For decades, I’ve been receiving all kinds of hate mail and phone messages from people who don’t appreciate my exposing the lies used in the tax protestor community, such as the idiotic one that taxes are voluntary.

Following is an email I received today from one of these brilliant tax scholars.  As always, this is a direct copy and paste, with no modifications by me.

From: “SHERRY SIMPHER” quartzeagle1@charter.net
Subject: your an idiot hitler
Date: Sat, 10 Dec 2005 12:53:50 -0600
X-Mailer: Microsoft Outlook Express 6.00.2900.2180

the iris told me that they are voluntary and they publish this fact quite often …….have a great day Hitler

Sherry Simpher

 

 

Q:

Subject: S corp

HI, I have a question.

When an S corp declares dividend, is dividend must be paid or declared before Dec 31, 2005 to show on the books or the dividend can be paid and declared after the year end.

 

What happens to dividend declared to shareholders, are they taxed personally, does it show up on the K-1, ,

thank you

A:

In a nutshell, dividends from corporations that have always been S don’t have any direct tax consequences other than to change the shareholders’ capital accounts and personal cost basis in the corp.  Shareholders pay tax on their K-1 income whether or not any is paid out.  S corp dividends are not reported separately on the shareholders’ 1040.  Likewise, dividends paid out do not reduce the corp’s taxable income.

It does get a little messier for a corp that converted from C to S and had previously taxed retained earnings. 

Your professional corporate tax advisor should be working with you on this.

Kerry Kerstetter

Follow-Up:

Thank you

 

 

No Change in IRS’s Interest Rate for First Quarter 2006 – It stays at seven percent. I’ve updated this on my Quick Reference page.

Tapping Retirement Funds To Start a Business

Best tip: Have a good accountant

It seems that I wasn’t alone in criticizing the folks at Intuit for their failure to provide us QuickBooks Pro Advisors with the ability to help clients who use Apple Macintosh computers. 

This was included in the QuickBooks ProAdvisors newsletter than arrived today:

How to Order Your Personal Copy of QuickBooks: Pro 2006 for Mac
Support Your Clients on Macintosh. To help you support your clients who are using the Macintosh, Intuit is offering you your own not-for-resale copy of QuickBooks: Pro 2006 for Mac. This software’s new features include improved data sharing with QuickBooks for Windows.*

Please fill out this form to receive your free not-for-resale (NFR) copy. Software will ship at the end of each month with the first shipment happening in December 2005.

* NOTE: QuickBooks:Pro 2006 for Mac can convert files from QuickBooks Simple Start, Basic, Pro, Premier, and Premier Accountant Edition 2004, 2005 and 2006 for Windows (U.S. versions, one way: Windows to Mac). QuickBooks: Pro 2006 for Mac can exchange data with QuickBooks Pro, Premier, and Premier Accountant Edition 2006 for Windows (US versions, round trip: between Mac and Windows).

I filled out the application for the copy of the program and hope they send it soon.  I will now have to get serious about buying my first Mac computer. I’ve been waiting for this kind of good reason to get a Mac, especially after reading reviews such as this one from Walter Mossberg of the Wall Street Journal.

IRS Issues Proposed Regulations to Safeguard Taxpayer Information

A key principle underlying the proposed guidance is that tax return preparers may not disclose or use tax return information for purposes other than tax return preparation without the knowing, informed and voluntary consent of the taxpayer.