Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for May 27th, 2007

Posted by taxguru on May 27, 2007

Posted in comix, IRS | Comments Off on

Working with QB on multiple computers

Posted by taxguru on May 27, 2007

Q:

Subject: transferring data

 

I use Quickbooks Pro 2005 and just got dsl at home.  I have it on my work computer also and want to transfer data to my home computer via the internet.  Can I transfer the data on the internet, I have been using pcAnywhere to transfer via phone line, but it takes forever.  Thanks for any information.

 

A:

I assume you are wanting to access your QB data from both your home  and work computers.  Trying to do that over the internet is going to be a slow and messy process.  Even the official online QB service, which is designed for this kind of direct access, is much too slow for my tastes; one of my many complaints about the online service.

What you need to do is work with the QBW file directly on each computer.  This will require that after each time you work in the file, from either computer, you backup the data into a compressed QBB file.  There are several ways for you to do this and have access to the QBB file from both of your computers. 

One way would be to backup the QBB file onto a portable storage medium, such as a CD-RW disc or thumb flash drive, which you can carry with you back and forth between home and work.  You would then restore the data onto the computer you are using.

Another way, and the one we use with most of our clients, is to store the QBB file on an online storage service, such as XDrive or MyDocsOnline.  You download a copy of the latest QBB file to the computer you are working on and restore it into your QB program and then work on it all you want. When you’re done, you make a new QBB copy that you upload to your online storage.  This gives you the speed of working on the file locally, with access to the data backup file from anywhere in the world. 

These obviously aren’t the only ways to work with a data file on multiple computers, but they are the ones that we have been using for several years.

Good luck.  I hope this helps.

Kerry Kerstetter

 

 

 

 

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Employing Family Members

Posted by taxguru on May 27, 2007

Q:

Subject: c corp

Hello,

I own my own design company…(architecture w/out a license yet).

I make about 50,000 a year up to this point.  I am getting much busier and will probably double what I have been making.

I am about to file to be incorporated.   It sounds like to me from reading your article that I should stay a c and not go to an s.

I realize that I need a professional to figure all of this out….but I was wondering how a couple of things will affect me.


One is employing my wife part time…

employing my children ( under 12 years old )

and working from home..


Do you have some suggestions on this..

 

A:

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 all 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. 

Any good tax advisor should be able to assist you with the details of hiring family members, including how best to do it through a corp, as well as through a Schedule C business, which is generally a bigger tax savings for employing kids under 18.  As I’ve said before, if you work with a tax pro who uses the TaxCoach Software service, s/he will be able to produce some very informative reports on the employing of family members.

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

 

 

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

 

Posted in corp, Employees | Comments Off on Employing Family Members

Section 179 Confusion

Posted by taxguru on May 27, 2007

Q:

Subject: questions Sec. 179 expensing

Kerry,

Have read your Sec. 179 info online.  But have a couple of questions:

a)  If I expense, say, $70,000 under Sec. 179 for a $100,000 equipment buy, can I straight-line depreciate the remainder (i.e. $30,000)?  Or am I precluded from depreciation if I write off some costs via Sec. 179?

b)  The $450,000 limit.  Is that ALL the equipment i bought in 2007 that qualifies for Sec. 179 treatment, or just the equipment I bought that I am opting to apply Sec. 179 to??  (I.e. — if I buy $600,000 worth of equipment that would qualify for Sec. 179 expensing, but only choose to seek the deduction for $100,000 of the equipment, does the $450,000 limit apply to just those expenses I am seeking to expense, or to the amount of all the equipment i bought, regardless of whether I plan to expense or not????)

thanks for any insight here.

A:

a) Whatever part of the cost basis that hasn’t been expensed under Section 179 is to be depreciated over the appropriate class life and using whichever method (straight line or accelerated) you and your personal professional tax advisor deem best for your unique situation.

b)  Our supreme rulers in DC have decided that any business that has acquired more than $450,000 in new Sec. 179 qualifying equipment will be claiming large enough normal depreciation deductions that they don’t need the full Section 179 expense that “smaller” businesses need. 

Again, if you are spending this amount of money on business equipment and you are trying to do your own taxes, you are taking a very irresponsible risk.  Focus on what you know and do well in your business and retain the services of a qualified tax pro.

Good luck.

Kerry Kerstetter

 

 

The best book on QuickBooks Premier Editions

 

 

Posted in 179 | Comments Off on Section 179 Confusion

Convert S Corp to Non-Profit?

Posted by taxguru on May 27, 2007

Q:

Subject: Changing from an S-Corp

 

Hello,

 I just read you blog this morning and had a very interesting question for you. Have you heard of and is it possible to change from an S-Corp to a Non profit of 501(c) organization.  I am really curious about this type of change

Thank you for your time

A:

The short answer is NO. 

The types of entities involved are not compatible for such a switch.

A C or S corp is a legal being chartered by a state as a for profit entity.

To qualify as a non-profit organization, you need to have your state charter a non-profit corporation, which is completely different from a for-profit corp and involves different paperwork.

You should be working with a professional tax advisor to straighten things out for your particular goals.

Good luck.

Kerry Kerstetter

Follow-Up:

Thank you so much for your information.

 

 

 

Posted in corp | Comments Off on Convert S Corp to Non-Profit?

Gifting Limits

Posted by taxguru on May 27, 2007

Q:

We want to give our grandkids some money.  Is it true that we can’t give them any more than $10,000 without triggering tax problems for them?

A:

The current limit for gifts without the need to file any gift tax returns is $12,000 per donor (giver) per donee (recipient) per calendar year.

I have this explained on my website

I hope this helps.

Kerry

 

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

 

Posted in Gifting | Comments Off on Gifting Limits

Choosing Proper QuickBooks Program

Posted by taxguru on May 27, 2007

Q:

Subject: Quickbooks on your wesbite…

Kerry,
 
You mention to stay away from Quickbooks Online and Quickbooks Simple Start, however, it seems in 2007, Intuit has only three options for Quickbooks now, QB Simple Start (I believe it replaces Basic and is $80), QB Pro ( $169) and QB Premier ($319).  Which would you suggest I use then?

A:

It was pure greed on Intuit’s part that made them drop the relatively inexpensive Basic version of QB, which was perfectly suitable for most users.  So, now you are correct that the least expensive version is the Pro, which is what you should buy.

I don’t even consider Simple Start to be a version of QB, so stay away from it.

Having just finished a messy partnership return for clients who use the online version of QB, my disgust and hatred of that service is at an all-time high right now. The “convenience” of having the file simultaneously available to several people ended up costing the clients a lot of money for the extra time it took me to clean up the data over what it would have been if I had been able to work on a normal desktop version of QB.

Of course, any decision as to which accounting program is best for you should be made in conjunction with your personal professional tax advisor; so be sure to check with him/her first.

Good luck.

Kerry Kerstetter

 

 

 

 

Posted in QB | Comments Off on Choosing Proper QuickBooks Program

Special Tri-State Depreciation?

Posted by taxguru on May 27, 2007

Q:

Subject: re 2002 2003 sec 179 

Kerry:

in the tristate area for 2002 and 2003, there was a ruling to spur capital investment and businesses could purchase a vehicle and depending on the cost could take $25K + 10% dep + that year’s depreciation.   Can you enlighten me on the nuances of this rule and how to best apply it?

Thanx

 

A:

This doesn’t ring a bell with me.  I checked in my 2003 references and didn’t see it mentioned.

Are you perhaps confusing that with the special depreciation deductions allowed for New York Liberty Zone property?  This is for almost all kinds of business equipment, not just vehicles and is only for the specific part of Manhattan, not the full Tri-States, and covers assets acquired and placed into  service from 9/11/01 through 12/31/06.

If it’s a State tax break you are referring to, you should check with your state tax agency for more specifics.

I’m sorry I couldn’t be more help.  Good luck.

Kerry Kerstetter 

 

 

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Posted in 179 | Comments Off on Special Tri-State Depreciation?

Gifting Options

Posted by taxguru on May 27, 2007

Q:

Subject: Capital Gains Taxes Aren’t for the ‘Kiddies’

Let me see if I understand this in a real world application:
My 80-yr old mother, living on welfare, needs to pay for something (home repair, what have you) but doesn’t have the money (say $5,000).

I could sell some stocks and give her the money, but we’d both be better off if instead of giving her the money I gave her the stocks that she could then sell.
Sound right?

 

A:

Decisions like this would obviously be on a case by case basis.  However, if you have highly appreciated assets, such as stocks, that would trigger a large capital gain tax, shifting that tax to someone in a lower tax bracket could result in some tax savings. 

This obviously needs to be balanced out with the hassle and cost of transferring the title to the asset, as well as the possible cost and hassle of having to prepare Gift Tax returns if the total current fair market value of gifts to any one person during a calendar year exceeds $12,000.

Kerry

 

Follow-Up:

Oh.  I forgot to mention it was merely a hypothetical.  I wasn’t seeking actual advice.

I knew something was off from the article.  Apparently it was that the writer never mentioned the cost of transferring title to the assets.

 

 

 

 

Posted in Gifting | Comments Off on Gifting Options