Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for December, 2000

Kill the Income Tax

Posted by taxguru on December 31, 2000

Although I make a very good living helping people cope with this country’s various tax laws, I have never been shy about voicing my opinions about the tax system. It is immoral, corrupt, unethical, and completely contrary to the goals of our founding fathers. It is such a shambles that reform is not possible. Anyone who claims otherwise is blowing smoke up your rear. Congress loves to pretend to care about the problems and “rearrange the deck chairs on the Titanic” by making superficial changes; but the proper approach is to “end it, not mend it.”

As I have said on several occasions, the much ballyhooed flat tax, as proposed by Steve Forbes, would not come anywhere close to achieving its stated goal of eliminating the dreaded IRS. The only way to do that would be to repeal the 16th Amendment and replace the revenue through a national sales tax.

One of the courageous leaders in this patriotic campaign is another freedom loving speaker, Fred Holden, of Colorado. He has an excellent new website with details of how we can all work towards this goal at www.SuperCitizen.com . Check it out.

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Posted by taxguru on December 29, 2000

Trapped

This comic from today’s Arkansas Democrat pretty well sums up our situation.

We lost our power last night; but the hard workers at Carroll Electric got it back online within two hours. We have been much luckier than many others in this area who have been without power for several days.

KMK

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Posted by taxguru on December 28, 2000

Bring On Global Warming

If we need an example of why global warming would be a good thing, this is it.

We are currently in the middle of the longest cold-ice-snow mess since our move out here in 1993. The one problem with living in the boonies is that we are now physically isolated from the outside world. Everything is completely covered with very slick ice, making it difficult to even do anything outside. Even the dogs are having hard time getting around, slipping all over the place. Quite amusing, until one of them breaks a leg.

Luckily, our phones and power are working fine. We had stocked up on firewood and filled our propane tank a few months ago, so we have plenty of heat. Except for the fact that we can’t receive or send any snail-mail (including UPS and FedEx), I don’t mind being up here by ourselves. Sherry is going crazy, wanting to get into town.

Of course, no mail service means that we have to wait to receive any more DVDs from NetFlix. We watched the ones we have here a week ago, but can’t send them back.

Here are some Winter pictures of our place from a few years ago. It’s actually a lot whiter and prettier right now, as long as we don’t have to leave the main house.

This has obviously put me a bit behind with several projects; so I hope you understand. When it melts, I’ll do my best to get caught up.

KMK

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Posted by taxguru on December 25, 2000

It’s Not Too Late

Even though there’s only a week left in the year that wasn’t supposed to happen (according to the fear mongers who claimed the Earth would explode at midnight on 1/1/00), there is still time to reduce your 2000 taxes. These aren’t new ideas, yet they are often overlooked.

PrePay
If you pay for some of your 2001 expenses by 12/31/00, you will be able to deduct those payments on your 2000 tax return, giving you the tax savings a year earlier than if you were to pay them in 2001. The prepayable expense nearest & dearest to my heart is tax preparation costs. You can pay your preparer by December 31 and deduct that fee a year earlier. Tax preparers don’t mind receiving that money early because whatever comes in will be spent on supplies for the upcoming tax season.

Section 179
If you haven’t already used up your $20,000 Section 179 expensing election for new (to you) business equipment, you should hurry up & go shopping. Also, let me clear up one big misconception about this very lucrative deduction. It’s not only necessary to pay for the equipment before the end of the year. You also have to put it into service by December 31 in order to claim the Section 179 deduction. This means that you may not want to rely on online shopping at this late date.

Credit Cards
Many people aren’t aware that IRS treats purchases made with credit cards the same as those made by check or cash, regardless of when the credit card is actually paid off. That means that you can charge expenses and asset purchases in December and claim them on your 2000 tax return, even if it takes you several years to pay them off. In addition, even if it’s a personal credit card, any finance charges incurred on business purchases are also deductible on the same business schedule (C, E, F, etc) as the underlying purchase. If you use the credit card function in Quicken or QuickBooks, where you enter the individual charges, these will be added into your 2000 expenses.

KMK

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Posted by taxguru on December 22, 2000

Selfish Celebrities

I am currently working on an article to explain what has long been a mystery to many people: Why certain people, such as highly paid celebrities and athletes, who should be in favor of a tax cut, instead are so supportive of big government tax and spend liberals.

In the meantime, this article on Sarah Jessica Parker’s attitude towards her relatives is very illustrative of the Hollywood liberal mindset. Although she likes to brag about being worth $30 million and buying all kinds of extravagant shoes and handbags, when it comes to caring for her own relatives, that’s completely the government’s responsibility.

Although it is common wisdom to think that when the Federal government pays for something, that money miraculously appears out of the heavens, that just isn’t the case. The truth is that our rulers in Washington send out IRS hitmen to stick guns in the faces of hard working individuals and take their money in order to pay for food stamps for Sarah Jessica Parker’s family. What’s wrong with that picture?

KMK

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Posted by taxguru on December 21, 2000

QuickBooks 2001

I have been using QuickBooks Pro 2001 for one of our corporations for about a week now. It is a good improvement from earlier versions and definitely worth upgrading, especially for those of you using pre 1999 versions of the program. The transfer of data from the 2000 version to the 2001 one went smoothly, including the online banking info. The only problem I have experienced so far has been the disappearance of the addresses for several vendors when I was preparing checks.

I will be adding several articles on the effective use of QuickBooks and Quicken to my main website over the next few months. I am also planning to produce a new video, this time focusing on QuickBooks. When I produced my earlier one on Quicken, it was also applicable to QuickBooks because the programs were very similar. Since then, each year’s version has veered off so that the two programs have become very different from each other. The changes have been so drastic in some respects that I will be transitioning many of my clients from Quicken over to QuickBooks.

Trying to capitalize on the web-based accounting trend, Intuit has started its QuickBooks for the web. I haven’t actually tried it out; but from Intuit’s own description, it seems like a feeble program. It doesn’t allow anything more than the most basic bookkeeping. It doesn’t allow the printing of checks. Its data files are not compatible with the regular QuickBooks. What were they thinking at Intuit? They definitely should have asked me for some advice before putting out this not ready for primetime program.

If you are in the mood for web-based accounting, I still think NetLedger is the best one out there. Their program accepts QuickBooks data files. In fact, they have a comparison between their program and the new QuickBooks web service.

KMK

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Posted by taxguru on December 19, 2000

Landlord’s Nightmare

For a landlord, there is no scarier movie than Pacific Heights. While it’s a ficitional account of a tenant from Hell in San Francisco, with the tenant-friendly anti-landlord bias in California laws, it could very well happen. In fact, we had such a psycho tenant (Bill Widger) on our ranch in Castro Valley, CA who used that movie as a guide of how to push us to the limit.

We have been so gun-shy from that experience that we have resisted all offers by people to rent any of our property here in the Ozarks. It is supposedly easier to evict problem tenants in Arkansas; but we still don’t feel comfortable enough taking that risk.

What brought this back to my memory was this story from New York where the owner of a house thought he had evicted a problem tenant. However, the tenant had sold the house and pocketed $30,000 from the new occupants while the real owner was away on a business trip. Scary.

KMK

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Posted by taxguru on December 14, 2000

Treating the Tax Code Like A Movie Script

Parody site The Onion has this article describing how Hollywood screenwriter Joe Eszterhaus has been hired by Congress to punch up the latest tax bill.

Note to Florida Democrats:
As is everything on The Onion’s site, this is a parody. A parody is a humorous look at a serious subject and is not to be taken as fact.

Also, thank you for replacing Arkansas as the state with the most unintelligent voters.

KMK

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Posted by taxguru on December 12, 2000

Don’t Be So Trusting

For several years, I have been warning against the use of offshore and some other bogus types of trusts to avoid income taxes. Just as with my warnings about other tax protestor schemes, it has been hard for people to believe me because the promoters have been allowed to sell their products supposedly free from IRS challenge. I have always believed that the official IRS tactic, to ignore tax protestors, had the wrong effect. To many people, silence signifies agreement.

A little over a year ago. I shared some IRS announcements to the tax practitioner community of their intent to get aggressive in attacking abusive trusts. Well, that time has arrived. This article is another in a growing series describing that IRS has now advanced to the next level in its attack on trusts. The old gray bar hotel is receiving plenty of new occupants.

As I explain to people who fall for the tax protestor lie that paying taxes is voluntary, we do have an opportunity to pay voluntarily. However, for those who fail to volunteer, IRS will do everything in its unlimited power to destroy your life and take everything you have.

Here is more explanantion of abusive trusts from the IRS Criminal Investigation Division.

I hate sounding like a broken record; but there are plenty of very legal methods to reduce or often eliminate taxes, without having to resort to these kinds of illegal means. In fact, the setup cost to do something legal, such as set up a corporation, is much less than what the tax protestor promoters charge for their untaxing programs. The added bonus of not worrying about losing your freedom or your life is, as the Visa commercial says, “priceless.”

KMK

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Posted by taxguru on December 6, 2000

What Would You Do For Money?

With the recent Survivor and Big Brother shows, as well as other even more disgusting ones popping up all the time, it has become a standard question as to what a person would do for money. The real question isn’t what you would do, but what is your price for doing unpleasant things.

This story of a guy whose dog, Zipper, ate the the $55 from his office football pool (two $20s, three $5s) seems at first blush to be ridiculous. This person, Jon Payton, has been following Zipper around and recovering the money from his droppings.

I assume most of us wouldn’t stoop so low for a few bucks and would simply chalk this up to learning to keep things more securely away from the dog. However, I started thinking. What if the bills were much larger ($100s)? What if the dog had swallowed a million dollar bearer bond? Is there an amount of money where sifting through dog poop makes sense? It’s an extreme example of the ages old question of whether it’s worth bending over to pick up a penny you find on the ground. I’m sure the dog poop amount would be different for each person.

KMK

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