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Archive for February, 2008
Understanding the purpose for the rebates?
Posted by taxguru on February 13, 2008
Posted in comix, Rebates | Comments Off on Understanding the purpose for the rebates?
Economic Stimulus Act of 2008
Posted by taxguru on February 11, 2008
The folks at The TaxBook have released a very handy six page pdf explanation of the new bill that everyone should download and keep handy to explain to clients. It includes much more detail on the increased Section 179 and special 50% depreciation allowance than you will find anywhere in the drive-by media, which have been only covering the ridiculous rebate portion of the law.
Posted in TaxCuts | Comments Off on Economic Stimulus Act of 2008
Smelly tax payment leads to arrest
Posted by taxguru on February 9, 2008
This guy in Oregon learned a very expensive lesson about how not to pay his taxes.
The investigation started when a Benton County tax clerk noticed that the $600 in cash that Michaelis used to pay his taxes smelled like marijuana.
He should have used a different kind of money launderer first.
Thanks to Neal Boortz for this story.
Posted in Money | Comments Off on Smelly tax payment leads to arrest
Reporting Gifts
Posted by taxguru on February 9, 2008
Q:
Subject: Cash Gifts
My 90 year old grandfather has been giving my brother and I $11,000 each for the past 2 years. I do his taxes but have not been showing these payments on his tax return as he does not itemize. How do I show these as cash gifts? Do I have to itemize to do this?Thanks for any advice or tips you may have.
A:
Gifts are not shown anywhere on income tax returns, either for the giver or the recipient. They are not deductible by the giver, nor are they taxable income to the recipients.
The Gift Tax system is actually separate from the income tax system. If your grandfather were to give any single person more than $12,000 during a calendar year, he would have to file a Gift Tax return (Form 709). There are exceptions for certain other kinds of expenses, such as medical and education costs.
If he starts giving away more than the annual $12,000 tax free limit, he should be working with a qualified professional tax advisor.
You can see more about the Gift Tax on my website.
Good luck.Kerry Kerstetter
Posted in Gifting | Comments Off on Reporting Gifts
Extreme withholding at the source…
Posted by taxguru on February 8, 2008
Posted in comix | Comments Off on Extreme withholding at the source…
Our meters are spinning…
Posted by taxguru on February 8, 2008
Posted in comix, cpa | Comments Off on Our meters are spinning…
Section 179 almost doubled for 2008
Posted by taxguru on February 8, 2008
As I had been predicting, the economic stimulus program from our rulers in DC includes a very generous increase in the maximum Section 179 deduction. All of the media attention regarding the stimulus bill has been on the tiny rebates and they have overlooked and ignored this very substantial tax break for small businesses.
Here is how it is explained in the recent Spidell Flash E-mail:
On February 7, 2008 both the Senate and House of Representatives passed H.R. 5140, the Economic Stimulus Act of 2008 (the Act), which the President is expected to sign. The Act contains provisions pertaining to tax rebates and depreciation.
Increased §179 plus first year bonus depreciation
For tax years beginning in 2008, the Act increases the $128,000 §179 expensing limit to $250,000 and boosts the overall investment limit from $510,000 to $800,000.
In addition, the Act generally permits a bonus first-year depreciation deduction of 50% of the adjusted basis of qualified property acquired and placed in service after December 31, 2007, and before January 1, 2009.
Here is how Spidell explains the rebates for those not classified as evil rich by our DC rulers:
Based on 2007 returns, a rebate of up to $600 would go to single filers with AGI of $75,000 or less ($1,200 for married filing joint with AGI of $150,000 or less). In addition, parents would receive $300 rebates per child. Tax filers who do not owe income taxes but have at least $3,000 in qualifying income would get a $300 rebate. The rebates are phased out by 5% of income in excess of the threshold amounts.
The IRS is expected to start sending out checks in early May with all rebates completed by mid-summer, according to Treasury Secretary Henry Paulson.
Posted in 179 | Comments Off on Section 179 almost doubled for 2008
Sec. 179 Changes?
Posted by taxguru on February 8, 2008
Q:
Subject: Section 179 deduction for 2008
The information was last updated Oct 2007, I was just wondering if it still correct because there is different info on other sites?
Thanks
Regards,
A:
That info is correct.
We’re still waiting to see if the current debates over economic stimulus plans will include an additional increase in the maximum Section 179 deduction. If it does, I will update my web site info.
Kerry Kerstetter
Posted in 179 | Comments Off on Sec. 179 Changes?
Capital gains double standard…
Posted by taxguru on February 7, 2008
Q:
Subject: Re: INFLATION ADJUSTMENTS [LACK THEREOF]
Dear Tax Guru Blog,
Kerry, since I’ve only been a CPA since 1990, I asked an “old-timer” how long the $3,000 capital loss per annum limitation has been in place…
yes, that’s right… since 1951.
I don’t know a way to verify this, I just wanted you know how ridiculous the term of this limitation has been. Feel free to cut loose on a rant about this; because, as we know, this never hurts wall street insiders or white collar slicksters, it only hurts the working class, the weak, and the elderly.Here’s wishing you and yours the best of health,
A:
I’ve done more than my share of ranting about this extremely unfair double standard in the tax code over the past decades.
I’m not sure about that 1951 starting date. My recollection of when I started preparing tax returns in the mid 1970s was that the annual limit was only $1,000 per person; but I can’t lay my hands on a full history of this idiotic rule right now.
The aspect of this that has always fried me the most was the fact that unused capital loss carry forwards evaporate upon death. I have written on a few occasions about a client who was in his 80s and had almost a million dollars of stock market losses that I knew would end up going to waste at the measly $3,000 per year rate of use. He passed away in the middle of 2007 and I have had to break the news to his heirs that those unused losses are gone forever as well.
Unfortunately, we don’t hear any of our supreme rulers in DC mentioning changing any part of this ridiculous rule; so we’ll just have to continue living with it for the foreseeable future.
Thanks for writing and good luck with this tax season.
Kerry Kerstetter
Posted in CapGains | Comments Off on Capital gains double standard…
Tax Guru - Ker$tetter Letter 