Tax Guru – Ker$tetter Letter

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Archive for February 25th, 2006

Offering Stock

Posted by taxguru on February 25, 2006

Q:

Subject: Stocks to Offer
 
Good Morning,
 
We are a small group of R&D researchers looking to form a small C Corp and would like to offer stocks to investors in order to try and gain enough funds to prototype a few different models for producing liquid fuel with the co-generation of electricity of systems we’ve been designing and preparing to build out.

Can you tell me where we can learn about the stock offer limitations and total funds we can collect? I understand there are limitations on the number of offers that can be made as well as cap on total funds.

We are also looking at partnering (or possibly contracting with) a Canadian Company. Are there restrictions for receiving funds from their investors directly or through the Company and would one way or the other be better?

Thank you so much for your time and an advice you can offer. Have a great week.

A:

This is area where you absolutely must work with an attorney and a CPA firm that both have experience in public stock offerings in your state.  The rules differ in each state and can get very complex in regard to several different aspects of this kind of thing.  Your attorney will inform you of the potential penalties, including investor lawsuits, that can arise from failing to properly dot every I and cross every T.

Good luck.

Kerry Kerstetter

 

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Adjusting For Sec. 179

Posted by taxguru on February 25, 2006

Q:

Subject: Section 179 Deduction

I’m hoping you can answer my question.  I work in a bank and I’m wondering about the effect of the 179 deduction on the company cash flow.  Is this considered a depreciation expense that can be added back to get traditional cash flow?  (net income + depreciation + interest expense)

A:

Section 179 is essentially a form of accelerated depreciation and is usually included on the same expense line with regular depreciation expense, except for pass-through entities, where it is shown separately on the K-1s because of the individual-level limits . 

Any adjustments you make to book income to add back in depreciation expense should be sure to add back the Section 179 if it is not already included in the stated depreciation total.

Kerry Kerstetter

 

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Posted by taxguru on February 25, 2006

Gambling With Your Taxes: How to Report Your Wagers – Some good tips from Gail Buckner

 

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Where’s My Arkansas Refund?

Posted by taxguru on February 25, 2006

Arkansas DFA has set up an online refund inquiry service for individual taxpayers.  You just enter your SSN and zip-code.  I’m not sure how useful this will be. I just tried it for a couple of clients, and it came up with the following message in each case.

Income Tax: Refund Inquiry

There is currently no return found for the Social Security Number and ZIP code you entered. It may take as long as six (6) weeks from the time you mail your return until it can be located in our processing system. Also, you may want to verify the Social Security Number, and ZIP code you entered with those found on your copy of your return. If you have additional questions, please call (501) 682-1100 inside Pulaski County, or outside of Arkansas, or 1-800-882-9275 WATS, in Arkansas.

 

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