Archive for March, 2008
You get what you pay for…
Posted by taxguru on March 8, 2008
Posted in comix | Comments Off on You get what you pay for…
Posted by taxguru on March 7, 2008
Like-Kind Exchanges Under IRC Code Section 1031 – Handy Fact Sheet from IRS covering the basics of 1031 exchanges. Amazingly, we never stop encountering people whose tax and real estate advisors are completely unaware of the existence of this perfectly simple way to defer taxes on property sales.
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Using Quicken & TurboTax?
Posted by taxguru on March 6, 2008
Q:
Subject: Quick Quicken question
Hi Kerry,
I ran across one of your web pages giving hints on how to use Quicken more effectively while searching for an answer to the following question:
How do you make expenses flow from one Quicken category to multiple Schedule Cs in TurboTax?
I have multiple Schedule C businesses, and some of them share similar expenses, for example, supplies. However, I’m unable to figure out how to separate the expenses for Business 1 and Business 2, and then make them flow to their respective Schedule Cs.
From consulting Quicken’s help and a Quicken Bible book I have here at home, it says to set up classes — and I did that — but how do I tell Quicken that “supplies expenses for the Business 1 class should flow to the Business 1 Schedule C, and supplies expenses for the Business 2 class should flow to the Business 2 Schedule C?”
Your web page gave me a partial answer — to run a P&L — and I appreciate that; it gave me a better answer than either Quicken’s online help or my Quicken Bible. However, I still don’t see how to make expenses/classes flow to specific Schedule Cs.
Is there any way to do that?
Thanks,
A:
Using Classes for each of your income and expense entries and then running a P&L with the columns set to show by Class is the best way to obtain accurate info to enter into each of your Schedule C forms.
As I’ve said on several occasions, I no longer use Quicken nor recommend it for small business owners. QuickBooks, which can import pre-existing Quicken data, is a much more reliable accounting program than is Quicken.
Even though there are some capabilities to export data directly from QuickBooks into tax prep programs, I have never felt that they were reliable enough to use. My clients send me their QB files and I have the class column P&L on one computer screen, while I have my Lacerte tax program on another screen, where I manually enter the data into each appropriate schedule.
You are making a huge mistake in trying to do your own tax returns and would be much better off by providing your Quicken or QuickBooks data files to your own professional tax preparer to enter into the tax program s/he uses.
As I’ve said since the beginning of consumer tax software, there is no better example of G-I-G-O (garbage in, garbage out) than programs like TurboTax.
I realize this isn’t the answer you were looking for; but I do not believe in the practice of people trying to prepare their own tax returns; so I can’t advise on how to do that.
Good luck.
Kerry Kerstetter
Follow-Up:
Thanks Kerry for responding. I appreciate your reply and advice. I did figure out the classes after writing to you.
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Posted in Quicken, Turbotax | Comments Off on Using Quicken & TurboTax?
New version of TaxMan song
Posted by taxguru on March 6, 2008
There are other people who share my “hobby” of collecting different versions of the George Harrison classic “TaxMan” song. It’s been a while since I’ve posted a new version; but I just received this from a reader.
Subject: taxman
Hi Kerry,
Here’s another Beatles “Taxman” cover by the Smashing Pumpkins:
http://www.archive.org/details/tsp2007-11-13.dsm6s
Track #20.
Thanks for the great website. I read it every morning.
I wrote back:
Thanks for the heads-up on that song.
I downloaded it and it’s a good take on the classic song that never goes out of style.
I chopped off the last three minutes of the file, after the TaxMan song ends, and will be uploading it to my blog.
Let me know if you come across any more.
Kerry
Here is the 4.8 mb MP3 file with the Smashing Pumpkins performing TaxMan
Posted in Music | Comments Off on New version of TaxMan song
Section 179 for Used SUV
Posted by taxguru on March 5, 2008
Q-1:
Subject: pre-owned SUV and Section 179 tax code
Hello Kerry,
Thanks for posting a great forum on accounting. I have read so many of your articles and find it very clear. I guess it mine time to ask a question
Correct me if I’m wrong, but my understanding about Section 179 tax code is that we need to buy brand new SUV (6000 plus lb) to qualify for the $25K dedication plus the 20 % depreciation deductions for the first year
We are planning on buying pre-owned SUV (6000 plus lb) i.e. between 2005 – 2007 year model and will be using primarily for business purpose. Will we be able to depreciate 100% of the value of the pre-owned SUV i.e. in 3 to 5 yrs? Ad whether it will also qualify for the $25K dedication
Thanks
A-1:
You really should be discussing this kind of thing with your own professional tax advisor who can assist you better than I possibly could.
I have actually covered this point on several occasions in my blog and on my Section 179 web page.
The Section 179 deduction has never required that the asset be absolutely brand new. It just has to be new to you and not acquired from a related party.
First year bonus deprecation, which was just recently set at 50%, has always only been available for the very first owner of a business asset.
Good luck. I hope this clears this up for you. Your own personal professional tax advisor can give you much more specific guidance on how these will affect your unique tax situation.
Kerry Kerstetter
Q-2:
thanks Kerry for your response to my question. If I understand you correct. The first year bonus deprecation only applies to brand new purchase of the SUV and not pre-owned SUV, but I should be able to deduct 100% deprecation of the value
thanks
A-2:
Your personal professional tax advisor will be able to assist you in claiming the proper amount of Section 179 and normal depreciation on the SUV, taking into account the various limiting factors, such as your net earned taxable income and the percentage of business usage.
You said that it will be used “primarily” for business; which means that you won’t be able to claim the cost of the personal usage percentage.
Again, a good professional tax advisor will help you work out the proper business mileage percentage, which can be much higher if you have an home office.
Good luck.
Kerry Kerstetter
Posted in Uncategorized | Comments Off on Section 179 for Used SUV
1031 requires like kind properties
Posted by taxguru on March 5, 2008
Q:
Subject: Exchange Question
Can I exchange a 4-unit income property for a personal property? Or might I be able to sell the income property and do an exchange for a
payoff of my personal residence and obtain a second residence as well.
A:
You really should be discussing this kind of thing with your own professional tax advisor who can assist you better than I possibly could.
I have actually covered these points on several occasions in my blog and on the TFEC website.
Basically, a qualified exchange for your rental property will require that the proceeds be used for the acquisition of one or more business, investment or rental properties within the statutory time-frames.
Using the proceeds to acquire personal use property will not be acceptable. Nor will using the proceeds for payments on debt of currently owned property. You need to acquire new (to you) property.
Good luck. I hope this clears this up for you. Your own personal professional tax advisor can give you much more specific guidance on how these will affect your unique tax situation.
Kerry Kerstetter
Posted in Uncategorized | Comments Off on 1031 requires like kind properties
Marketing for accountants?
Posted by taxguru on March 5, 2008
Posted in Accounting, comix | Comments Off on Marketing for accountants?
Tax Guru - Ker$tetter Letter 