Posted by taxguru on February 16, 2005
Lookout for the sucker-punch tax – Another appropriate name for the insane AMT.
Class-Warfare Death Wish – I wish I could be as optimistic as Larry Kudlow is on this topic, but I still see a very pervasive hatred of success in this country that is exploited by the DemonRats.
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Posted by taxguru on February 16, 2005
Q:
Subject: mileage deductions
Can you tell me if the new rate of 40.5 up from 37.5 a mile can be used in my tax returns filed now feb of 05 for my 2004 income tax. Or do i have to wait till the end of the year to apply the new rate
A:
That is a new, but very wrong, interpretation of the rules for claiming business mileage deductions. When you file the tax return is irrelevant. Business miles driven during 2004 can use the 37.5 cents per mile standard rate, or the prorated actual expenses, whichever gives you the best total deduction.
The new rate of 40.5 cents per mile is only available for business miles driven during 2005, which will obviously be calculated on your 2005 1040 some time after the end of 2005.
It sounds as if you could benefit from the services of a tax pro to help make sure you interpret the tax rules properly.
Good luck.
Kerry Kerstetter
Posted in Uncategorized | Comments Off on Mileage Deductions
Posted by taxguru on February 16, 2005
I received the following email from a CPA in Michigan in response to my most recent post on recapturing Section 179 expense deductions.
Subject: Your Blog Article On Section 179 Recapture
The sale of an asset that taxpayer had originally taken Sec. 179 deduction is more complex than this.
How it is handled depends on the entity (I am ignoring trades)Section 179 recapture is ordinary income subject to self-employment taxes for self-employed/partners. The recapture adds to basis creating smaller gains or larger losses. The losses are 1231 losses subject to 5 year lookback on 1040s etc.Milt Baker CPA MichiganP.S. I enjoy your Blog site on which you post great information and fabulous cartoons.THANK YOU
Milton:Thanks for the additional info. I always have the dilemma of how technical to make my answers for non tax pros. In this case, I was just trying to let him know that there were potentially expensive tax consequences to his scheme of buying and selling new vehicles each year. As I’m sure you encounter in your practice, there is no shortage of people who think they’ve discovered a way to game the system, only to make things worse for themselves.
I hope that everyone who reads my postings gets my point that they need to consult with a tax pro before embarking on their tax savings plans.
Thanks again for writing and feel free to contribute anything else that you feel is appropriate.
Kerry Kerstetter
Posted in 179 | Comments Off on More On Section 179 Recapture
Posted by taxguru on February 16, 2005
IRS is issuing a clarification on how to best avoid taxes on homes that have been used as both a primary residence and business or rental. Utilizing a combination of the Section 121 tax free exclusion and Section 1031 like kind exchange is not anywhere close to a new idea. We have been doing just that for decades with tax and exchange clients, including long before 1997, with the old rules requiring a new residence to be purchased within a certain time frame and the measly once in a lifetime exclusion of $125,000 of gain per person or couple. This new ruling will just make those who feel uneasy about doing anything that is not explicitly spelled out for them a little more comfortable.
Posted in 1031 | Comments Off on Avoiding Taxes On Sales of Mixed Use Homes
Tax Guru - Ker$tetter Letter 