Tax Guru – Ker$tetter Letter

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IRS Extends Deadlines for Irma Victims

Posted by taxguru on September 12, 2017

All last week, as we all prepared for the oncoming wrath of Hurricane Irma, I was confident that everyone in Florida could expect the same kind of official extensions of time from IRS to file tax returns that had their first extension expiring in the next few months. 

While this was mainly 2016 1040s, even more pressing are the extensions for pass-through entities, such as LLCs, Partnerships, Trusts and S-Corps, which have extended deadlines of September 15, 2017 for their 2016 tax returns.  In the “old days” filing any of these tax returns late wasn’t a big deal because late penalties were only based on the amount of taxes due, and as pass-through entities, they had no taxes and thus no late penalties.  However this was changed a number of years ago and nowadays IRS is very aggressive in assessing late filing penalties of hundreds of dollars per month per K-1.  These frequently grow into thousands of dollars.

Since Sept 15 is fast approaching, for the past few days, I have been checking the IRS news page for an announcement similar to the one they had for Hurricane Harvey, giving all those affected by Irma more time to file their 2016 tax returns.  Until just a short while ago, the only Irma affected territory mentioned as having filing relief were parts of the U.S. Virgin Islands.

IRS has just released this news release, announcing the expansion of the list of areas that have been granted official deadline extensions due to Hurricane Irma disruptions.

As of right now (2:50 pm on 9/12/17) The IRS’s list of affected Florida areas only includes 16 counties.  Since the evacuation order, preparation and the actual storm included all 67 counties here in Florida, IRS will need to expand that list.  According to the IRS description, it’s a function of what they are told by FEMA.  While not all 67 counties were hit as hard as some others, most were affected by the storm.  Even people who didn’t have any actual storm damage, but heeded the Governor’s pleas to get the hell out of Florida, are going to need a lot of time to get back to their normal lives after returning to their homes.  

I can only assume that the IRS’s official list of affected Florida counties will grow over the next few days or weeks.  Rather than list 60 to 65 county names, they may just take the simpler route and include the entire State of Florida.

[Update 9/14/2017] – I noticed a few more Florida counties being added yesterday to the IRS’s list.  As of just before Noon today, their list of affected counties is up to 37, including Citrus, where we are located.  As more hurricane damage is discovered and reported up the chain of command (FEMA, et al), this list will continue to grow.

[Update 9/15/2017] – The list of affected Florida counties is now up to 46.  Just 21 more to include the entire state.

[Update 9/16/2017] – The IRS list of affected Florida counties has now been changed to “This represents all 67 counties of Florida.”

Posted in disaster, extensions, IRS | Comments Off on IRS Extends Deadlines for Irma Victims

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Posted by taxguru on August 30, 2017

Is the IRS Scandal About to Break Wide Open? – Let’s not hold our breath waiting for our GOP rulers to do anything to punish, or even stop, the DemonRat criminals operating at high places in the government.

 

The Big 3 Tax Cut Lies That Democrats Keep Telling – Just a few of the many lies promulgated by the enemedia, DemonRats, and RINOs in order to justify stealing huge percentages of money from the producers in this country via the Marxist “progressive” tax rate system.

Posted in Uncategorized | Comments Off on .

Some Hurricane Harvey Tax Breaks

Posted by taxguru on August 29, 2017

There are a few silver linings to the still ongoing disaster in the Houston area as related to income taxes.

Filing Delay
As is always the case with huge unexpected disruptive events, IRS has officially extended tax filing and payment deadlines for people and businesses who are in the affected areas.  In this recent press release, IRS has extended the tax return filing and tax payment deadlines until January 31, 2018 for those who had tax returns due or extensions expiring in September and October 2017.  This includes millions of people who filed extensions for their 2016 1040s. 

IRS Gives Tax Relief to Victims of Hurricane Harvey; Parts of Texas Now Eligible; Extension Filers Have Until Jan. 31 to File

Deducting Unreimbursed Casualty Losses
Not mentioned in this IRS announcement is the fact that victims of Hurricane Harvey also have a choice about when to deduct their losses from this disaster.  Presidentially Declared Disaster Areas (PDDA) have a special tax break that “lesser” disasters don’t.  

Trump declares Hurricane Harvey federal disaster in Texas

Normal tax policy is to declare income received and expenses paid on the tax returns for that particular year.  If there were a fire or a small neighborhood flood in August 2017, those who were affected would have to wait to deduct their unreimbursed loses on their 2017 tax returns, which they would be filing with IRS in 2018.

In order to allow PDDA affected taxpayers to recoup some of their losses sooner, via tax reductions, they have the option to claim the casualty loss deduction on the normal year’s tax return (2017 for Harvey) or on the previous year’s return (2016 for Harvey).  You can see more details on this on the IRS website.

Tax Relief: Presidentially Declared Disaster Areas

Deciding on which tax return to claim the PDDA loss is, like many tax planning choices, based on when it will save you the most money.  As of today (8/29/17), we are only aware of one of our clients who has been personally hit by Hurricane Harvey, with an early estimated loss of around a million dollars.  We will most definitely be discussing the feasibility of deducting this loss on his 2016 1040, which also happened to be a year in which he had to report several millions of capital gains. 

Having spent several years in California, I do have quite a bit of experience in working with this issue with such disasters as earthquakes, as well as how to properly document and claim the losses on tax returns to avoid any IRS questions.  This includes attaching photographs of the home, before the disaster and after, as well as copies of contractor invoices for reconstruction costs.  The larger the deduction, the more documentation you need to attach to your tax return.  You don’t want to have to suffer through a disaster that’s often much worse than a hurricane, an IRS Audit.  

You can download a handy PDF reference on deducting casualty and theft losses here.  Courtesy of my favorite tax reference source, TheTaxBook.

Posted in casualty, disaster | Comments Off on Some Hurricane Harvey Tax Breaks

Will IRS criminals ever be prosecuted?

Posted by taxguru on August 19, 2017

I’m not holding my breath expecting Lois Lerner and her band of scofflaws to ever be punished for assisting the bHo Regime in using the IRS to attack and persecute political opponents.  However, it’s still great to see that some folks are not yet ready to let the story drop. 

Lay it on the line’: Judge in tea party case orders IRS to disclose employee names, reasons

Posted in Uncategorized | Comments Off on Will IRS criminals ever be prosecuted?

A necessary prerequisite for Tax Reform

Posted by taxguru on August 11, 2017

Ever since the amazing election of Donald Trump, there has been debate as to whether or not he and the GOP controlled Congress will be able to enact any substantial reform of our wild and wacky Tax Code in the near future.  We in the Tax Practitioner community would love to know the answer to this question so we will know what to advise our clients.  The uncertainty surrounding this issue is very frustrating for us all.

Basing predictions of what our rulers in DC will do on their blustery talk is insane and ludicrous. However, if we look at what actual advance preparations are being made by our rulers for such reforms, it doesn’t look promising. 

As these others have noted, it’s pretty much impossible to clean up the IRS Swamp when its crooks are allowed to continue running it  and nobody is punished for their flagrant crimes.  How can we have anything resembling a fair tax system when we can’t trust those in charge of it?

IRS head Koskinen hurting tax reform, Rep. Brady wants him fired

The IRS is STILL toying with conservative nonprofits. When will Trump jump in and drain this swamp?

Posted in Crooks, IRS, TaxReform | Comments Off on A necessary prerequisite for Tax Reform

IRS Condones Employees’ Criminal Activities

Posted by taxguru on August 1, 2017

It’s not bed enough that such IRS miscreants as Lois Lerner and John Koskinen have never faced any legal consequences for their blatant illegal activities while working at the IRS, there is this news item that IRS is rehiring employees who had been fired for criminal actions while working for IRS.

IRS Rehired Employees That Falsified Documents, Had Unauthorized Access to Taxpayer Information 

We all know that IRS has been suffering from low manpower due to attrition and budget restrictions, but are they this desperate for worker bees that they ignore and excuse prior criminal actions? What message does this send to other IRS employees, the tax practitioner community, as well as the American TaxPayers?  It is nothing less than  insane.

Update: Rush Limbaugh discussed this issue in his Morning Update on 8/7/17.

Posted in Crooks, IRS | Comments Off on IRS Condones Employees’ Criminal Activities

Facing Off With IRS Auditor

Posted by taxguru on May 27, 2017

The third season of the TV version of Fargo has been very amusing.  This scene from a recent episode, where a cash bank withdrawal of a tiny bit over $10,000 brings in a pushy IRS auditor, is funny in the way that the villain’s henchman handles the auditor.

 

The henchman cites "Section 41(c) of the U.S. Tax Code" as dealing with the taxpayer’s right to have licensed  representation.  That citation sounded strange to me, so I looked it up in the actual Internal Revenue Code that is included in my main tax reference, TheTaxBook’s WebLibrary.  Section 41 actually deals with  Credit for increasing research activities.  There are paragraphs (a) and (b) under Section 41, but no (c).

Posted in Fargo, IRS, video | Comments Off on Facing Off With IRS Auditor

Let’s avoid premature celebration for what is still just a proposal

Posted by taxguru on April 27, 2017

I am being asked to analyze the recently announced Trump tax reform proposals. However, at this early stage in the legislative process, it is far too premature to assume that these proposals will ever become real tax laws. 

There are some very good ideas in the Trump tax reform proposal; but they are already under vicious attack by the DemonRats and RINOs, who are revising actual history and spreading outright lies about the effect of tax rate reductions. Opinions as to whether Trump will be able to get his proposal through the legislative process are all over the board. 

As I have already told some people, if it starts to appear that the Trump proposal garners enough support in Congress to have a good chance of passing, I will most definitely spend some time analyzing it.   

Over the past 40+ years in the tax profession, I have seen far too many pie in the sky tax reform proposals that too many people wasted time taking seriously.  Back in the 1980s, I even commissioned a poster to illustrate the metamorphosis appetizing sounding tax reform proposals go through as they work their way through Congress.  It’s no different than our body’s digestive process.  Scrumptious apple pie ends up looking and smelling completely differently.  You can still see a small version of that poster here on my main website.

 

Posted in TaxReform | Comments Off on Let’s avoid premature celebration for what is still just a proposal

Colbert Spoofs H&R Block

Posted by taxguru on April 6, 2017

I’m not much of a Stephen Colbert fan.  However, this recent skit, where he pretends to be a Block tax preparer, does have some funny moments.

The Block skit starts at 1:42

 

 

Posted in colbert, hrblock, video | Comments Off on Colbert Spoofs H&R Block

IRS Reputation Still Sullied

Posted by taxguru on April 6, 2017

Can the top brass at IRS pull the agency’s reputation for corruption out of the hole they dug themselves into?  Punishing the lawbreakers we already know about would surely be a good start.  The fact that Lois Lerner and John Koskinen have yet to suffer any repercussions from their flagrant violations of the law makes it difficult to trust the Service’s desire to rehabilitate the taxpayers’ trust in them.

Bribery: New Documents Show IRS Targeting Scandal Was More Expansive

GOP calls for IRS Commissioner Koskinen to be fired

Posted in Crooks, IRS | Comments Off on IRS Reputation Still Sullied