Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for July 7th, 2004

Posted by taxguru on July 7, 2004

‘Cost of Government’ Date Is Reached Today

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Posted by taxguru on July 7, 2004

Too good to be true? Lawyers seek millions from investors in scheme – One more pyramid scheme collapses, nailing another bunch of scammers, con artists and idiots.

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Posted by taxguru on July 7, 2004

National Taxpayer Advocate Releases Report to Congress, Cites Need for Aggressive Protection of Taxpayer Rights

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Tax Return vs Book Income Figures

Posted by taxguru on July 7, 2004

Back when corporate accounting scandals were big news, I mentioned how much more useful it would be if shareholders and others interested in a company’s finances had access to copies of its income tax returns to see what is being reported to IRS. Under the very wide generally accepted accounting principles (GAAP), it’s very common for companies to tell IRS that they are losing their shirts, while at the same time telling the investing public that they are making money hand over fist. In fact, I requre a look at 1120s before giving my opinion on small corporations that are possible acquisition targets by my clients.

One of the underlying assumptions behind the Martha Stewart and other insider trading cases is the premise that every potential investor should have the exact same information at the exact same time and as much as possible in order to arrive at the best possible investment decisions. As I’ve mentioned before, such a goal is impossible to achieve; but releasing corporate tax returns would be a step in the right direction.

Similarly, knowing about differences between book accounting and what is reported on corporate income tax returns (1120) can tip off IRS to possibly over-aggressive tax savings strategies. These differences have normally been shown on Schedule M-1 on Page 4 of the 1120. However, IRS hasn’t been able to see the differences as clearly as they would like with the limited format of the current M-1; so they have come up with a new three page long Schedule M-3 to provide more detailed information on differences between book and tax income and expenses. This new schedule will only be required for corporations with more than $10 million in total assets and for tax years ending on or after December 31, 2004.

Official Press Releases regarding this:

From IRS:

Treasury and IRS Issue Revised Tax Form for Corporate Tax Returns (IR-2004-91)

Treasury, IRS Streamline Reporting of Significant Book-Tax Differences (IR-2004-92)

From Treasury Department:

Treasury and IRS Issue Revised Tax Form for Corporate Tax Returns (JS-1770)

Treasury and IRS Streamline Reporting of Significant Book-Tax Differences (JS-1769)

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Posted by taxguru on July 7, 2004

Baxter County jury to hear Brown case – Too much coverage by the Harrison Times has supposedly made it impossible to have a fair trial in Boone County. I doubt that moving the case over to a nearby county will make much of a difference other than to inconvenience most of the witnesses. What’s actually been more surprising is the fact that there hasn’t already been any attempt (that we know of) at vigilante justice. Maybe Boone County has matured since its heydays, with lynchings, mob violence and other KKK related activities, and can be patient enough to allow the legal system to do its thing.

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Posted by taxguru on July 7, 2004

Fuzzy Math And Stock Options – As usual, when our rulers attempt to micro-manage our lives, they make things worse. Creating new convoluted accounting rules that make no logical sense will do nothing to make corporate numbers more reliable. Just the opposite.

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