Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for August, 2008

Posted by taxguru on August 31, 2008

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On the DemonRat menu…

Posted by taxguru on August 25, 2008

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Posted by taxguru on August 24, 2008

Lone accountant takes on IRS and wins – Interesting case on the taxation of insurance company demutualizations.

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Pet tax?

Posted by taxguru on August 24, 2008


(Click on image for full size)

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S corp fiscal year?

Posted by taxguru on August 20, 2008

Q-1:

Subject: Choosing a fiscal year

Hello Tax Guru,

I was not sure if I can post on your blog, I had a question about Fiscal year and S-Corp. Is there no situation where an S-Corp can have a fiscal year end on June 30th like you suggest for other corporations or am I misunderstanding the S-Corp?

thanks, great blog!

 A-1:

 S corps are required to use the same tax year as their shareholders, which is almost always a calendar (December 31) year.

If income shifting between years is a critical factor, a C corp is an easy way to accomplish this.

Your personal professional tax advisor should be able to help you set up a structure with one or more entities to achieve whatever goal you have.

Good luck.

Kerry Kerstetter

Q-2:

 Kerry,

thanks for the great info. Our challenge is that we are receiving a product order prepayment from the US DOD for $250K and may not have to pay our factory till after Jan 1st. 2009 and we don’t want to pay taxes on the $250K sitting in the bank, what would you do?

Will will apply for S-Corp status with IRS.

thanks for your help!

A-2:

Using a C corp to smooth out that income and have control over the timing of the taxes on it is a very simple task for any experienced professional tax advisor.  You need to start working with one ASAP.

Good luck.

Kerry Kerstetter

Follow-Up:

 Thanks again Kerry!

 

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

 

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Gifts to married grandkids?

Posted by taxguru on August 20, 2008

Q:

Subject: Tax free gift question

My grandmom gifts us money each year
12,000

For example we are all married but she does not gift the spouses

can she gift each grandchild 24,000 for example writer me the check for 24,000 because I am married?

But without it being written, handed to or directly given to the spouse in anyway?

Or does 12,000 have to be written in my name and 12,000 in my wife’s name?

 

A:

 The annual gift tax exclusion is currently $12,000 from any individual to any other individual.  I’m not clear how you came up with the idea of her being able to give $24,000 to one grandchild. That makes no sense.

If your grandmother wants to give $12,000 to you and another $12,000 to your wife, two separate checks would be the cleanest way to do this. Giving one $24,000 check to you would look too much like that was a gift to just you and would require her to file a Gift Tax return.

Gifts are completely tax free for the recipients and any tax or return filing requirements are the responsibility of the giver, your grandmother.  She should be working with her own personal tax and estate planning professionals to plan out the best strategies for her situation and goals for her family.

Good luck.  I hope this helps.

Kerry Kerstetter

 

Follow-Up:

thanks

  

 

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Posted by taxguru on August 16, 2008

Slightly Easing Off on Tax Preparers – Interesting look at the “more likely than not” issue from the latest edition of Practical Accountant.

 

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Is Ben Stein on drugs?

Posted by taxguru on August 15, 2008

I guess I fell for the hype that economist/actor/game show host Ben Stein was an intelligent person because he would have been the last person I would have expected to write an article like this in the NY Times, calling for tax hikes and denying the reality of the fact that lower tax rates generate more tax revenue.

Thanks to Ohio CPA Dana Stahl for passing this along in this email:

Mr Guru – shocking commentary from Ben Stein, who I thought was pro-growth!

DS

I replied:

Dana:

That is a very surprising analysis from Ben Stein, who I had always taken as being more savvy on supply side economics.

He seems to be drinking the Obama Kool-Aid.

Kerry

 

TaxCoach Software: Are you giving your clients what they really want?
 

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Posted by taxguru on August 12, 2008

Income Gain Exclusions – The Scoop on Code Sec. 121 – From TrustMakers, including the newly passed change.

 

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Posted by taxguru on August 11, 2008

From To The Point News:

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