Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for March 22nd, 2008

Rebate advice…

Posted by taxguru on March 22, 2008

Posted in comix, Rebates | Comments Off on Rebate advice…

Annual Gift Exclusion

Posted by taxguru on March 22, 2008

Q:

Subject: Tax Free Gift

The maximum tax free gift for 2007 was $12,000 per individual. Is this the same for 2008?

 

Thank You.

 

A:

 Yes it is.

By law, this figure is only allowed to be increased in even $1,000 increments; so it takes a number of years’ worth of cumulative inflation before it is bumped up.

Kerry Kerstetter

 

 

Posted in Gifting | Comments Off on Annual Gift Exclusion

Tax Reference Materials

Posted by taxguru on March 22, 2008

Q:

Subject: TAX MATTERS

MR KERSTETTER,

 I AM LOOKING FOR DIRECTIONS ON 2 SUBJECTS .

 1. THE SAME FOLKS OPERATING MULTIPLE “C” CORPORATIONS WITH OUT  FOLDING INTO  ONE CORPORATION BRINGING ON HIGHER TAX RATES,  BECAUSE ALL CORPORATIONS ARE GENERATING TAXABLE INCOME.

 2.  WORK AROUNDS FOR PROFESSIONAL SERVICE CORPORATIONS.

 I WOULD APPRECIATE YOUR THOUGHTS ON THE ABOVE SUBJECTS OR POINT ME IN THE RIGHT DIRECTION FOR ASSISTANCE.

 I AM A TAX  PREPARER LOCATED IN THE MIDWEST AND FOUND YOUR WEB SITE

TO BE JUST WHAT THE SMALL BUSINESSMAN NEEDS.

 SINCERELY,

 

A:

I still highly recommend the reference materials from QuickFinders, TMI and TaxCoach, as I mentioned in this recent blog post.

I hope these help.

Kerry Kerstetter

 

 

TaxCoach Software: Finally! Plain-English Tax Planing That Builds Your Business!

 

Posted in Reference | Comments Off on Tax Reference Materials

Avoiding Double Taxation

Posted by taxguru on March 22, 2008

Q:

Subject: C Corp

Hi Kerry:

I just read your article on the web as I am researching what to do. Here is my situation I am withdrawing funds from my old 401k to invest in a franchise.  The company Benetrends and or Guidant indicate that they would form a C corp for me which would buy stock in the new company.

Some people have brought up the “double taxation” issue with C corps. The cash flow from one franchise is about 25 K on a 60-85k Invetsmnent. The other location which I might get is is a 15k cash flow based on a 45-55k investment.

What would be your advice?  I plan  put in some amount into 401 k with the new corporation to reduce taxes but I need to withraw funds ( that wont be taxed again on my tax return)  to reduce debt elsewhere,

Do you know of accountants in the dallas area who would be able to keep the books for my new corp?

Thanks in advance for your time.

 

A:

There are so many very easy ways to pull money out of a C corp in a tax deductible manner that any good tax consultant can help you avoid any double taxation.

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 will need to work directly with an experienced tax pro who can analyze your unique circumstances.

I wish I could be more 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.

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.   

You should note that geographic location should not be the main criterion for selecting a tax pro.

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 | Comments Off on Avoiding Double Taxation

Operating wih no accounting knowledge…

Posted by taxguru on March 22, 2008

Q:

Subject:  Transfers from personal checking into a business shown as income ???

Kerry

I read your tips on Taxguru.org

I have quicken 2008

I have a business in florida selling equipment.  I get paid a salary.

I also have a farm in Tennessee which a rent out  

the problem is every month the farm loses money.
I ever overdraft or pull money from a line of credit or my checking account

This shows as income in cash flow reports.

how can the transfer go from my checking account >  to the “Shareholder Loans.” to the farm,  and if its not income or expeses
what is it   (a liability)?

I guess thats what gets it off the the income statement

If (should) the farm should have its own Quicken file

How does the income flow in and out of my personal checking into the farm when it needs money?

Sorry for the conveluted questions?

Thanks

 

A:

All of those questions involve very basic bookkeeping procedures.

You are way out of your depth in trying to set up and keep your own books without professional guidance.  You should have a professional bookkeeper set up the Quicken, or better still QuickBooks, files to coincide with each of your tax returns and then either train you how to make the entries for your transactions or take on that task on an ongoing basis.

Your personal professional tax preparer should also be involved in the design of your books to ensure the ability to easily obtain the info s/he needs for each of the related tax returns.

Good luck.

Kerry Kerstetter

 

 

 

Posted in Accounting | Comments Off on Operating wih no accounting knowledge…

Business Mileage

Posted by taxguru on March 22, 2008

Q:

Kerry,

 

What percentage of business miles vs the total can I deduct per car?

 

A:

There is no such thing as a standard business use percentage.  It depends on how many business miles were driven for each individual vehicle.

As I said before, you need to calculate the business miles in such a way that you would feel comfortable defending that if IRS were to ever question it.

A very commonly used method for reconstructing annual mileage is to estimate the business miles in a standard day or week and extrapolate that for the entire year based on the number of days or weeks you worked that year.  This methodology is accepted by most IRS auditors.

I hate to be such a pain with this; but I can’t just pull numbers and percentages out of the air for you. That is your responsibility.

Kerry

 

Go Daddy Domain Names

 

Posted in Vehicles | Comments Off on Business Mileage