Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for February, 2007

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Section 179 Income Limit

Posted by taxguru on February 2, 2007

 

Q:

Subject: Section 179 – Please help

Hello TaxGuru.  I came across your website after searching google and I think my situation is similar to what you describe in the following link regarding sole proprietorships and taking the Section 179 deduction…

http://www.taxguru.net/2004/07/limits-on-section-179.html

I just wanted to briefly describe my situation and ask you if I am interpreting things correctly.

My wife started a photography business at the beginning of 2006.  For the year, the business will have a net loss of about $16k due to photography equipment purchases.  I wanted to deduct all of these business assets using Section 179.  We are filing married-jointly and we both have W2 income which resulted in positive taxable income both before and after applying the section 179 deductions.  Is this OK to do, or do I need to depreciate the assets?

Thank you for your help!

 

A:

You seem to be understanding the issue correctly.  Your W-2 income can be used to determine how much Section 179 can be claimed on your wife’s Schedule C.  The net loss, including the Sec. 179, on her C will shelter some of your W-2 income, most likely resulting in a larger refund of taxes withheld from your paychecks.

As I mentioned in that post, as well as in practically every other one, you should work with a professional tax advisor and not try to prepare your own tax returns.  There are so many ways you could screw things up on your own that it would be extremely reckless on your part to do your own 1040.  Practically any tax preparer should be able to save you much more in taxes than his/her fees; so you should end up with more money, in addition to the peace of mind that IRS and your State won’t be coming after you.

Good luck.

Kerry Kerstetter

 

 

 

 

Posted in 179 | Comments Off on Section 179 Income Limit

Quicken and Multiple Files

Posted by taxguru on February 2, 2007

 

Q-1:

Subject: Multiple Quicken files
 
Dear kerry
I read your web site and blog with great interest.  I use Quicken 2006 DeLuxe for my personal finances on one machine, and I also use it on an older machine to keep books for our home owners association.  The old machine is on it’s last leg and I was thinking of trying to do them both one one machine.  I couldn’t find anything in Quicken help on how to do it.  I first thought I could create a seperate directory and do a backup and restore, but was afraid the data would get comingled.  Would this work?  And what about all the saved reports, and categories, etc.   I hope you can help.  thanks.

A-1:

You can have an unlimited number of company Quicken files on the same computer and switch back and forth between them.  Before I made all of our clients upgrade to QuickBooks, most of them were on Quicken and I had hundreds of their files on my computer.  I like to set up separate folders for each client just for ease of locating; but each client folder had multiple Quicken data files, covering their personal and corporate finances, as well as multiple years.  As long as each company file has a different name, the program doesn’t mix them up.

So, all you need to do is copy the Quicken data files to your new computer, either directly or via Backup & Restore.

Good luck.

Kerry Kerstetter

 

Q-2:

Kerry
I really appreciate you quick response.   Thanks so much.  Do the reports, categories, etc follow the data files?  That is, are the reports, categories, etc. for my personal quicken file seperate from the ones for the homeowner reports?

 

A-2:

Each file will have its own saved reports and other data, with no reference to any of the other files.  There is no commingling of any kind between the data files because you can only have one open at a time.

As I said, I used to have literally hundreds of different Quicken client data files on my computer and would switch back and forth between them with no problems.  It’s that way currently with QuickBooks data files.

Good  luck.

Kerry

Follow-Up:

Kerry
Thanks a lot for helping.  If I could, I’d steer some business your way.
 
 

 

 

Posted in QB | Comments Off on Quicken and Multiple Files

Posted by taxguru on February 1, 2007

Why should we expect our imperial rulers to take the simple approach to dealing with the mystical Tax Gap, when they can use their voodoo to make the tax system even more complicated and impossible to comply with?

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