Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for February 13th, 2006

No More QB Basic

Posted by taxguru on February 13, 2006

Q:

Subject: Quickbooks
 
I am using Quickbooks Basic.  It is my understanding that this program is no longer available.  My question to you is, do I need to upgrade to Quickbooks Pro or can I continue to use this program for now?

Thanks

A:

It is true that, starting with the 2006 QB programs, they have dropped the least expensive Basic version.  It’s an obvious scheme to squeeze more money out of people.

It doesn’t matter to me which year’s version of the program you use.  I have a dozen different ones installed on my computer to enable me to work with everyone’s data files.

You should upgrade to newer versions whenever you feel that you want the newer features or the official Intuit support, which they drop after three years.  If you are using QB to process a company payroll, you will need to upgrade more frequently in order to keep the withholding tables accurate.  However, for basic bookkeeping tasks, which is really all that most people need, you can stay with your current program for as long as you want.

Kerry

Posted in Uncategorized | Comments Off on No More QB Basic

Corp Payments

Posted by taxguru on February 13, 2006

Q:

Hi Kerry,

I have a quick question, I hope you have time to help me out.  My brother and I started a s-corp in the state of Washington last year, we do not have any employees.  It’s year end and we have around 60k in the bank, I’ve taken about 5k out of the corp and he has taken $0.00.    What would you recommend we do with the 60k?  I’m married and my wife and I made about 35K last year, my brother has made about 30k outside of the corp.  I know this is so last minute, but any insight would be so helpful.

Thanks in advance!!

A:

You really should be discussing this with your own personal tax advisor.  If you are actually trying to operate an S corp without a tax advisor, you are asking for big trouble. 

A tax pro will inform you that paying S corp money out to the shareholders will have no tax effect, and is something that should have been evaluated when you decided to become an S corp in the first place.

Good luck.

Kerry Kerstetter

Posted in Uncategorized | Comments Off on Corp Payments

Sec. 179 Limits

Posted by taxguru on February 13, 2006

Q:

Subject: Section 179 Upper Limits

Hello–
 
I have the opportunity to purchase (and take delivery) of two qualified pieces of equipment.  One costs $79,000 and the other $133,000.  Is my 2005 deduction limited to the $105,000 (plus accelerated depreciation) or is it $79,000 + $105,000 = $184,000 (plus accelerated depreciation)?
 
Thanks.

A:

The $105,000 limit is per tax return, not per asset.  You could have dozens of items totaling $105,000 or just one.

As I have described several times, a 1040 can claim $105,000 in Section 179 and a C corp can also claim up to another $105,000 on its 1120.

If you are spending this much money on business equipment, you are being very irresponsible by not working with a tax pro who can assist you and ensure that you don’t screw things up.

Good luck.

Kerry Kerstetter

Posted in 179 | Comments Off on Sec. 179 Limits