The Virtual Taxman Cometh – Will IRS come looking for real tax dollars from people earning online virtual money?  Will IRS accept virtual money as payment of taxes?  We’ll have to wait and see.

Allowing people to keep more of their hard earned income is now considered the same as a gift from Santa?

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A Way for Mom and Dad to Give More Generously – From Gail Buckner

Your Mortgage: Pay Now, Or Hold Off to Invest? -From the free WSJ.

Tax Leads Americans Abroad to Renounce U.S. – An extremely drastic way to save on taxes.

Q:

Subject: Business Startup Questions

 

To the TaxGuru~

 

 Hello! Somehow in a random search for relevant tax based website information I stumbled across your site. First let me introduce myself. Im 27 y/o and in the process of forming a corporation that provides auction & import services. I am somewhat business savvy, but when it comes to tax – its over my head! And of course my funds are meager to begin with. So my questions are below….

1 Do you provide tax help for povery stricken student ha.

2. Do you know of any non profit orgs that will answer your tax questions for a small fee.

 

3. What is the process for taking the home based office deduction? I have the form i just dont know how i would lease an apartment upfront. 

I imagine thats what i would have to do? Then from what i understand(let me know if this is wrong). You *rent* the office to the corporation which you keep the money from and the corporation deducts the office costs as a business expense?  I would be utterly grateful if someone could walk me through this process there is so much i dont understand about this. I need to start this business away from the stress of my home situation. But i cant afford an apartment unless i can qualify for the office deduction.

 

Kerry any advice you can give me is respectfully appreciated.

 

Seasons Greetings!

A:

While this may sound harsh and self-serving, tax and accounting advice isn’t the place where you want to cut corners.  Nowhere is the “you get what you pay for” maxim more appropriate than in this area.

There are far too many options to consider and possible scenarios that can be used to achieve your goals for me to even begin giving you specific advice via this medium.

You will need to work directly with an experienced tax pro who can analyze your unique circumstances. I wish I could help; but I already have too many clients to take care of properly; so we are still trimming back on the difficult clients and are not accepting any new ones at this time. 

Unfortunately, we don’t have anyone specific to whom we could refer you. I did recently post some names and links for some like-minded tax pros around the country.

If you haven’t already done so, you should check out my tips on how to select the right tax preparer for you.

I wish I could be of more assistance; and I wish you the best of luck.  

Kerry Kerstetter

 

Q:

Subject: So how would you advise them?

Dear Mr. Kerstetter,

A friend and fellow lawyer pointed this article out to me and I thought you’d find it interesting.

Basically, can you be taxed on receipt of a kidney?

What I wonder is, if you and I each have a car of equal market value and we trade them, would we be taxed?  Beyond the obvious bio-ethics issues, I don’t see the difference.

A:

As learned and entertaining as Professor Maule is, this is a perfect example of how ivory tower academics (and some attorneys I have known) love to let their imaginations go wild and conjure up scary tax scenarios out of what are actually innocent events.

If I were advising these people from my real world perspective on tax matters, I would have them sell their kidneys to each other for one dollar each and completely avoid the entire subjective valuation of a bartering transaction.  While the black market price for kidneys may be as much as $50,000 (per a recent episode of Nip/Tuck), each person is actually entitled to establish her own price.  While some cold-hearted bastards might say they should auction the kidneys to the highest bidders, basic private property rights allow us to set out own prices for things we own; so who is to say one dollar isn’t appropriate?   

They can each prepare a bill of sale for one dollar and report the transactions on Schedule D of their 1040s, with a cost basis of zero.  The tax on one dollar of long term capital gain (acquisition date = date of their birth) will be the least of their worries.

Thanks for sharing that.

Kerry Kerstetter

 

Jokers couldn’t resist messing with this sign.

Courtesy of CollegeHumor

No Change in IRS Interest Rates for the First Quarter of 2007 – The main rate stays at 8.0% for at least another three months. I’ve updated this on my Quick Reference page.

I have heard of people actually trying this strategy.

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As if this has a snowball’s chance in Hell of ever happening.

Referring to this article.