Posted by taxguru on February 28, 2006
From David Letterman’s Late Show:
10. “Instead of CPA training, employees got CPR training”
9. “Forgot to carry the one 32 million times”
8. “For years we’ve been secretly funding Hamas”
7. “H was out sick that day and R was on jury duty”
6. “We were using Martha Stewart’s guy”
5. “Were testing the world’s first accounting monkey”
4. “Come on, it’s a couple of dollars. It’s not like we shot a guy in the face…”
3. “Hard to stay focused when you’ve been drinking since April 16th”
2. “Thirty-two million dollars?! We lose that much on a good day”
1. “Hoping for hot make-up sex with the IRS”
Posted in Uncategorized | Comments Off on Top Ten H&R Block Excuses
Posted by taxguru on February 27, 2006
Posted in Uncategorized | Comments Off on
Posted by taxguru on February 27, 2006
Q:
Subject: Question regarding 179 expense
Hello,
I happen to stop by your web site and read your article regarding 179 expense.
I am a major stock owner of a S corporation.
Last year, the company got not a samll loss
I have other source of income and overally I have some income to report last year.
In this case, may I apply section 179 expense deduction for the S-Corp.
Your prompt and kind reply will be highly appreciated.
Best regards
A:
As your corporate tax accountant can tell you, an S corp with a net loss before counting the Sec. 179 deduction cannot claim Sec 179 on that year’s 1120S. Sec. 179 is limited at the S corp level, and it doesn’t make any difference whether or not the shareholders have other income to offset it.
Work with your corporate and personal professional tax advisors to work out the best strategy for your unique situation.
Good luck.
Kerry Kerstetter
Follow-Up:
Thank you for your kind and concise answer
bye
Posted in 179 | Comments Off on Sec 179 Limited At Entity Level
Posted by taxguru on February 25, 2006
Q:
Subject: Stocks to Offer
Good Morning,
We are a small group of R&D researchers looking to form a small C Corp and would like to offer stocks to investors in order to try and gain enough funds to prototype a few different models for producing liquid fuel with the co-generation of electricity of systems we’ve been designing and preparing to build out.
Can you tell me where we can learn about the stock offer limitations and total funds we can collect? I understand there are limitations on the number of offers that can be made as well as cap on total funds.
We are also looking at partnering (or possibly contracting with) a Canadian Company. Are there restrictions for receiving funds from their investors directly or through the Company and would one way or the other be better?
Thank you so much for your time and an advice you can offer. Have a great week.
A:
This is area where you absolutely must work with an attorney and a CPA firm that both have experience in public stock offerings in your state. The rules differ in each state and can get very complex in regard to several different aspects of this kind of thing. Your attorney will inform you of the potential penalties, including investor lawsuits, that can arise from failing to properly dot every I and cross every T.
Good luck.
Kerry Kerstetter
Posted in Uncategorized | Comments Off on Offering Stock
Posted by taxguru on February 25, 2006
Q:
Subject: Section 179 Deduction
I’m hoping you can answer my question. I work in a bank and I’m wondering about the effect of the 179 deduction on the company cash flow. Is this considered a depreciation expense that can be added back to get traditional cash flow? (net income + depreciation + interest expense)
A:
Section 179 is essentially a form of accelerated depreciation and is usually included on the same expense line with regular depreciation expense, except for pass-through entities, where it is shown separately on the K-1s because of the individual-level limits .
Any adjustments you make to book income to add back in depreciation expense should be sure to add back the Section 179 if it is not already included in the stated depreciation total.
Kerry Kerstetter
Posted in 179 | Comments Off on Adjusting For Sec. 179
Posted by taxguru on February 25, 2006
Posted in Uncategorized | Comments Off on
Posted by taxguru on February 25, 2006
Arkansas DFA has set up an online refund inquiry service for individual taxpayers. You just enter your SSN and zip-code. I’m not sure how useful this will be. I just tried it for a couple of clients, and it came up with the following message in each case.
Income Tax: Refund Inquiry
There is currently no return found for the Social Security Number and ZIP code you entered. It may take as long as six (6) weeks from the time you mail your return until it can be located in our processing system. Also, you may want to verify the Social Security Number, and ZIP code you entered with those found on your copy of your return. If you have additional questions, please call (501) 682-1100 inside Pulaski County, or outside of Arkansas, or 1-800-882-9275 WATS, in Arkansas.
Posted in Uncategorized | Comments Off on Where’s My Arkansas Refund?
Posted by taxguru on February 24, 2006
Q:
Exchange Question
What if I sell Florida then use only some of the money for another property in another state? Or can I use it to pay off one of the other financed properties?
A:
Like kind replacement real property can be in any state; not just the one where the original property was located.
If you reinvest less than the net sales price, you will have to report as taxable income the difference; the amount you missed the target replacement price by.
Paying off loans on property you already own is not a like kind investment. You have to acquire new property.
Your personal professional tax advisor should be able to help you with real numbers for your unique circumstances.
Good luck.
Kerry Kerstetter
Posted in Uncategorized | Comments Off on Exchanging Between States
Posted by taxguru on February 24, 2006
Q:
Subject: tax website
I saw your tax web site, and was wondering if you could help me.
Simply, the IRS disalowed my EIC, ( never recieved it, (( refund froze )), later after i protested, they reassessed their own review and sent me a letter stating that i have to pay them the EIC amount in question, if i disagree, then i have to go to tax court. If i go to tax court, then i will have to pay penalties and interest on an amount that i never recieved.
Is their any service that you can offer me to fix this ?
Have you seen anything like this before?
A:
There are far too many variables involved for me to be able to advise on your particular situation via this medium.
The person who prepared your tax return should be able to help you with this. If you did your own return, you learned an expensive lesson.
To work out the best solution for your particular circumstances, you really need to work with a tax pro who can help you set up a strategy that will work for you.
I wish I could help you; but I already have too many clients to take care of; so we are not accepting any new ones at this time.
Unfortunately, we don’t have anyone else to whom we could refer you. If you haven’t already done so, you should check out my tips on how to select the right tax preparer for you.
Good luck.
Kerry Kerstetter
Posted in Uncategorized | Comments Off on Disallowed EIC
Posted by taxguru on February 24, 2006
Q:
Subject: question
If I take the section 179 deduction of $25,000 on my new truck for 2005 can I take mileage in 2006?
Thanks
A:
No, and here is why.
The IRS standard mileage rate includes a portion for straight line depreciation (17 cents per mile for 2005 & 2006). If you use the actual expense method of deducting vehicle costs, and use the straight line depreciation method, you are allowed to switch to the standard mileage rate in subsequent years for that particular vehicle.
However, if you use any accelerated depreciation method, of which Section 179 is the most accelerated, you must stick with the actual expense method for as long as you have that vehicle. To allow you switch to the standard mileage rate would in effect be allowing you to over-depreciate the cost of the vehicle.
I hope this helps. Your personal professional tax advisor can give you more specific figures for your particular situation.
Kerry Kerstetter
Posted in 179 | Comments Off on Sec 179 Locks In Actual Expense Method
Tax Guru - Ker$tetter Letter 