Now anyone can create their very own fake award via this website.

Interesting articles from the August issue of Practical Accountant magazine:

Focus on AMT Planning

The Internet’s Many Facets

Charitable Giving Pitfalls

Real Property as a Closely Held Business

 

Attack Of The Real Estate Rip-Offs – Good look at some important points to watch out for, from Forbes.

Why a House Is Not a Piggy Bank To Tap Into For Your Retirement

Baby-Boomer Apartment Investors Sell Despite Trend in Rising Rents

House Passes Limit on Retiree Taxation – The Feds give a slap in the face to states like the PRC, who want to tax retirement income received by former residents.

…clarifying that state taxation of retirement income is limited to the state where the retiree resides

New Tax Law Will Hurt Some Americans Working Abroad – And Their Employers

The new law removes a housing exclusion/deduction for costs over $11,536 per year, and those who earn over $82,400 will now face much higher U.S. income tax.

 

Smokers may get burned in cigarette-tax collection – As usual, the tax collectors in the PRC lead the way in finding ways to squeeze more money out of people.  This time, nicotine addicts who bought their smokes from out of state vendors will be receiving bills for excise and sales taxes.  They are guestimating this will squeeze another $52 million in additional taxes out of evil nicotine fiends on the Left Coast, very popular targets for tax loving rulers.

Their worst fears have become real.

Anyone who has had to deal with the passing of a loved one knows that the hassles are almost limitless.  While it’s not possible to be completely stress-free; there are some things that can be done to reduce it somewhat. 

I’ve written several times about Mark Colgan’s excellent Survivor Assistance Handbook.

In Mary Hunt’s Everyday Cheapskate column today, she had info on some other similar guides to dealing with this most difficult aspect of life.

“If Something Happens to Me” by Joseph Hearn and Niel Nielsen 

“Ready or Not” by Julie Edstrom – available in various formats; book, CD and internet download. 

“Creating the Good Will” by Elizabeth Arnold

 

How tax breaks find their way into our tax code.

As I’ve mentioned many times before, these are extremely attractive investments, when Congress-Critters are willing to sell multi-million dollar tax breaks for literally pennies on the dollar in campaign contributions (aka legalized bribes).

Q:

Subject: Two entities together

Kerry,

In a recent post to your blog you wrote: “a Personal Service Corporation (PSC) which is subject to much higher tax rates than normal C corps.  There are easy ways around this, often by the use of two entities.  A competent tax advisor should have no problem in helping you set things up properly.”

I know of many doctors that have done this, but it made wonder why the IRS wouldnt classify this as a type of tax shelter. The only reason that someone is creating the second entity is simply to reduce their tax rates i.e. there is no true business purpose.

Thanks.

A:

I’m not really sure if I understand the motivation of your question. 

If you are worried that IRS could challenge such an arrangement, that is always a possibility because IRS can always challenge anything they want to, and the burden of proof is on the taxpayer to establish the validity of the structure.  Too many people self censor themselves and are too scared to take certain tax savings steps because of the fear that IRS may want to dispute it.  As I’ve pointed out on many occasions, the government gets a lot of extra tax money from people for just this reason.

While one of the big benefits of setting up a separate corporation to provide various back-room business services for a PSC may be net tax savings, having those other functions handled by a separate entity can be easily justified, for liability, as well as efficiency reasons.  Asset protection advisors have long advocated keeping business operations in separate self contained entities in order to shield each one’s assets from lawsuits and other legal actions caused by the other.  With doctors and crazy malpractice suits, doing this would make perfect sense, without any consideration of the tax benefits.

I hope this helps you understand this issue a little better. Your own personal professional tax advisor can help you how any of these ideas and concepts would apply to your unique circumstances.

Kerry Kerstetter

Follow-Up:

Yes this does help and I do agree with you that too many taxpayers dont do enough to lower their tax burdens.