Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for September, 2003

Posted by taxguru on September 29, 2003

Harrison Abstract hearing Oct. 10 – List of some of the people with claims against the company.

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Posted by taxguru on 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

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Peer Pressure In The PRC

Posted by taxguru on September 28, 2003

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.”

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Posted by taxguru on 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.

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Posted by taxguru on September 27, 2003

This is a perfect metaphor for the status of the PRC and how the different political parties view the solution.

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Posted by taxguru on September 27, 2003

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 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.

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Working With Small Corporations

Posted by taxguru on September 26, 2003

On my main web site, I’ve posted some guidance on how to handle corporate expenses paid from personal accounts.

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More On Section 179 Expensing

Posted by taxguru on September 26, 2003

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.

The question:

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.

My response:

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.

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Harrison Abstract Update

Posted by taxguru on September 26, 2003

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.

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How our rulers get away with routinely violating the Constitution.

Posted by taxguru on September 26, 2003

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