A Taxing Time for the Bush Legacy
“Does he really want to be the second Bush to have his name associated with general tax increases on the American people?”

 Double Whammy: the Taxation of Social Security Benefits – One of the Clinton-Gore team’s proudest moments, retroactively raising the taxes on seasoned citizens.  Remember that the original promise under Social Security was that all of the benefits would be completely tax free.  Any similar tax free promise (Roth IRAs, for example) should be considered just as reliable

DemonRats Bringing Back ‘Death Tax’ – That headline says it all.

Q:

Subject: Regarding your article

 

Mr. Kerstetter,

 

I realize you must be extremely busy, and I hope to take as little of your time as possible.  Thank you in advance for whatever small amount of time you may have to share with me.

 

Regarding your article (http://taxguru.org/corps/scorp.htm), I wonder if you might point me to more information on the following section:

“Double Taxation

The biggest fear of c-corporations has to do with double taxation, where after-tax earnings are distributed to shareholders as non-deductible dividends. This is rarely a problem with small corporations because there are plenty of ways to pull money out of the corp in a manner that is deductible, and thus only taxed once.

    Compensation – wages or consulting income
    Interest Payments
    Lease Payments
    Royalty Payments
    Contributions to Retirement Accounts”

Specifically, I’m looking for background on the following questions:

1)     What size corporation is a “small” one?

2)     Are wages and consulting income treated differently?

3)     Are there interest, lease, and/or royalty payments that may be payable to the owners of a corporation so as to avoid the double taxation?

Any information/direction you can provide in these areas will be greatly appreciated; I’m willing to do the research, but I don’t know where to look.

Thanks once again for your time!

A:

You can find a lot of info on these subjects in the QuickFinder books, as well as The TaxBook from TMI.

I have also been impressed with the coverage of these topics in the TaxCoach Software reports.

Good luck.  I hope this helps.

Kerry Kerstetter

Don’t try to deduct lottery ticket purchases as contributions to an IRA or SEP, even if it’s true that the lottery has a better chance of paying out than does Social Security.

(Click on pic for full size image)

‘Structured Sales’ Aim to Ease Tax Bite, but Returns Are Slim – Similar to installment sales for spreading the tax bite out over several years.

Why Middle Age May Be Healthy for Your Wallet – Do we become more financially savvy after we reach our 50s?

Q:

Subject: Self-Directed IRA

Hi Kerry,

I came across your blog as I was researching self-directed IRA facilitators. The company I’m taking a look at is Guidant Financial and I’m wondering if you have an opinion on how they compare to Benetrends or SD Cooper?

Thank you,

A:

I’m sorry but I don’t know anything about that company.

I’m sure a Google search would turn up complaints, if there any unhappy customers out there.

Good luck.

Kerry Kerstetter

Q:

Subject: copy of 2004 federal income taxes

 

Dear Kerry,  I would like to know if there is any possible way of me getting a copy of my 2004 Federal income taxes. I need these documents for a court case and I can not find my copies. I would appreciate if you could email me and tell me any information that may help me to obtain these records.   Thanks in advance for any advice that you may be able to provide.                

A:

I’m assuming you didn’t use a professional preparer for your 2004 1040, because you could always get a copy from him/her.

IRS has two forms that can be used to get either a transcript of the numbers from your tax return (4506-T) or an actual copy of the return (4506).  The transcript is free, while the copy is $39.

You can download these forms from the IRS website:

          4506–T

          4506

Good luck.

Kerry Kerstetter

From A Reader:

Subject: WSJ’s bad advice

Kerry,

You posted a link to a WSJ article basically telling people not to buy a house in most instances.

Much of what it said was just wrong.

For one thing, even if you assume 4% growth, we’re talking about 4% of the total value.

So, if you put 10% down, in a year you’ve had a 40% roi (less the interest paid during that year).  I have yet to see that in any of my stocks.

The author also completely missed the aspect of control.  Homeowners don’t have to wait for the super to fix something and if they’ve got a fixed rate mortgage they don’t have to worry about rents raising (taxes, but not rent).  Homeowners will also never get a note saying “I don’t like you anymore.  You have 60 days to leave.”

You can also refinance to take advantage of lower rates.

 

Is home ownership a free ticket to cushy retirement?  Of course not.  But it’s also not the doom of wasted opportunity the author paints (even the author admits you can walk away with a quarter million in cash if you move from a high market to a low one).

My Reply:

Those are very good points. 

The principle of leverage in an appreciating market has always been the main reason I have always been a big fan of real estate investments.

The issue of control and not being at the mercy of a landlord is also very near and dear to me, and why I have never felt comfortable renting a home.

Thanks for writing. 

Kerry