Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for December 30th, 2003

Posted by taxguru on December 30, 2003

Blogging Economics – As Mr. Bartlett observes, one of the big benefits of the blogging revolution is the growth in information available directly from people actually working in various professions (economics, law, taxes, etc.) and less of a need to rely on uninformed professional journalists. No offense intended towards professional journalists; but on whom would you rather rely for information on technical topics, such as the law or taxes; a reporter with no real life experience in those areas or an attorney or CPA with decades of real world experience? Media outlets do have a reason to worry about their loss of clout as more people learn that they can obtain real world information straight from the horse’s mouth instead of having to suffice with third hand coverage from non-specialists.

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Posted by taxguru on December 30, 2003

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Don’t Spend Money Needlessly

Posted by taxguru on December 30, 2003

As I’ve discussed on several occasions, prepaying for some kinds of operating and other deductible expenses before midnight tomorrow will allow you to deduct them a year earlier than otherwise. There are some kinds of expenditures for which that strategy doesn’t work.

Inventory – Stocking up on items that are going to be resold does absolutely nothing for tax savings. Whether you use the Cash or Accrual method of accounting, the cost of unsold inventory has to be carried over to the next year’s tax return.

Equipment – As indicated by the dozens of postings I have made on the issue of the newly expanded Section 179 deduction, there is a lot of interest in this; especially in regard to vehicles weighing more than 6,000 pounds. One of the big misunderstandings I have been noticing is that people think they can just send in a check for some new equipment and claim the deduction on their 2003 tax return, even though it won’t be received until next year. That is not correct. You need to be careful here. You can only claim the Section 179 expensing election for equipment that has been received and actually placed into service by December 31, 2003. It’s not good enough just to prepay for new equipment. Anything that doesn’t arrive until 2004 can’t be deducted until that year’s tax return.

I have seen many people make these mistakes over the years by spending all of their money on inventory and future deliveries of equipment in the final weeks of December. It’s one of the unpleasant tasks of this job to have to break the news that they can’t deduct those expenditures, They then have to try to sell the inventory quickly enough to come up with the money to pay their taxes by April 15.

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Posted by taxguru on December 30, 2003

The only way to really escape from taxes (as far as we know).

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Posted by taxguru on December 30, 2003

Hitting two popular villains in one parody. Thanks to Player.

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Posted by taxguru on December 30, 2003

Rumbling on the hard-line right – As I’ve been saying for a long time, Bush is losing a lot of support from those of us who are disappointed in his embrace of larger more expensive government. Rather than sit out the 2004 election, a stronger message could be accomplished by supporting the party that has always believed in the constitutional limits on government, the Libertarian Party

With election on the way, latest tax cuts likely won’t be the last – I don’t want to sound overly negative about Bush. Cutting taxes has been an excellent move and I’m glad that he plans to continue that trend. He just needs to start exercising some restraint on spending for things that are not authorized by our Constitution.

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