be a good way to start improving things out there. Most of the legislator slots could be filled from the crowd of gubernatorial candidates.
The simmering Social Security problem will boil over soon.
As I've always explained, the popular belief that everyone cheats on their taxes and underpays is 180 degrees off the mark. Most people don't claim all of the legitimate deductions to which they are entitled, resulting in grossly overpaying taxes.
Financial data can be captured with a good bookkeeping system, of which QuickBooks is the easiest and most efficient.
Non-cash transactions are a little trickier to keep track of. I am constantly seeing people claim zero on their tax returns for non-cash donations. They always tell me that they did give things away, but didn't keep track of it. What we end up doing is using guesstimates, which I am sure are grossly understated.
For several years, there has been a company that has produced a workbook called ItsDeductible to help people track their non-cash donations and assign proper values. A few years ago, they added a computerized version. H & R Block has even come out with its own version of this kind of program, Deduction Pro, selling to the public for the same $20 price.
I haven't done a side by side comparison of these programs to know first hand which is superior. Both of them appear to produce the official IRS Form 8283 for non-cash donations, which can then be given to the user's tax preparer.
However, the It's Deductible has been around much longer. It was also recently purchased by Intuit, which has plans to integrate it with its Turbo-Tax programs. According to the latest news, there are no plans to have It'sDeductible integrate with Intuit's professional tax prep programs (Pro Series and Lacerte) for the 2003 tax program; but I am hoping this can be done for 2004 because we use Lacerte for all of our tax returns.
ItsDeductible does have volume discounts for tax professionals to buy ten or more copies at a time to give or resell to their clients.
Special offer for our tax clients: We have long been trying to get more of you to computerize your records. If any of our clients are willing to use the computerized ItsDeductible to keep track of your non-cash donations for this year (2003), I will buy a bunch of them and give you the program on CD for free. If you use it properly for 2003, I will also provide you with a copy of the 2004 program, and so on. Any of our tax clients who are interested should send me a request to the top secret (currently spam free) email address that we have provided you to use in communicating with me.
Many conservatives do see Arnold as a stealth Kennedy, and he isn't doing much to dispel that impression.
2003 Estate Tax Returns
An estate tax return (Form 706) is required to be filed if the gross market value of the assets owned by the decedent, plus the total of taxable gifts made during his/her lifetime, exceeds the lifetime exclusion amount for the year of death (currently one million dollars). That in no way means that there will be any tax due because that is calculated on the net estate, after subtracting liens, final expenses, and charitable bequests. It is often advisable to file a 706 even when not legally required in order to formally establish values of assets passed on to heirs, as well as to start the statute of limitations running for any possible challenge by IRS.
It used to be that IRS wouldn't revise the estate tax return form (706) for several years at a time. Now, with the almost yearly changes in the exemption amounts, IRS has been issuing new revisions of the form for each year. The 2002 form was released in August, 2002.
The normal due date for the 706 is nine months after the person passed away. For those who died in January, that nine months is almost here, and the 2003 version of the 706 has yet to be released. According to the official IRS schedule of releases dates, the 2003 706 is supposed to be available October 7, 2003. My experience with these schedules is that they are as reliable as an appointment with Bill Clinton, who is never on time to a meeting.
A draft of the 2003 706 was posted by IRS back in July.
There are often times when closing up an estate, including the filing of all tax returns, is a rush priority. If you can't wait for the official release of the new form (IRS is notorious for missing these scheduled release dates) and need to close up an estate ASAP, you can go ahead and use the 2002 version. You just need to manually make any changes that would affect the tax calculations between years. I have had to do that on a number of occasions, and IRS has never had a problem with it.
If the nine months are up before the new form is released, or if you just need more time to get everything together, you can also file for a six month extension on Form 4768, sending in a payment for any expected tax.
Saturday, September 06, 2003
BDO tax prep clients try to assert privilege - IRS is trying to force a CPA firm to disclose its client list so they can be busted for using questionable tax shelters. This has been a long running debate, whether CPAs can legally shield their clients' information from others in the same manner as attorneys can. I have always believed that if the clients sign a power of attorney (Form 2848) authorizing the CPA to act on their behalf, they should be afforded the exact same client-attorney confidentiality privileges as with a regular attorney.
It's been very disheartening over the past few months to hear and read so many people moaning about the GOP's abandonment of one of its former cornerstones, the support for smaller, less expensive government. Bush and the top GOP have pulled out all stops to expand the size of the Federal government well beyond any constitutional justification, in an attempt to literally buy votes from supporters of the JackAss Party.
What is more depressing than this change in party philosophy is the reaction by the critics. Most of them claim to be disgusted by this change, but say that they will stick with the GOP because it is still the lesser evil, when compared to the outright socialism of the DemonRats. The idea of changing their support to a party that truly believes in the concept of smaller and less expensive government is just too radical for them to even consider.
A perfect example was a few days ago, when Rush Limbaugh spent a lot of time decrying the GOP's wild spending binges. However, when a caller asked Rush why he didn't support a third party that does believe in smaller government, such as the Libertarians, Rush said such a thing would be unthinkable. Rush gave the impression that he would much rather give a big open-mouth kiss to Queen Hillary or Janet Reno than even consider supporting any party other than the Republicans. I like and admire Rush very much, but his claim of being a conservative first and a Republican second doesn't seem to be very honest if he is supporting the GOP as it abandons conservative principles.
Attitudes like this are just encouraging the GOP leaders to continue with their out of control spending. With no downside from the possibility of losing voters, and plenty of upside from the new voters they are buying, what motivation do they have to change? None.
Friday, September 05, 2003
Thursday, September 04, 2003
IRS workers poor on tax law advice - Getting tax advice from IRS employees has always been a bad idea. Most of them don't have a clue as to the proper application of tax laws and regulations. I am constantly having to teach IRS employees the rules, including a current case with an Appeals Officer in Oklahoma City, who should be embarrassed by his ignorance of how tax returns are supposed to be handled, as well as the objective viewpoint his office is supposed to maintain.
As if receiving erroneous advice from IRS isn't bad enough, they won't even stand up behind what they tell people. Relying on their bad info is no excuse because the IRS's official position is that everyone should know that their employees are ignoramuses, and anyone who relies on their advice is too stupid to feel sorry for. This is why, if you have a tricky tax issue at stake, you are better off paying a tax pro for advice. Then, you would have legal (malpractice) recourse if you were given a bum steer.
Dim and Dimmer in California - George Will on the RINO Schwarzenegger.
I watched the first hour of the debate yesterday and was amazed at how vehemently the socialist candidates (Huffington, Bustamante, and Camejo) were with their support of the Marxist wealth redistribution ideas of Arnold's financial guru, Warren Buffett. Arrianna Huffington even wants to change the property tax rules to make them based on people's income. Under her concept of attacking the wealthy, the evil rich should pay more in property taxes than the "poor" people on the same properties.
Peter Ueberroth seemed as if he was half asleep and was as dull and uninspiring as the French looking presidential wannabe, John F. Kerry. The only person who appeared in control of the facts and had any leadership charisma was Tom McClintock. He was very impressive. I don't think my opinion of the debate would have been any different even if Arnold had participated.
Wednesday, September 03, 2003
For Calif. GOP, It's Principles vs. Potential. Republicans May Look Past Weaker Conservative Credentials in Hopes of a Win - In other words, is a RINO better than a DemonRat?
Increasing federal spending deepens deficit - And not the tax cuts, as the leftist media are trying to claim.
Thou shalt pay more taxes - Alabama's governor is still trying to use the Bible to justify raising taxes.
Recall Fever Spreads to Nevada - Tax hikes are not receiving a warm welcome. They need to work this out in Nevada because the mass exodus of tax refugees from the PRC is going to grow.
One of the many wonderful features of the Internet is the ability to access news and media from anywhere in the world. We are no longer lmiited to just those things our local radio and television stations choose to air. In fact, via the web has been the only way I have been able to hear Rush Limbaugh's show, with no local radio stations brave enough to carry it.
The biggest political circus currently underway is the recall election in the PRC. Tonight (Wednesday, 9/3/03) the first official debate between the current governor, Gray-Out Doofus, and the five top candidates to replace him, is scheduled to take place in Walnut Creek. I'm not sure if the offer from Jay Leno is still open to have all 135+ candidates sit in his audience; but the less popular candidates are not allowed in tonight's debate.
For those folks fortunate to be outside the PRC, there is a way to watch the proceedings live over the web. There are probably other feeds; but I found one that is supposed to be accessible on the Contra Costa Times website. The debate is scheduled for 4:00 pm through 6:00 pm Pacific Time. That would be 6-8 here in the Central time zone and 7-9 on the East coast.
As has been well publicized, Arnold is sitting this one out. However, it should still be a lot more interesting than any of the ridiculous debates among the DemonRat presidential wannabes. Those shows are completely meaningless and are intended as nothing more than a way to make everyone beg Queen Hillary to ride in on her white steed (broom) and save the JackAss Party from humiliation at the polls next November.
Tuesday, September 02, 2003
It's Hopeless For the PRC
Here are just a couple of reasons, other than the high taxes I normally discuss, that the name "People's Republic of California" is justly deserved. The mindset among the rulers out there isn't very different than full out socialism.
They refuse to accept the realities of the basic supply and demand laws of economics and continue to assume that they can force certain results. Those are no more possible than making water flow uphill or the sun rise in the West.
This isn't new and is the very reason why I, after living in the San Francisco Bay Area for 38 years, decided to leave almost eleven years ago. Things have deteriorated since then, and show no sign of improving.
Price controls on gasoline - Lower prices will result in lower supply and more shortages.
Forcing employers to pay for employee medical costs - Higher costs on employers will result in fewer employers staying inside the PRC and those who do stay will hire fewer workers.
It is becoming much more difficult to counter those who believe it would be best for the USA if the PRC were to just break off and float off into the Pacific; or those like Cruz Bustamante, who want to give the State back to Mexico.
Monday, September 01, 2003
Harrison Abstract Fiasco
Many people haven't been as lucky as some of our clients were by being able to get their funds released from the Harrison Abstract custodian.
One couple still has over $80,000 locked up, preventing them from completing the purchase of the home they are currently occupying.
One woman's lender has its $175,000 loan money frozen in the Harrison Abstract mess. This article tries to paint the picture that this woman owes $350,000 on a house that only cost her $175,000. That's ridiculous. She only owes $175,000 and the bank just has to wait to get the rest of its money back. It's interesting that the bank isn't named. Some local banks are still being investigated for their involvement in the embezzlement.
Refinancing 1031 Properties
I've posted a new article on how to properly refinance property to pull out tax free cash without jeopardizing a Section 1031 tax free exchange.
Divide & Conquer
Pressure's on Senator to Drop Out of Race, but Why Should He? - The liberal media are doing everything they can to ensure that the GOP votes are spread so thin among several candidates that nobody can overpower their choice, the high tax loving racist, Cruz Bustamante (aka "Davis Heavy").