Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for September, 2010

Accountants gone wild?

Posted by taxguru on September 30, 2010

From Blog Comix

Posted in Accounting, comix | Comments Off on Accountants gone wild?

Second Tax Season

Posted by taxguru on September 30, 2010

For those of us with a lot of extensions, the month before October 15 is busier than April 15.

Posted in comix, extensions | Comments Off on Second Tax Season

Misunderstanding Sec 179 Maximums

Posted by taxguru on September 29, 2010

 

Q:

Subject: Advice Please- You are the only one who knows this, it seems

Hello Mr. Kerstetter,
 
I came upon your blog on section 179 regarding maximizing the deduction.  I am the sole shareholder for my S Corp  which will have about $30,000 of sec 179 purchases this year, 2010.  My salary is $100,000 and assumed taxable income for S Corp in 2010 is $50,000.  According to your blog (I’ve copied below), I can take the maximum of $130,000 sec 179 deduction ($30K from purchases and $100K from my salary.  Is this right?  Can you please give me a publication reference or any official rulings for this rule?  My CPA doesn’t know about this, and I would like to refer him to it! 
 
Thanks so much in advance.

 

A:

Either I am misreading your question or it looks like you are misunderstanding the concept of the Section 179 deduction.

Section 179 is in essence a type of accelerated depreciation for the cost of business equipment, allowing its cost to be deducted in the first year rather than spread out over several years.

Although your W-2 and other income give you a potentially higher maximum Sec. 179 deduction, it is still limited to the cost of the newly acquired qualified equipment.  This means that if your business only purchased $30,000 of equipment, that is the maximum Sec. 179 that can be claimed for this year.  Of course, if you do purchase another $100,000 of equipment before 12/31/10, the Sec. 179 deduction would be much higher.

I hope that helps clarify the issue.

Good luck.

Kerry Kerstetter

 

Follow-Up:

Mr. Kerstetter,
 
Thank you so very much for your reply!  Yes, I was missunderstanding the concept of section 179 and you have cleared it up for me.

 

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

 

 

Posted in 179 | Comments Off on Misunderstanding Sec 179 Maximums

Posted by taxguru on September 28, 2010

Posted in Accounting, comix | Comments Off on

Posted by taxguru on September 26, 2010

From Blog Comix
From Blog Comix
From Blog Comix

Posted in comix, TaxHikes | Comments Off on

Prepped for slaughter…

Posted by taxguru on September 24, 2010

Posted in comix, taxpayers | Comments Off on Prepped for slaughter…

Expansion of Sec. 179

Posted by taxguru on September 23, 2010

Spidell has a handy summary of the new small business tax breaks in the latest DemonRat stimulus bill. 

I’m sure of great interest will be the doubling of the Section 179 maximum to $500,000 per year for 2010 and 2011, as well as the ability to use it on more kinds of assets.

I will post more details as they become available.

Updates:

CCH has a 7 page pdf newsletter covering this new law.

QuickFinder has a 4 page pdf summary of the new law.    

 

          

Posted in Uncategorized | Comments Off on Expansion of Sec. 179

Posted by taxguru on September 21, 2010

Taxing us on inflationary gains –  An issue I have been harping on for decades.

 

Posted in Uncategorized | Comments Off on

Worse than withholding…

Posted by taxguru on September 21, 2010

I’ve frequently commented on how the income tax withholding system shields people from their true tax costs and keeps them mellow about it. If everyone had to write actual checks for their income taxes, there would be much more of an uproar.

This story from the UK would be a huge step in the wrong direction if implemented here in the USA.

UK Proposes All Paychecks Go to the State First

While at first blush it may seem ridiculous to worry about this happening here, consider who are in charge of things in DC; a bunch of Marxists who consider everything to be the property of the imperial government.  I’m sure they’re studying this very technique right now and could start its implementation in the near future, if the November elections don’t go well for the Constitution and the DemonRats are allowed to remain in power.. 

 

Posted in Uncategorized | Comments Off on Worse than withholding…

Whose tax cuts are they?

Posted by taxguru on September 21, 2010

It’s been amusing to watch the posturing in DC over the soon to expire tax cuts.  When they are being portrayed as a bad thing, they are referred to as the Bush Tax Cuts and Tax Cuts for the Evil Rich.  When they are properly referred to as something good for the economy, they are being portrayed as the Obamao DemonRat Tax Cuts, as shown in this clip from the latest episode of NewsBusted

For those twisted folks who work and reside in the fairy tale land of DC, this supposedly makes sense. To those of us in the real world, it’s one more example of why we need to get rid of the career politicians and ignore the mainstream state controlled media.

Posted in TaxCuts, video | Comments Off on Whose tax cuts are they?