The Committee For Justice is giving away some very cool bumper stickers that will still be quite useful around here long after the upcoming election. You can order yours here.

Posted by taxguru on October 21, 2004
The Committee For Justice is giving away some very cool bumper stickers that will still be quite useful around here long after the upcoming election. You can order yours here.

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Posted by taxguru on October 21, 2004
This is an excellent analogy for the Social Security system. Fewer and fewer workers supporting more and more retirees can only have one result.

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Posted by taxguru on October 21, 2004
If he’s so willing to give up all decisions over our national security to the United Nations, how is this not possible?

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Posted by taxguru on October 21, 2004
California-based “corporation sole” and “claim of right” programs halted – Another scammer out of business. The Feds are racking up a good number of scalps.
Buried treasure dug up – This woman’s investment plan actually beat many stock market investors. She put $50,000 into a hole in her backyard in 2001 and got back $50,000 three years later.
Fair Share & More. The rich are doing their tax-paying part — and then some
Bush Has Until November 2 to Sign ETI Repeal Bill – But he could sign this into law as early as tomorrow, which means the new Section 179 limit for vehicles weighing less than 14,000 pounds will kick in.
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Posted by taxguru on October 21, 2004
A number of issues came up in this email I received recently.
hello, i am writing from rural grayson county, virginia (mouth of wilson 24363). i own 3 small tracts of land. i would like to sell about 2 1/2 acres off 2 of these (5 – 6 A total)to get cash to begin restoring an old log house on one of them. it will either become my primary residence or a rental property. can i take profits from the sale of the land and put them into restoration and avoid capital gains? even though this is small stuff every penny counts!
also, the 3rd lot (2 acres) i just purchased last spring to protect the view from the old house–can one take capital gains exchange retroactively?
if so, for how long?thanks for your help1 i am a wee small citizen who knows naught about this stuff.
My Reply:
I’m afraid I have to be the bearer of bad news in regard to your proposed plans.
1. The one kind of real estate that is absolutely not eligible as a replacement property is one that will be used as a primary residence.
2. Reinvesting exchange proceeds into improving existing structures is not allowable either. In some cases, the exchange proceeds may be able to be used to construct an entirely brand new structure on property that was previously owned; but even that is a gray area of 1031 exchanges.
3. Reverse exchanges, where the replacement property is acquired before disposing of the old one, are possible. There are different ways to structure them, including the IRS’s safe harbor of parking the new property with an unrelated third party. Whichever way is used, it must be set up ahead of time. If you have already taken title to the property, it is too late to try to go back and change that to be part of a 1031 exchange. IRS calls that an “afterthought” because you thought of doing the reverse exchange after you had already bought the new property.
I’m sorry to spoil your plans. Remember that I don’t make the tax laws. I just do my best to interpret them for real people in the real world.
You can see many more details on how to properly set up a legal 1031 exchange at www.TFEC.com
Good luck.
Kerry Kerstetter
Posted in 1031 | Comments Off on Exchange Questions
Posted by taxguru on October 20, 2004
Our fire department had its first chance to use the new foam sprayer in a real life situation this afternoon on a pickup truck that had caught fire while pulling a trailer with two horses on Highway 43. It took them only two minutes to put out the flames, saving the truck’s bed and the trailer. The driver got the horses out as soon as he pulled off the road into one of our firefighter’s driveway; so there were no injuries. The foam sprayer performed excellently and it was good not to see the same kind of results of a similar fire several months ago, when nothing was left but a burned out shell of an SUV.
By the time Sherry and I reached the scene, all of the flames were out, but there were still plenty of soap suds, as can be seen in these pictures Sherry took.
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Posted by taxguru on October 20, 2004
It’s not just from the IRS that we need to be on the alert for bogus tax notices. I just sent this email to a client, with a CC to the Missouri DOR:
Thanks for sending me the copies of the recent notices you received from the Missouri Department of Revenue claiming that you owe them taxes for the years 2000, 2001 & 2002. I’m assuming you sent me copies of everything you received from them, which makes these notices completely ridiculous and extremely unfair and illegal on their face.
When I have seen such claims of unfiled tax returns made by other states, such as California, they have included copies of W-2s or 1099s showing the income that they consider to have been earned inside their state. These Missouri notices give us absolutely no idea of how their tax calculations were made or what income they consider to be Missouri source.
It appears that the State of Missouri is increasingly desperate for tax revenues and is trying to pick on nonvoting out of state residents as an easy source of cash. Sending such bills without proper documentation of the underlying income that they are assuming is subject to their tax is insane. I’m sure they are banking on the shotgun approach to this scheme, assuming that enough people will just send them the money without taking the time to demand a proper explanation.
To straighten this out, I advise calling them at the number on their notices, or writing to them, and demanding that they send you complete written documentation of what they consider to be Missouri source income. We can then review your records to see if they are correct or not and take any steps that may be appropriate to correct the situation. This may possibly require us to prepare one or Missouri non-resident income tax returns, along with amended Arkansas returns to claim credits for the Missouri taxes.
I would contact the Missouri DOR myself, but they would probably insist on having a formal power of attorney authorizing me to act on your behalf, which I would be glad to do; but your contacting them directly would be faster. I am sending them a copy of this email and will be posting this on my blog to let them know that we will not just send them money without proper documentation.
To refresh your memory, here is my blog posting from earlier this year about similar notices some of my clients had received from the Missouri DOR. Those notices didn’t have actual dollar amounts of taxes shown.
http://www.taxguru.net/2004/08/missouri-tax-fishing.html
Please provide me copies of whatever information you are given and I will check it against your tax return records.
Good luck.
Kerry
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Posted by taxguru on October 20, 2004
I’ve often discussed the benefits of using a living (aka revocable) trust instead of a will to take care of things after passing away. Saving on probate costs alone makes it one of the best investments around.
One of the other big differences is the ability to keep your very personal information private. Living trusts are confidential documents and are not available to the public. That’s not the case for wills, which become public record after a person dies.
TaxProf Paul Caron has an excellent page of links to celebrity wills that anybody can check out. While we may all get a kick out of gawking at the private lives of celebrities, how would you feel if your will were open for scrutiny by anybody in the world, including your neighbors, friends, co-workers, and relatives?
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Posted by taxguru on October 20, 2004
I received this follow-up to my earlier message on Section 179 deductions:
Thank you very much for your reply. There are some accountants out there that think section 179 expires December 31, 2004. Was there any truth to this?
Thanks again.
My reply:
There was never any chance that the entire Section 179 was going to be eliminated.
Before this new law, the schedule was for the maximum Section 179 deduction for 2005 to be $102,000 + a COLA for inflation. It was then scheduled to drop to $25,000 in 2006.
I’m not sure how the rumor that Section 179 was ending on 12/31/04 got started, but I have heard it a lot; not just from you.
You can see more on this on my website:
http://taxguru.org/incometax/Rates/Sec179.htmKerry Kerstetter
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