Archive for January, 2008
Unorthodox retirement plans…
Posted by taxguru on January 27, 2008
(Click on image for full size)
Posted in comix, Retire | Comments Off on Unorthodox retirement plans…
Posted by taxguru on January 24, 2008
Bush Revises Stimulus Deal to ‘Rebate All of It’ – This would be a dream come true for most of us. Unfortunately, it’s just another parody by Scott Ott.
Under the terms of the revised measure, the Bush administration will ask Congress to “rebate all of it” and introduce legislation to repeal the 16th amendment to the Constitution, which instituted the federal income tax in 1913.
Posted in humor | Comments Off on
Posted by taxguru on January 23, 2008
Inflation and the Tax Man – Another look at the issue of indexing the cost basis of assets for inflation, a topic I have been writing about for a very long time, such as this piece from the era of Bush 41. The current President Bush has the same option his father passed up; to show some guts and just issue an executive order redefining cost basis to include inflation adjustments. Unfortunately, his well documented fear of confrontation with the Dims will prevent him from taking this bold step.
[Update] More on this topic from David Freddoso at National Review Online – Inflate This
Posted in CapGains | Comments Off on
Posted by taxguru on January 21, 2008
IRS Audits of Millionaires on the Rise – Nothing really new here. IRS has always put more audit focus on the higher income tax returns. This is just another example of how using a C corp to smooth out income and keep the 1040 income from being too high can reduce the audit potential.
Posted in audits | Comments Off on
S Corp Status
Posted by taxguru on January 20, 2008
I actually sent the very same answer to the following two emails that came in within a few days of each other from different people.
Q-1:
Subject: Converting from an S to a C Corporation
My S corp is located in the state of Tennessee and I would like to change to a C corp. What specific tax form do I use to make this change?
Q-2:
After our fiscal year end (Aug 31, 2007), we sent a request to the IRS to change from C to S Corp.We have since realized that this is probably not a good idea.Is it possible to void the request and not file a short return?Any help will be greatly appreciated.
A:
As I’ve mentioned on several occasions, nothing related to dealing with an S corp is a do it yourself task. This covers the decisions to become an S corp, as well as to revoke the S election. All of those processes need to be handled with the assistance of an experienced professional tax advisor, who can thoroughly analyze your business’s current and future situations.
Needless to say, the actual mechanics of revoking the S election, if that is considered to be the appropriate course of action, are also not something you can do on your own.
I have lost track of the number of times I have heard about people, hoping to save a few dollars in consulting fees, making what I can plainly see are bone-headed decisions to either choose to be classified as an S corp or to revoke an S election and then have to deal with the restrictions that entails, such as the use of the much more expensive calendar tax year.
Again, as I have explained on countless occasions, it is frequently a much better plan to simply start up a brand new C corp than to try to convert an existing S corp back to a C. That decision also needs to be made with the assistance of an experienced tax advisor.
This is obviously not the answer you were expecting; but it’s plain from your question that you are already in dangerous territory by attempting to navigate the corporate tax environment without professional assistance. I hope I’ve made the point about how foolish that is.
Good luck.
Kerry Kerstetter
Posted in corp | Comments Off on S Corp Status
1099 Forms
Posted by taxguru on January 20, 2008
Q:
Subject: 1099 formsKerry – I was going to run off the 1099-Misc form off the web, but they said that I’m not to copy the red form (copy A), the one that I send in. Do you have these forms or where can I get them? I have the red (1096) they sent thru the mail.
A:
Those red forms are a pain in the butt to line up properly in printers, so you should buy some extras to test on.
Most office supply stores are selling them right now. I saw them in Staples in Mt. Home last weekend.
You should remember that the 1099 forms are only required to be given to your unincorporated workers by 1/31/08. The red forms that are required to be sent to IRS don’t have to be postmarked until 2/29/08. It’s not a good idea to rush the IRS’s copies in until all of your 1099 recipients have had a chance to review their copies for mistakes. A big mess will ensue if you send in an incorrect 1099 to IRS and then later send them a corrected one. It’s much better for everyone to only send in one accurate form per payee during February.
Good luck.
Kerry
Posted in 1099 | Comments Off on 1099 Forms
Beware of Tax Scams
Posted by taxguru on January 20, 2008
Anti-Tax Groups Convince Americans Not to Pay Taxes – And as proven all too often, there is no shortage of people gullible enough to fall for these idiotic scams, such as Wesley Snipes.
IRS Names Four New Frivolous Claims to Avoid – Four new scams added to the IRS’s list of popular tax protestor arguments that will get anyone stupid enough to mention any of them an automatic $5,000 penalty.
Tax Guru - Ker$tetter Letter 