Archive for July, 2004
Nothing New
Posted by taxguru on July 31, 2004
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Posted by taxguru on July 30, 2004
Amway & Taxes – Excellent post by Roth & Co on how important it is to have a true profit motive in order to deduct business losses. Since almost nobody ever makes any real money from Amway, that business already starts off as suspect in the eyes of the IRS.
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Limits On Section 179
Posted by taxguru on July 30, 2004
I continue to receive a lot of questions about the use of the Section 179 expensing election, such as this one:
Question:
I’ve read that taking this deduction cannot cause your business to have a loss, but If I have a business loss before taking this deduction, am I allowed to take it?
Thank you in advance,
My answer:
It is true that the Section 179 cannot be used to reduce taxable income below zero. However, this isn’t always based on the business income alone.
For corporations (Form 1120), it is pretty straight forward. The Sec. 179 deduction can only be as high as needed to zero out the taxable income. If there’s already a break-even or net loss, no current 179 is allowed and must be carried over (on Form 4562) to the next tax year.
For Schedule C sole proprietorships, it is actually possible to use Sec. 179 to create or increase a large net loss if there are other sources of income (W-2s, etc) that result in a positive taxable income before considering the Sec. 179 deduction.
I hope this helps. I’m sure your personal tax advisor can give you more specifics for your particular situation.
Kerry Kerstetter
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Posted by taxguru on July 29, 2004
IRS Says Americans’ Income Shrank for 2 Consecutive Years – Using amounts reported on tax returns actually understates the drop in income caused by the stock market collapse a few years ago. I’ve seen tax returns where the taxpayers lost well over a million dollars; but were only allowed to deduct $3,000 per year.
Cigarette Taxes Are Dangerous For Your Health
John Kerry’s Tax Plan: Too Much Tinkering – While it’s not worth wasting any time seriously worrying about John Kerry’s tax plans becoming reality any time soon since he will lose in November in a landslide, there are some other good alternative tax reform ideas at the end of this article.
The Tax Code’s Impact on the Reliability of Revenue Projections
Socialism is evil – Good “tell it like it is” from Walter Williams. It’s always bugged me how pervasive the belief is in this country among the elites (and the DemonRats) that capitalism is the world’s evil and socialism is the salvation from all problems.
Wave of Regulations Will Follow Tsunami of Federal Spending
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Posted by taxguru on July 28, 2004
Trusts May Gain Tax Benefits By Shifting States – A tax saving strategy that has always been near & dear to me, arranging things so that income is sourced from a tax free state. While this article deals with trusts, similar steps can often be taken with corporations.
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Once a Marxist, always a Marxist…
Posted by taxguru on July 27, 2004
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Posted by taxguru on July 27, 2004
Human Piggy Bank Held – An even more disgusting money laundering technique.
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Posted by taxguru on July 27, 2004
A closer look at 2004 sales-tax-free holidays – Most are timed for back to school purchases, but some have already started.
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Tax Guru - Ker$tetter Letter 