From Leno via NewsMax:

President Obama has announced a task force to review the tax codes. He’s concerned there are too many loopholes and too many people manipulating the system to avoid paying taxes. And that’s just in his administration.

 

I came across this page on the Tax Analysts site that has links to download pdf copies of several tax returns for a number of US Presidents (Obama, Bush 43, Clinton, Bush 41, Reagan, Carter, Nixon, & FDR), some Vice Presidents (Cheney & Biden), and some recent candidates (McCain & Palin).  From a true historical perspective, the 1913 tax return for FDR is interesting to look at because it was the very first year tax returns were required to be filed in this country.

From the AP:  IRS dumps private debt collectors, shifts pendulum

From IRS:  IRS Conducts Extensive Review, Decides Not to Renew Private Debt Collection Contracts

I didn’t have any real world experience dealing with the private collectors, so I can’t comment on how this experiment actually worked out.  If anyone wants to share some examples of their real life experiences with the contract collectors, I’d be glad to post those.  There’s a good chance this will be attempted again in the future.

From Jay Leno via NewsMax:

Quite a scare in Washington, D.C. today. Police were called to the White House. Apparently President Obama was in a meeting with some potential Cabinet nominees when someone noticed a suspicious-looking document on the table that no one had ever seen before. Turns out it was just a tax form.

The president’s latest nominee for U.S. trade representative, Ron Kirk, who owes the government $10,000 in back taxes, has agreed to pay his taxes. When was there a choice? You try that on April 15.

Treasury Secretary Timothy Geithner announced he plans to go after tax evaders . . . this after failing to pay his own taxes. This is part of operation “Do As I Say, Not As I Do.”

 
From Jimmy Fallon via NewsMax:

Ten office workers won New Jersey’s $260 million Mega lottery. Unfortunately, under Barack Obama’s tax plan, they now owe $300 million.

From a reader:

Subject:  Mass Transit Provision of the Stimulus Package Provides $1K

Kerry,

I have been following your posts lately and thought you’d be interested to know there is a provision in the bill for commuters to save up to an additional $1,000 per year on transportation costs. A raise in the cap on pre-tax commuter benefits should increase mass transit ridership and help hard working Americans keep a good chunk of money in their wallet, according to TransitCenter (the non-profit that has been advocating this change for nearly seven years).

The CEO of TransitCenter, Larry Filler, decided to setup a blogger resource room to explain the change in the IRS Code to help individuals get access to the information they need to take advantage of this opportunity. Feel free to use any of the material on the blogger resource room to inform your readers and get them the $1K per year.

Also, Larry’s happy to provide a personal quote that would be exclusive for your blog. Feel free to contact me if you have any questions.

http://www.transitcenterblogresource.com/accounting.html

Best,

Jonathan Blank, representing TransitCenter

My Reply:

Jonathan:

I have always been a huge fan of pre-tax employee benefits as a great way for both employees and employers to save on their taxes.

I appreciate your alerting me to this recent increase for mass transit users and I will make sure to post the link to your site on my blog.

Thanks for writing.

Kerry Kerstetter

Q:

Subject:  Gain on Inherited Property

How do I record my gain on inherited property?

I inherited property in 1982 when my husband died. I am considered 1/12 owner and received 1/12 of the proceeds when the house sold in 2008. If the house was assessed at $60,000 in 1982, then is my cost basis $5,000 (1/2 of $60,000). In addition, do I reduce my proceeds by the settlement charges I paid at closing. Finally, does this get reported on Schedule D?

A:

You really need to be working with a professional tax advisor on this because there are many factors that need to be considered.

Some of the issues that you will need to discuss with your own personal professional tax advisor so that s/he will know how to properly report the sale include the following.

For the basis of the property, it is important to know if it was owned as separate property by your late husband or jointly by both of you. The amount of the step-up in basis will also depend on whether or not you were in a community property state or not if it was jointly owned.

Any improvements to the property that you paid for will be added to the basis.

You didn’t say what kind of property it was and what it was used for. If it had been used for rental or other business purposes, any depreciation claimed or claimable will reduce the basis and trigger depreciation recapture at a higher rate than the other profit.  It will also require reporting the sale on Form 4797, which will then flow onto Schedule D.

I assume you received the full amount of your share of the proceeds; but if you are receiving periodic payments, it will probably need to be reported as an installment sale on Form 6252, with any interest received reported on Schedule B.

If you had been living in the property as your primary personal residence, you would most likely be eligible to exclude up to $250,000 of profit.

These are all important items to clear up with your own personal professional tax preparer who will then now how to show the sale on your 1040.

Good luck.

Kerry Kerstetter

Created on this French website

With working links:
http://content.screencast.com/users/TaxGuru/folders/Default/media/3cff7fdc-e8f8-47c4-b3e1-f515eff1d7d2/bootstrap.swf

For clients and others wondering where we are, we have been out of power since last Tuesday morning as the result of what everyone is calling the worst ice storm ever to hit this area. Just one more fact proving AlGore’s global warming theories to be a pile of donkey crap. We all wish we had warming after digging out of the ice and cutting down hundreds of fallen trees to barely clear the roads.

Needless to say, we have had no internet access up on the mountain and we received our first snail mail delivery since last Monday yesterday by meeting our mailman half-way.

Parts of the Ozarks do finally have power and we were able to make it off the mountain this afternoon to set up a satellite office in a Super 8 motel room in Harrison with two laptop computers and a laser printer from my main office.

Our electric company is vague about when we will have power restored, but they do have some pictures on their website of what things are looking like around here. Tax returns will be delayed a bit; but I will do my best to answer emails as soon as possible.

I was reading my paper copy of Practical Accountant magazine the other day and noticed this small item in the Tax Briefing section.

ROBS Retirement Plans Targeted

An IRS memorandum has been issued containing audit guidelines for a version of a qualified plan being marketed as a means for prospective business owners to access accumulated tax-deferred retirement funds without paying applicable distribution taxes in order to cover new business start-up costs. The memorandum refers to these arrangements as ROBS (rollovers as business startups).

IRS indicates that they “may serve solely to enable one individual’s exchange of tax-deferred assets for currently available funds, by using a qualified plan and its investment in employer stock as a medium. This may avoid distribution taxes otherwise assessable on this exchange. Although a variety of business activity has been examined, an attribute common to this design is the assignment of newly created enterprise stock into a qualified plan as consideration for these transferred funds, the valuation of which may be questionable.”

This obviously has to do with the kind of plans that that I have discussed on numerous occasions, such as those offered by companies like BeneTrends. I haven’t seen any response to this yet from BeneTrends or any of the similar companies; but I’m hoping their plans will withstand any IRS scrutiny that may come their way because they are a huge help to small business owners, as well as a more productive investment vehicle for the retirement funds than the big stock market or other conventional vehicles.   

From Jay Leno via NewsMax:

Obama says that he wants to bring a “sense of accountability” to Washington. I have a better idea — why not bring some accountants to Washington?

Speaking of that, Obama’s new secretary of the Treasury nominee, Timothy Geithner has come up with a new plan to lower taxes: Don’t pay them.