Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for April, 2007

Posted by taxguru on April 28, 2007

For Some Americans, Buying Land Is Like Collecting Art and Autos Buying thousands of acres of land seems like a smart way to invest excess cash.

Unnecessary Closing Costs – Title insurance has always been such a scam when buying and refinancing property.

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Short form?

Posted by taxguru on April 28, 2007

Posted in comix, IRS | Comments Off on Short form?

SS Base Increases

Posted by taxguru on April 28, 2007

Anyone who understands the future of the current Ponzi Scheme setup for Social Security knows that the only way it can continue to survive is to increase the tax rate and the amount of income subject to the tax, which is FICA for W-2 wage slaves and Self Employment tax for those of us in control of our own income.

My long running prediction that the ceiling on the income subject to the tax will be removed completely is still on target and should be implemented shortly after the Dems take control of the White House. In the meantime, Spidell just sent out an email with the following scheduled increases in the taxable income base according to the SSA’s projections.

2008: $102,300
2009: $106,800
2010: $111,600
2011: $116,400
2012: $121,500
2013: $126,300
2014: $131,700
2015: $136,800
2016: $141,900

As I have been explaining for decades, there are very legitimate ways to reduce or possibly eliminate the requirement to pay any Social Security or Medicare tax by the proper use of other legal entities, such as LLCs and corporations. Any good tax pro should be able to help clients set things up to accomplish this.


TaxCoach Software: Are you giving your clients what they really want?


Posted in SSA | Comments Off on SS Base Increases

Upcoming Ponzi Scheme Collapse…

Posted by taxguru on April 27, 2007

The financial and actuarial assumptions and predictions for Medicare are the same as they are for Social Security; which means that fewer workers are forced to shoulder the cost for more retirees each and every year until they reach their breaking points and the programs collapse.

Posted in comix, SSA | Comments Off on Upcoming Ponzi Scheme Collapse…

Section 179 For Vineyards

Posted by taxguru on April 27, 2007

Q-1:

Subject: Vineyards and Section 179 depreciation

Hello —
According to your website Vineyards are eligible for section 179 expense election.

However, the IRS is taking a opposite position. Can you please provide me with your reference.

THANK YOU.

A-1:

That list of qualifying assets was from the QuickFinder Depreciation Handbook. I just checked the online version of that handbook and it is still included there.

I also just checked IRS’s Publication 946 and don’t see any mention of vineyards not being eligible. Where exactly did you see that IRS doesn’t allow it?

Kerry Kerstetter

Q-2:

Kerry — email me with your fax phone number and I will fax you the IRS article. It is from a July 2006 Farmer publication. And, there is a very recent court case that reinforces that Vines are considered land improvements and NOT eligible for 179. I am a CPA in the Sonoma Wine Country, and this is a HUGE item in my practice…

A-2:

I would like to see a copy of that article.

I’m curious to see whether it cites an actual IRS regulation or is just someone’s opinion as to the applicability of Section 179. I haven’t actually prepared any tax returns for any vineyards; so I can’t say that I have seen it actually be accepted by IRS. Since relocating from the Bay Area, most of our Schedule F clients are involved in beef and poultry production.

However, Vineyards have been listed in the QuickFinder books for several years as qualifying for Section 179 and my experience has been very good with the accuracy of the QuickFinder books for the 20+ years I have been using them. In fact, I have frequently used copies of pages from the QuickFinders books when defending positions we have taken in cases under IRS audit and Appeals and they have been accepted as valid every time.

Thanks for sharing that article with me.

Kerry Kerstetter

Q-3:

Kerry —

I just faxed you the IRS article on farmers about Code Section 179.

Below is a link to the recent court case, where on page 26 this position is again referenced.

I am 100% confused….as I believed that Section 179 was re-written and the definition of Section 179 property was the old Section 38 (ITC definition).

I am not a tax attorney, and I am very concerned about this issue.

A-3:

Thanks for faxing that clip from the IRS website and sending the link to that Tax Court case.

I do find it quite interesting that they are relying on such an old Revenue Ruling, from 1967. It has always been my understanding as well that Section 179 assets are the same kinds that would have qualified for the Investment Tax Credit under Section 38. This had most often hinged on the items being movable rather than affixed permanently to real property.

Reading the Revenue Ruling, I noted that it actually only refers to trees and not to grape vines. Since mature trees, with their larger and deeper roots, are less movable than are grape vines, it would be much more difficult to apply Section 179 to them.

The Trentadue court case you sent seems to be addressing established vines that are acquired as part of an overall property purchase. Claiming that 100 year old vines are movable does become more difficult than to apply that distinction to new vines that are being planted for the first time.

As I said before, I haven’t really had any need to investigate this issue this deeply before. It is a very interesting question, and I hope that other readers of my blog who have some real world experience with applying Section 179 to grape vines will be willing to share any additional info and insight they have.

Kerry Kerstetter

Posted in 179 | Comments Off on Section 179 For Vineyards

Attack of the Insane AMT…

Posted by taxguru on April 26, 2007


(Click on image for full size)

It’s no surprise that the DemonRats have more Marxist plans for dealing with the AMT problem.

Posted in AMT, comix, IRS, politics | Comments Off on Attack of the Insane AMT…

Understanding financial statements?

Posted by taxguru on April 24, 2007

Posted in comix, cpa | Comments Off on Understanding financial statements?

Thanking IRS?

Posted by taxguru on April 24, 2007

Posted in comix, IRS | Comments Off on Thanking IRS?

Does voting help?

Posted by taxguru on April 23, 2007

Posted in comix, politics, taxes | Comments Off on Does voting help?

Posted by taxguru on April 23, 2007

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