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We're all going to be Mugged & Stuffed
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/25/2009 03:45:00 PM Send this post:
Investing retirement funds into C corp
Q:
Tax Guru
In 2005 you recommended the use of the BeneTrends rainmaker plan for using your 401k funds to finance a company. Have you had anymore experience with them in the last four years? I am thinking of using them, but am worried that there may be some problems with the IRS.
Any help you might give would be appreciated.
Best Regards,
A:
I haven't heard of any problems with the BeneTrends program, and in act I am still recommending it, as in this recent vidcast.
Good luck.
Kerry Kerstetter
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/23/2009 09:10:00 PM Send this post:
Next best thing?
Labels: comix
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/23/2009 02:16:00 PM Send this post:
New BoTaxes?
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/22/2009 08:07:00 PM Send this post:
Using Multiple Entities - Vidcast
Using multiple entities for tax, liability, and other business reasons has been a very common and useful strategy for longer than I’ve been in this business. Why many tax pros are unaware or unwilling to recommend them is still surprising to me.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/22/2009 03:08:00 PM Send this post:
Exclusion from Gift & Estate Taxes
Q:
Subject: Estate Tax Exclusion
Mr. Kerstetter,
I found your writeup on estate and gift taxes via google search, and then I read your blog with great interest.
Thank you for publlishing it.
You have this text on your page:
If you do give any one person more than the $13,000 during a single calendar year, you must file a 709 and either pay gift tax or use part of your lifetime exclusion. When you pass away, the amount of exclusion that will be available on your estate tax return (706) will be whatever the exclusion is at that time reduced by the gifts you reported on 709s during your lifetime, where you opted to offset them with part of your lifetime exclusion. If you never used any of the credit by keeping your gifts below the annual limits, the full amount of the credit will be available to your estateMy wife and I have six children, so we're trying to get some intelligent estate planning done. The lifetime exclusion I understand is now $3.5M. Is this $3.5M total for the estate, or $3.5M for each heir?
Thanks for your help.
A:
I have a chart of the annual estate tax exclusions on my website.
For people passing away in 2009, there is an exclusion of $3.5 million of net estate value per decedent.
The lifetime exclusion on gifts is set at one million dollars.
You should be working with an estate planning professional because there are a lot of changes on the horizon; so you want to make sure any plan you set up is flexible enough to be able to handle the changes.
Good luck.
Kerry Kerstetter
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/21/2009 07:26:00 PM Send this post:
Snipes Appeals Overly Taxing Prison Sentence – The Hollywood lunkhead’s tax planning strategy is still on course for him to stay at Club Fed for at least a few years.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/20/2009 08:31:00 PM Send this post:
2010 Vehicle Depreciation Limits
CCH has calculated the inflation adjustments for the depreciation limits on business vehicles first placed into service in 2010. Based on past experience, they expect IRS to release their official version of the calculation in April 2010.
Ever since the ridiculously low luxury car limits on depreciation were initiated in 1984, we have had to break the news to clients that they were driving luxury cars in the eyes of the IRS, even though that wasn’t reflected in reality.
The new limits per CCH:
Passenger Vehicles:
Year 1 $3,060
Year 2 4,900
Year 3 2,950
Year 4 1,775
Year 5 1,775
Five Year Total $14,460
Trucks & Vans:
Year 1 $3,160
Year 2 5,100
Year 3 3,050
Year 4 1,875
Year 5 1,875
Five Year Total $15,060
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/19/2009 12:18:00 PM Send this post:
Sec. 179 On Converted Assets - Vidcast
You need to be careful about violating anti-churning rules.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/18/2009 07:45:00 PM Send this post:
From the latest issue of Intuit’s ProConnection Newsletter:
What's New on the 2009 Form 1040
If you haven’t seen the 2009 1040, here’s the most recent version from the 2009 Lacerte program.
Labels: TaxForms
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/15/2009 07:11:00 PM Send this post:
CPA Blogging
I’ve lost track of the number of CPAs and tax professionals who have asked me for advice on building up a clientele. I always advise against paying those “marketing” firms that promise to attract new accounting and tax clients via their deceptive advertising. Those are scams.
I have been telling several people that doing a blog and showcasing what you know and how you feel about tax and business issues is the best way to attract new clients. In spite of the fact that I have made it known for the past few years that I am not accepting any new clients, I continue to receive requests from people to take them on as clients on practically a daily basis.
In fact, if blogs had been around in the early 1990s, I could have saved a lot of time driving around Arkansas, Missouri and Oklahoma presenting my Realtor seminars and built up my practice via the internet. That’s how I would do it if I were starting out in a new market today.
I mention these obvious points in conjunction with this article on CPA blogging from AccountantsWorld that Ohio CPA Dana Stahl forwarded to me. It has some excellent tips and creative ideas on how to overcome the “writer’s block” that scares most tax pros from undertaking a blog.
Labels: Accounting
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/13/2009 10:13:00 AM Send this post:
Sec. 179 For Yachts?
Another question that really depends on multiple factors.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/10/2009 09:42:00 PM Send this post:
Advice For New CPA - VidCast
If the embedded player doesn’t work, go to the YouTube page.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/09/2009 08:40:00 PM Send this post:
Another new payroll tax?
Labels: comix, payrolltaxes
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/09/2009 04:49:00 PM Send this post:
Maximum Sec. 179 For Vehicles - VidCast
It’s not a cut and dried answer as to the maximum that can be claimed, as I explain in this vidcast Q&A.
If the embedded player doesn’t work, you can access the video directly on YouTube.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/08/2009 05:41:00 PM Send this post:
Financing an SUV For an LLC - VidCast
We have been looking at ways in which to improve the quality of our content; so we are adding short videos (VidCasts) of my answering reader questions. These should be more enlightening than the completely text versions.
This is going to be an evolving process as we become more proficient in utilizing this medium and our skills with the software and equipment improve. Our goal as of now is to do the same kind of Q&As as I have been posting for several years on my blog in these free short YouTube videos.
As we become more comfortable with this technology, we also plan to present some more intense live online webinars on some of the topics that seem to have the most interest around the country. There will be a charge for these to cover the costs, as well as for our time. As charitable as we are, we are evil capitalists and do intend to make a profit on this venture. The mini-classes will be of particular interest to small business owners and investors who are interested in learning techniques on how to minimize their taxes, as well as professional tax advisors with whom I can share my 34 plus years of experience. The costs will be very reasonable and much less than the $250 per hour that clients are paying me for one on one consulting.
This first batch of VidCasts that we produced are rough as we learn how to operate everything; but the information they contain should be useful for anyone wanting to keep their taxes down.
If the embedded player doesn't work in your browser, you can go directly to the YouTube page to watch it.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/07/2009 07:55:00 PM Send this post:
Profiting from sales taxes...
As someone who buys almost everything over the internet, where some out of state vendors charge sales tax and others don’t, I have long suspected that many of those vendors don’t actually send the tax money to Arkansas and other “foreign” states. Given a choice, I’d obviously prefer not to pay the sales taxes at all. But if I am forced to pay them, I would like some assurance that the money is properly forwarded to the State and not kept as another profit item, such as inflated Shipping and Handling charges, which I have railed against in the past.
According to this article,some states are now cracking down on online vendors who aren’t passing along the full amount of sales taxes paid by their customers.
I’m not a pro-tax type of person, but the money these companies are allegedly pocketing isn’t being stolen from the state governments. It is being stolen from their customers.
Labels: SalesTax
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/03/2009 09:57:00 PM Send this post:
Trick and Trick
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/03/2009 07:42:00 PM Send this post:
The Triple Whammy...
Labels: comix, PropertyTax
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/29/2009 01:26:00 PM Send this post:
No increase in SS tax base for 2010
There has already been a lot of press coverage of the fact that there will be no increase in the monthly benefits paid to Social Security recipients in 2010 because of the low inflation rate for the past year.
For the first time I can recall, we also have a freeze in the other side of that equation, the maximum earned income that is subject to the Social Security (aka FICA) tax. The maximum for 2010 will be the same $106,800 as it has been for 2009 according to IRS and the SSA.
I still stand by my prediction that it is only a matter of time before that ceiling is completely removed, as it was a while ago for the MediCare tax. The politics of class envy and soak the rich rhetoric are as hot and heavy as they’ve ever been; so forcing those “evil rich” people to pay more SS tax will be a very popular move.
Likewise, there will be also a stronger push to “means test” eligibility for future Social Security benefits, with those having an AGI and/or a net worth over a certain limit established by our all-wise rulers in DC phased out of receiving anything back from the SSA.
So, people earning over $100,000 will be forced to pay in more to the SS system with the probability of receiving even less of it back than ever before. If this doesn’t encourage more people to take legal steps to reduce what they pay in to the SS system now, such as by the effective use of corporations, it’s hopeless for those folks.
Labels: SSA
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/28/2009 04:47:00 PM Send this post:
Choosing a profession...
Labels: Accounting, comix
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/28/2009 02:28:00 PM Send this post:
Tax refugees staging escape from New York – As always, any State rulers who didn’t see this as the inevitable result of increasing taxes are complete idiots.
Labels: StateTaxes
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/27/2009 11:11:00 AM Send this post:
Costly fraud and error reported in home buyers' tax program
Wow! Who would have suspected that a refundable $8,000 tax credit would be an invitation for un-deserving people to cheat? Of course, the answer is that our imbecile rulers in DC obviously weren’t able to anticipate what anybody with half a brain could see would be an inevitable result of such a program. Common Sense has to be the scarcest commodity in all of DC.
And the response from our rulers to this? The sub-head of this article sums it up:
Lawmakers consider extension.
Typical problem solving by our moronic leaders. When a government program is filled with fraud and corruption, just make the program even bigger and more costly and available for more people to scam.
Is anyone else in favor of a constitutional amendment to change the eligibility requirements for our elected officials to include an IQ above 50? That would wipe out most of the current ruling class right off the bat.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/23/2009 07:34:00 PM Send this post:
Official IRS 2010 Inflation Adjustments
For those folks not satisfied with the CCH calculations of the 2010 inflation adjustments that I posted a month ago, IRS has officially released their figures.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/16/2009 01:55:00 PM Send this post:
Tax Hike in a Lab Coat… Dare to say no to Baucus-care.
– And anyone opposing this socialist takeover of the medical profession is going to be portrayed as racist, evil and cold-hearted.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/14/2009 05:57:00 PM Send this post:
Eight Year-End Moves That Can Cut Clients Tax Bills for 2009 and 2010 – Some good ideas from the most recent issue of the Intuit ProConnection Newsletter.
These are obviously not the only ways by which to reduce taxes. For example, they don’t mention the huge potential savings from setting up a C corp before year-end to move income off of a 1040 (aka Income Shifting), a subject that I hope to be able to cover in more detail in a webinar in the near future..
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/13/2009 07:23:00 PM Send this post:
Tax the Rich? How's That Working? – Idiotic politicians always assume that they can just continue to financially rape the people with the money and they will just stand still and allow it to happen. While that worked for Roman Polanski, who was able to prevent his 13 year old victim from leaving by drugging her up, more and more wealthy people are taking actions to stop it, such as leaving the high tax states. How hard is it for the mental midgets in power to understand the concept that five percent of billions of dollars will result in a lot more revenue than ten percent of nothing?
Mrs. Pelosi's VAT. The Speaker floats a middle-class tax hike. – It looks like we may have missed our opportunity to enact something like the FairTax national sales tax to replace the current income and payroll taxes. Our rulers in DC want to have it in addition to all of the taxes we currently have and the hundreds of new ones the insatiable spendaholics in DC are cooking up. The analogy of Queen Nancy’s vat as a witch’s cauldron of poison does seem to fit on several levels.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/08/2009 07:28:00 PM Send this post:
New IRS Phone Scam
It appears that our friends at the real IRS have even more competition in separating people from their money from imposters.
Earlier this morning, a client called and said that there was a voice mail message on her husband’s cell phone, claiming to be from the IRS and that they needed to call back by the end of business today. I didn’t recognize the 800 number given as being one of the regular ones that IRS uses.
Instead of calling that number back, we decided that it would be best for her to call the main IRS info line at 1–800–829–1040 and ask them to pull up her account.
She just called us back and said that when she called the main IRS switchboard, they had no pending actions against them or anything else that would have warranted any contact from an IRS agent. They also told her that they didn’t even have any of their cell phone numbers in their database.
So, this was obviously another scam from some scumbag looking to trick people into revealing their personal identification, credit card and bank info, much like the email version that I mentioned last month.
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/08/2009 10:46:00 AM Send this post:
Gifts From Parents
Q:
Subject: gifts of 13,000
Good Afternoon,
If I am reading it correctly, it states that a married couple can receive up to $52,000 a year.
Would it be done like this, My mother writing a check out for 13,000 to both my husband and I and then my dad writing a check for $13,000 to both my husband and I. Now the money would be out of the same account with both their names on the check. One signing 2 checks and the other signing the other 2 checks. We are in Ct and they are in North Carolina. We are trying to buy a house and they want to give us money. Thank you.
A:
Gifting strategies are the kinds of things you and your parents should be discussing with your own personal professional tax advisors because there are several different ways in which they can be structured.
I noticed some aspects of gifting that you appear to be confused about.
First, there is no maximum amount of gifts that can be received. For the recipients, gifts are exempt from income tax. However, if you were to be given non-cash items, such as stocks or real estate, that have appreciated in value since your parents purchased them, there could be tax consequences when you sell them because you are required to maintain your parents' cost basis.
From the givers' (your parents) perspective, there is also no maximum that they can give away in a year. However, if either of them were to give any person more than $13,000 during a single calendar year, they would be required to file a Gift Tax return (Form 709) to report that to IRS. There is also a lifetime exemption of one million dollars of gifts per giver, so even if they exceed the annual $13,000 limit, they wouldn't have to actually pay any gift tax until they have used up the million dollars.
There is a provision in the tax law allowing for married couples to split their gifts if they are made by only one spouse from his/her separate money. This enables both spouses to use their $13,000 annual exemption.
In the proposed plan that you mentioned, it sounds as if the bank account is jointly owned, so each could give you $13,000 and your husband another $13,000 without the need for any gift tax returns or gift splitting. Added all together, that would be $52,000.
This was a rather lengthy way to say that your plan appears valid. However, there are ways to transfer even larger amounts of money without exceeding the annual limits that should be discussed with your own personal professional tax advisor.
For example, if you needed $200,000 right now, your parents could gift you the $52,000 in 2009 and loan you the additional $148,000. In future years the principal of the loan could be forgiven as gifts in those years in increments of $13,000 or whatever the annual limit is in those years.
I hope this helps.
Good luck.
Kerry Kerstetter
Follow-Up:
thank you so much for getting back to me.
Labels: Gifting
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/03/2009 09:13:00 PM Send this post:
Killing the Golden Goose...
Risky business: States tax the rich at their peril - Too many of our rulers have short term mentalities and have no concern for the long range consequences of their decisions to steal as much money as they can from the "evil rich."
I am very happy to see that rather than just bend over and accept these kinds of financial rapes, more people are voting with their moving vans.
New Jersey, New York and California Have Worst Tax Climates for Business, Tax Foundation Says
Labels: StateTaxes
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 9/28/2009 10:17:00 PM Send this post:
IRS scam now world's biggest e-mail virus problem – These phony IRS emails that I mentioned a few weeks ago are still floating around the net. I have been receiving at least one copy each day since then. As this article explains, they contain a nasty computer Trojan virus; so be extra careful when encountering these scam emails.
Labels: scams
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 9/28/2009 10:15:00 PM Send this post:
