Tax Guru – Ker$tetter Letter

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Archive for August, 2011

Paying for 0Bambi’s Magical Misery Tour…

Posted by taxguru on August 23, 2011

 

 

 

Posted in Obambi, TaxHikes, video | Comments Off on Paying for 0Bambi’s Magical Misery Tour…

Prepare to be Gang-Raped

Posted by taxguru on August 23, 2011

From Blog Comix

Posted in comix, TaxHikes, taxpayers | Comments Off on Prepare to be Gang-Raped

Choosing A Fiscal Year

Posted by taxguru on August 23, 2011

Q:

Subject: Fiscal year question

HI Kelly, I went to your site about Choosing Fiscal Year. I have a question if you can help me. I have a new LLC created on 5/17/11. Recently I applied IRS online for EIN. Calender year is a defult on this so I have to elect Fiscal year now with form 1128. My question is can I elect 6/30 year end although 5/17/11 is the creation of the LLC?

Thanks

A:

You really shouldn’t be setting up new business entities without the assistance of a professional tax advisor.  It’s all too easy to make mistakes that may be impossible to remedy later on.

In this example, there are a few misconceptions you already have that an experienced tax pro would have alerted you to.

If you are choosing to have your LLC taxed as a C corp, you can choose the end of any month to be its fiscal year end, regardless of when it was chartered.

For example, if you want June 30 to be the fiscal year-end, that’s your right to choose.  You would need to file the initial 1120 covering all of the activity for the period from 5/17/11 through 6/30/11.  This 1120, or an extension (Form 7004), would be due 9/15/11.  You need to file that 1120 even if no actual activity took place or IRS will assume that you made millions of dollars.

When you have a brand new C corp, it has no set fiscal year-end, so the initial 1120 becomes the official notification to IRS of that fact. This is even if you used December 31 on the SS-4.

You do not need to file Form 1128 to designate the tax year for a new corp that has not filed any 1120s.  Here is a direct excerpt from Page 1 of the 1128 instructions:

Exceptions
Do not file Form 1128 in the following circumstances.

Corporations

• A corporation adopting its first tax year.

Good luck.  I hope this helps.

Kerry Kerstetter

 

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

Posted in corp, Fiscal Year, LLC | Comments Off on Choosing A Fiscal Year

Posted by taxguru on August 23, 2011

 

 

From Blog Comix

Posted in Commies, extensions, IRS | Comments Off on

The inevitable happens…

Posted by taxguru on August 21, 2011

Social Security disability on verge of insolvency – And who is the least bit surprised that this Ponzi Scheme has finally started to implode?  Of course, the fact that all of your SS tax money is being flushed down the commode doesn’t mean our rulers in DC and their henchmen, the IRS, will cut you any slack.

 

Posted in SSA | Comments Off on The inevitable happens…

IRS Lowers Its Interest Rates

Posted by taxguru on August 19, 2011

We’ll never see the IRS charge the same as the Federal Reserve charges its banks (0.00% to 0.25%), but it’s good that they are at least cutting us some slack; unlike some State tax agencies that never change the double digit interest rates they charge their taxpayers. 

Interest Rates Decrease for the Fourth Quarter of 2011

The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning Oct. 1, 2011. The rates will be:  

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • zero and one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

 

Courtesy of TimeValue Software:

From Tax Info

 

 

You can study or you can QuickStudy!

 

 

Posted in IRS | Comments Off on IRS Lowers Its Interest Rates

Taxing the ugly?

Posted by taxguru on August 17, 2011

Everything is up for grabs in terms of being taxed, as in this clip from Red Eye last night.

Posted in humor, SinTaxes, video | Comments Off on Taxing the ugly?

Sec. 179 assets have to be used in the USA

Posted by taxguru on August 17, 2011

Q:

Subject: Foreign assets and sect 179

I saw your informative web page concerning 179 property.

Where are foreign assets carved out from its application?

 

A:

From the IRC on TheTaxLibrary:

§ 179(d) Definitions and special rules

§ 179(d)(1) Section 179 property

For purposes of this section, the term “section 179 property” means property—
§ 179(d)(1)(A) which is—

§ 179(d)(1)(A)(i) tangible property (to which section 168 applies), or
§ 179(d)(1)(A)(ii) computer software (as defined in section 197 (e)(3)(B)) which is described in section 197 (e)(3)(A)(i), to which section 167 applies, and which is placed in service in a taxable year beginning after 2002 and before 2013,
§ 179(d)(1)(B) which is section 1245 property (as defined in section 1245 (a)(3)), and
§ 179(d)(1)(C) which is acquired by purchase for use in the active conduct of a trade or business.
Such term shall not include any property described in section 50 (b) and shall not include air conditioning or heating units.

§ 50(b) Certain property not eligible

No credit shall be determined under this subpart with respect to—

§ 50(b)(1) Property used outside United States

§ 50(b)(1)(A) In general

Except as provided in subparagraph (B), no credit shall be determined under this subpart with respect to any property which is used predominantly outside the United States.

From Page 9-15 of TheTaxBook:

Other nonqualifying property:

• Air conditioning or heating units.

• Property used predominantly outside the United States, except property described in IRC Section 168(g)(4).

 

From Page 17 of IRS Publication 946:

Excepted Property

Even if the requirements explained earlier under What Property Qualifies are met, you cannot elect the section 179 deduction for the following property.

· Certain property you lease to others (if you are a noncorporate lessor).

· Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging.

· Air conditioning or heating units. 

· Property used predominantly outside the United States, except property described in section 168(g)(4) of the Internal Revenue Code.

I hope this helps.

Kerry Kerstetter

 

 

Follow-Up:

Thank you VERY much. I blew right by section 50. I had seen Pub 946. I don't believe I have ever laid eyes on section 50.

 

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

 

Posted in 179 | Comments Off on Sec. 179 assets have to be used in the USA

Advice for Warren Buffet…

Posted by taxguru on August 16, 2011

 

 

 

 

Take Buffett’s Money. Don’t let the super-rich set tax policy for the merely well-off.

 

From Blog Comix

Posted in Buffet, comix | Comments Off on Advice for Warren Buffet…

All Ponzi Schemes eventually collapse…

Posted by taxguru on August 16, 2011

From Jay Leno via NewsMax:

It’s the 76th anniversary of Social Security. I mention it because there’s no guarantee that there will be a 77th.

 

Posted in humor, SSA | Comments Off on All Ponzi Schemes eventually collapse…