Tax Guru – Ker$tetter Letter

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Archive for October 4th, 2007

Both sides of the Fair Tax debate

Posted by taxguru on October 4, 2007

The Lies:

FairTax is anything but – From a nut job in Kansas City

FairTax Is Pure Fantasy – More spurious attacks from Bruce Bartlett, who has yet to apologize for his idiotic claims that the FairTax is a Scientology plot.


The Truth:

A 59 minute video of a presentation by John Linder and Neal Boortz.  I just finished listening to the entire thing.  John Linder mentions that we CPAs are strongly in favor of this idea so that we can use our skills for more useful purposes than protecting clients from the IRS, something I have long been saying.   


Posted in FairTax | Comments Off on Both sides of the Fair Tax debate

Vehicle Weights

Posted by taxguru on October 4, 2007


Subject: Question on 179




I am a financial advisor and was wondering if you could answer whether or not section 179 (for the suv’s) means “gross vehicle weight” or “gross vehicle weight rating (GVWR)”????  My understanding is that one can use the GVWR for the 6,000 lb. suv minimum.  I am wondering if I am correct? Or is it “curb weight”?


Thanks for your time.




Here is a quote from Page 10-2 of the 2006 TaxBook that covers this point:

Passenger autos rated at more than 6,000 pounds unloaded gross vehicle weight, or trucks and vans rated at more than 6,000 pounds loaded gross vehicle weight are not subject to the Section 280F depreciation limits.

Kerry Kerstetter


Posted in Vehicles | Comments Off on Vehicle Weights

State Section 179 Rules

Posted by taxguru on October 4, 2007


Subject: Listing of States conformity to Section 179


I was just viewing your website and was wondering if you had an updated list of each state and it’s conformity/non-conformity to Section 179?


I’m not aware of any such list.  That sounds like an interesting project for one of the tax reference publishers. 

In the meantime, we have to continue researching this on a state by state basis.

Thanks for writing.



Posted in 179, StateTaxes | Comments Off on State Section 179 Rules

Changing Corp Tax Years

Posted by taxguru on October 4, 2007


Subject: S Corps

If a corp has been using a fiscal year that ends in a month other than December, it will have to change to a 12/31 fiscal year end if it changes to an S status. If the S status is later revoked, you will not be allowed to change from the 12/31 year end.

Regarding the above statement if you have sent in a 2553 for S corp. status with a F/Y/E of 3/31 and it is denied what happens to the years you have functioned at a F/Y/E of 3/31.  Do you have to amend the tax return with a F/Y/E of 12/31 even if it becomes a financial disaster.  The corp. functioned as 3/31 and cleared out the income etc at 3/31 and now at 12/31 there is a lot of net income.  Any recourse?



As I constantly advise, you should be working with an experienced  tax pro before undertaking something as major as changing from a C corp to an S.

From the logistics side, your corp would file regular C corp 1120s for the entire time period until the effective date of the S election as specified in the letter you will receive from IRS.  The income and expenses from the effective date onward will be reported on an S corp 1120S.

 Because of the required change in fiscal year, there will have to be at least one tax return covering less than 12 full months.  Unless the effective date of the election is either January 1 or April 1, it’s more likely that both the final 1120 and the initial 1120S will be for less than 12 months.

Again, an experienced tax pro can give you more specifics on how such a change would affect your business.

Good luck.

Kerry Kerstetter


Posted in corp | Comments Off on Changing Corp Tax Years

Appropriate attire for an IRS audit?

Posted by taxguru on October 4, 2007

From FunnyBone:

A Visit To The IRS

A man, called to testify at the IRS, asked his accountant for advice on what to wear. “Wear your shabbiest clothing. Let him think you are a pauper.”

Then he asked his lawyer the same question, but got the opposite advice. “Do not let them intimidate you. Wear your most elegant suit and tie.”

Confused, the man went to his rabbi, told him of the conflicting advice, and requested some resolution of the dilemma.  

“Let me tell you a story,” replied the rabbi.  “A woman, about to be married, asked her mother what to wear on her wedding night. ‘Wear a heavy, long, flannel nightgown that goes right up to your neck.’

But when she asked her best friend, she got conflicting advice. ‘Wear your most sexy negligee, with a V neck right down to your navel. The man protested: “What does all this have to do with my problem with the IRS?”

“No matter what you wear, you are going to get screwed.”


Posted in audits, humor, IRS | Comments Off on Appropriate attire for an IRS audit?