That’s all I can think of after the final response from this woman, who I’m sure would love to hear from other readers.  As always, these are unedited, copied and pasted, from our actual emails.  I’m sure her employers at the local hospital are so proud of her for the way in which she represents their attitude towards people.

Q-1:

From: “Life League” <lifeleague@lifeleague.com>

Subject: Tax question

I was wondering if you could answer a very basic tax question for me.

If myself and a partner were to setup an LLC, and have it organized as an S Corp with the IRS, and then we were to for example receive a payment of $100,000.00 to the LLC.

 

What would be the best way for myself and my partner to split the $100,000.00 generated by the LLC with the minimum tax burden on us personally?

Would the LLC be taxed as an S corp and then could we as members of the LLC take some sort of distribution from the LLC that would not be considered personal income?

Or would it be best to take the money out and then just pay standard IRS Personal income tax on the money?

 

Thanks much.

 

Liz

Life League

A-1:

Liz:

You absolutely must be working directly with a professional tax advisor to set this kind of thing up.  You are heading for major problems if you go any further without such assistance.

You need to cover with your professional tax advisor how the various types of entitles are taxed because it is obvious that you haven’t any idea how it works.  For example, if you elect to have your LLC treated as an S corp, that means that  you agree to have all of the LLC’s income pass through to your 1040s regardless of how much money you take out of the LLC.

Good luck.

Kerry Kerstetter

Q-2:

So if the S Corp LLC made $100,000.00 and as you say, that means we agree to have all the funds flow through to our 1040’s, would each partner be responsible for 50% of the $100,000.00?? (Provided that the partners are 50/50 partners in the LLC that is.

 

Thanks much.

 

Liz

A-2:

Basically, that’s how it works.  Any business expenses are deducted and the net profit flows to your and your partner’s 1040s via the K-1 forms.  How much actual cash you each receive personally will have no bearing on the taxability to each of you. 

You need to be working directly with a tax pro and not relying on advice you find from strangers on the internet.

Good luck.

Kerry Kerstetter

Follow-Up:

From: “Life League” lifeleague@lifeleague.com

Subject: Thanks so much for all your help…..

Your unprofessional condescending comments are appreciated and well noted!!!

And I quote: “You need to be working directly with a tax pro and not relying on advice you find from strangers on the internet”.

And yet again from your previous email: “….because it is obvious that you haven’t any idea how it works”

How do you know I am not a local resident of AR near Harrison and looking for a tax professional and just testing the waters to see what you in fact do and do not know? You can be sure I will NOT be calling you for one of your “seminars” after all of your little rude comments you unprofessional prick.

And good luck selling your hilarious “K.M.K. Ranch” property for a MILLION DOLLARS!!! And you think I need a tax professional? Maybe you should do some research, asswipe, because you are in serious need of a real estate agent or a pscharitrist for asking one million dollars for that broken down shithole regardless of the acreage size!!!! Its ALMOST as funny as asking $4950 for a 1978 truck that blue books at less than $1000!!!!

Maybe try not to be such a prick next time and maybe you would not receive responses like this….It does not make you very happy, does it?  And FYI…I am employed by the North Arkansas Regional Medical Center on North Willow here in Harrison, and will be sure to advise all of my friends, family and anyone at KHOZ that will listen to me about how unprofessional and rude you have been.

Oh, one last thing..you are now blocked from this email account…so please….Get a life, moron!! Or should I say, Get a life “GURU”…..

Love and kisses!

Liz

My Reply, which I cc’d to her hospital:

To: “Life League” <lifeleague@lifeleague.com>

Subject: Re: Thanks so much for all your help…..

Cc: pr@narmc.com

 

Liz:

I’m sorry that you don’t appreciate the value of FREE advice and can’t grasp the concept that you need to be working directly with a tax professional whom you pay for advice.

I’m sure your employers at NARMC are so very proud of the way in which you represent the professionalism of the hospital.  YOUR attitude says a lot about that aspect of the hospital’s feelings towards people.

It also sounds as if you don’t have enough work to do there at the hospital if you have time to nit-pick so many items that have nothing to do with you.

Kerry Kerstetter

 

Working around the new kiddie tax – Need to modify strategies for shifting investment income to kids.  This is all part of the never ending tax game.  Our imperial rulers change the rules and we adapt accordingly. 

AARP returns to the mutual fund business – Just pointing out what hypocrites the AARP leaders are.  As pointed out frequently at the Social Security Choice website, AARP fought hard against the idea of allowing people to own and invest their own retirement funds under the premise that the stock market is too dangerous a place to put money, while at the very same time AARP has been earning huge commissions from selling the exact same kinds of investments.  This kind of attitude is one of the main reasons we refused to renew our AARP membership a few years ago.

Tax Advantage Is Driving Deal To Buy Braves – We need to look more into how we can help our small corporate clients use this “cash-rich split-off” technique to avoid taxes on cash deals.

If You’ve Got a Tax Refund, You’re Crazy – Good tips from Gail Buckner on how to adjust your W-4 to avoid giving the government an interest free loan.

John J. Miller at National Review has a interesting list of his top 50 conservative rock songs.  Two of those songs are especially appropriate for posting here.

#2. “Taxman,” by The Beatles. 
A George Harrison masterpiece with a famous guitar riff (which was actually played by Paul McCartney): “If you drive a car, I’ll tax the street / If you try to sit, I’ll tax your seat / If you get too cold, I’ll tax the heat / If you take a walk, I’ll tax your feet.” The song closes with a humorous jab at death taxes: “Now my advice for those who die / Declare the pennies on your eyes.”

http://rcm.amazon.com/e/cm?t=taxfreeexchacorp&o=1&p=8&l=as1&asins=B000002UAR&fc1=000000&IS2=1&lt1=_blank&lc1=0000ff&bc1=000000&bg1=ffffff&f=ifr

#45. “Taxman, Mr. Thief,” by Cheap Trick.  
An anti-tax protest song: “You work hard, you went hungry / Now the taxman is out to get you. . . . He hates you, he loves money.” 

http://rcm.amazon.com/e/cm?t=taxfreeexchacorp&o=1&p=8&l=as1&asins=B00000C28I&fc1=000000&IS2=1&lt1=_blank&lc1=0000ff&bc1=000000&bg1=ffffff&f=ifr

Update: While I have posted dozens of versions of the very familiar George Harrison song over the years, the Cheap Trick song was new to me; so I found this copy on the web and uploaded it.  The lyrics are a bit hard to make out, so I found these on the web as well.

Taxman, Mr. Thief Lyrics

You work hard, you make money
There ain’t no on in the world who can stop you
You work hard, you went hungry
Now the taxman is out to get you
You worked hard
And slaved and slaved for years
Break your back sweat a lot
Well, it’s just not fair
He hates you, he loves money
And he’ll steal your shit and think that it’s funny
Like the Beatles, even Dylan
Now the taxman is out to get you
You worked hard
And slaved and slaved for years
You played
And you played and played for years
Taxman, Mr. Heath (he’s a thief)
He’s looking for run-in, yeah
Taxman, Mr. Heath (he’s a thief)
He’s looking for run-in, yeah
You work hard, you make money
There ain’t no on in the world who can stop you
You work hard, you went hungry
Now the taxman is out to get you
You worked hard
And slaved and slaved for years
Break your back sweat a lot
Well, it’s just not fair
Taxman, Mr. Heath (he’s a thief)
He’s looking for run-in, yeah
Taxman, Mr. Heath (he’s a thief)
He’s looking for run-in, yeah

 

Update #2: Mr. Miller has posted a list of 51 additional conservative rock songs. While some mention taxes, none are as focused on them as the two above.

Creative Like-Kind Exchanges – From Practical Accountant magazine.

A new hip-hop version of George Harrison’s classic TaxMan song by that out of control crazy tax and spend lunatic, New Jersey Governor Corzine.  

Confirmation of New FEMA Director Hits Snag Over “Questionable” Personal Deductions – Those hypocritical imbeciles in DC are at it again. The very idea of Congress Critters (CC) auditing and passing judgment on income tax returns is just one more example of how the inmates are running the asylum in this country. They seem to care more about a non-CC’s travel expense deductions than the proper handling of congressional bribe money stored in freezers.

The fact that most of our elected rulers don’t have to pay their own travel expenses because lobbyists pony up for those costs is just one more illustration of how out of touch our royal leaders are and how badly we need a thorough house-cleaning, as in kick all of the bums out this November.

Local Doctor Found Guilty of Tax Evasion – This idiot from our area hoped to convince the jury that just because he believed taxes were voluntary, he had no intent to defraud the government and should be found innocent of the 25 criminal charges he was facing.  The jury obviously was smarter than the doctor and didn’t agree with his ludicrous line of reasoning. 
Update – Other Arkansas Coverage:
      Arkansas Democrat Gazette
      Harrison Daily Times

Florida Snowbirds Question Fairness of Property Tax – Taxation without representation is growing in popularity with local government officials.  Just as they love to hit tourists with huge taxes on travel and lodging costs, nailing property owners who can’t vote with higher property taxes than on voters is another underhanded tactic that they have no qualms about using in their insatiable thirst for tax dollars.

From a reader:

Subject: 2006 Tax Law

 

Thanks for a link to the new tax law. The following item was a shock:

New law, IRC §6049(b)(2): Effective for interest paid after December 31, 2005, the payment of tax exempt municipal bond interest of $10 or more must be reported to the recipient and the IRS on a 1099.

Good grief; the noose tightens [retroactive to the January 1, 2006 coupon payments] for items which are not taxable. I wonder which of our masters sneaked in that provision.

My reply:

One of the many insane aspects to how our rulers draft tax laws is the fact that despite constant real world proof that lower tax rates result in higher overall revenues, they persist in using static analysis numbers that assume lower rates will lower revenues. 

There is also a rule that, whenever possible, any new tax law has to be revenue neutral. This send those financial geniuses scrambling all around for any little bit of new revenue they can find to offset the expected costs.  This often ends up with assorted provisions to plug up suspected “tax leaks.”  This new law has a good assortment of those, especially the expansion of the Kiddie Tax to cover children under 18 instead of just 14.

I haven’t read all of the background info on this new tax law; but I tried to think of the potential revenue justification for the new muni interest reporting rule.  If you look at the worksheet for computing taxable Social Security benefits, tax exempt interest income is added in to the calculation of gross income to see if the individuals qualify as evil rich and subject to the tax.  Our rulers’ staff flunkies probably figured being able to match up 1099s for this income will generate a few million dollars in new revenue by catching evil rich senior citizens who fail to pay enough tax on their SS benefits.

Thanks for writing.

Kerry Kerstetter

Follow-up:

Thanks for your swift & incisive reply.

When those “staff flunkies probably figured being able to match up 1099s” they probably over looked the accrued interest paid on purchase that is paid buy the buyer to the seller which is going to put the 1099s out of balance OR is the IRS going to start requiring non-issuer sellers to report accrued interest received & buyers to report accrued interest paid? I buy munis 6 times a year & usually have to pay some accrued interest to the seller, so there are potentially 6 items that  won’t agree with the 1099s sent to the IRS.

Next up for the IRS? They will require all buyers of securities to report their purchases in detail, sort of an anticipatory Schedule D.