As I have been screaming for decades, the definition of who is in the cross-hairs as being the Evil Rich and deserving of extra tax persecution is subject to constant change by our rulers in DC.  It’s the classic camel’s nose under the tent.  The O’Biden DemonRat tag team isn’t even waiting until the election’s over before publicly announcing that their target for additional mandatory patriotism has widened from those making over $250,000 per year a few weeks ago to anyone earning over $120,000 today.  As I have long predicted, it won’t be long until these nut-cases use the same definition of evil rich as the IRS has for decades for Social Security recipients; Single persons earning over $25,000 per year and married couples earning over $32,000 per year.

How Low Can It Go? Richardson Pegs Middle Class as Those Making Under $120,000 – From FoxNews

Richardson Lowers Obama's Definition of "Rich" to 120K a Year – From Rush Limbaugh

Labels: TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/31/2008 07:42:00 PM Send this post:

Taxing Times – Thomas Sowell, predicting a huge exodus of capital out of the USA between November 5 and December 31 if 0bambi wins this election, for very obvious and justifiable reasons.  

Labels: TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/30/2008 09:00:00 PM Send this post:

Labels: comix, Obambi

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/30/2008 08:34:00 PM Send this post:

From last night’s Tonight Show via NewsMax:

The Democrats’ definition of the rich keeps going down: Barack said no one making under $250,000 a year will see a tax increase. Then he said no one making under $200,000 will see a tax increase. Then Joe Biden said no one making under $150,000 will see a tax increase. I think we’re going to see a tax increase.

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/30/2008 07:49:00 PM Send this post:

Labels: comix, Dims

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/30/2008 04:43:00 PM Send this post:

This latest video from F.R. Duplantier’s mock presidential campaign has a tax plan that sounds very much like Obambi’s

Labels: TaxHikes, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/28/2008 12:45:00 PM Send this post:

Labels: comix, Rebates

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/27/2008 10:02:00 PM Send this post:

Q-1:

Subject: sep ira tax calculations

can profit distributions to an owner of an s corp. be used to calculate contributions to a sep ira?

A-1:

No it can't. 

Only earned income that is subject to Social Security tax is eligible for the SEP earning test.  Since S corp net profit on a K-1 is not subject to any SS tax, it doesn't count towards SEP-IRA eligible income.

Whether or not it makes sense for you to intentionally restructure your S corp income in such a way so as to pay in some SS tax and thus make it possible to use that income as a means of qualifying  for  a SEP-IRA contribution is something you need to work on with your professional tax advisor.  It may or may not be counter-productive to do that.

Good luck.

Kerry Kerstetter

Q-2:

kerry can someone have a sep ira and a roth ira or any other retirement combination with a sep ?

A-2:

You can simultaneously have several types of retirement accounts.  The tricky part comes in determining which ones you are allowed to contribute to each year.

Rather than ask me about each potential combination of plans, the more efficient approach would be to work with a professional tax advisor to run each of the scenarios until you find one that suits your unique situation and goals.

Good luck.

Kerry Kerstetter

Labels: Retire

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/27/2008 03:23:00 PM Send this post:

Q:

Subject:  gifting

In the year of death can the surviving spouse make a $24000 gift to her daughter after her husband has passed away? She gets to claim him as an exemption in 2008 even though he died Jan 2008.Can she still use his annual gift exclusion to make gifts in 2008 after his date of death?

A:

What you are proposing is not allowed.  Once a person passes away, s/he can no longer make gifts or use the Gift Splitting option between spouses. Any transfers of assets owned by the deceased will need to be treated as a distribution of estate assets.

Even though the widow can't exclude the full $24,000 gift, the additional $12,000 can still be given tax free as part of her one million dollar lifetime exclusion, which may or may not make sense depending on the potential size of her taxable estate.

A qualified professional tax advisor should be consulted to work out the most sensible strategy.

Good luck.  I hope this helps.

Kerry Kerstetter  

Labels: Gifting

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/27/2008 03:16:00 PM Send this post:

Q:

Subject:  S corp's

Hi I just found your site and read about S vs C Corp's.  We have been an S Corp for years.  Some questions I have is:  money taken out by shareholder ( my wife and I) should that be ledgered under personal income or shareholder loans?  Is that money taxable?  My CPA says it is not taxable.  Why would I ever pay myself in wage form if this is the case.  I see as our profits get up to 65,000 or more maybe we should start a C Corp.  How so you smooth out the money in a C Corp.  I don't understand.  Maybe I should get a new CPA? 

Thanks

If you've been operating an S corp for any period of time and your professional tax advisor hasn't explained to you all of the details of how cash distributions are treated, it does sound like s/he has dropped the ball.  That all should have been explained to you prior to your even setting up the S corp.

Likewise, if your professional tax advisor isn't aware of how to effectively utilize a C corp to smooth out your taxable income, it is time to find someone who understands this very basic tool of tax planning.

Good luck.

Kerry Kerstetter

 

Labels: corp

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/26/2008 08:21:00 PM Send this post:

I received this from a reader back in early September:

Subject:  possible link of interest for your blog

http://www.fulcruminquiry.com/Investment-Calculator.htm

This is an online interactive calculator that addresses whether one should sell now to take advantage of lower capital gains rates that now exist. 

David Nolte
Fulcrum Inquiry

I Wrote back:

David:

Thanks for passing that along.  It's an interesting calculator, albeit with too many assumptions required to be realistically practical.

I was surprised not to see any part of your discussion or calculation that takes into account the zero percent LTCG rate for sales in 2008, 2009 & 2010. That is a very real issue, as opposed to the possible future rate increases, and is a question we tax pros have been receiving frequently for the past year or so.

Your calculator could cover such an analysis as whether the transaction costs of selling now to tax advantage of the zero percent bracket justify it, plus the fact that there will still be tax on the portion of the gains that are above the new zero percent rate bracket.

Kerry Kerstetter

To date, no reply has been received

Labels: CapGains

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/26/2008 08:13:00 PM Send this post:

Courtesy of Say Anything:

Labels: comix, Dims

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/26/2008 03:51:00 PM Send this post:

(Click on image for full size)

Labels: comix, Commies, Obambi

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/25/2008 09:27:00 PM Send this post:

(Click on image for full size)

Labels: comix, corp, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/25/2008 09:23:00 PM Send this post:

Labels: comix, Obambi, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/24/2008 01:34:00 PM Send this post:

Labels: comix, Commies, Obambi

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/23/2008 01:25:00 PM Send this post:

Labels: comix, Obambi, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/21/2008 07:57:00 PM Send this post:

Labels: comix, Commies, Obambi, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/18/2008 12:02:00 PM Send this post:

Labels: comix, Retire, SSA

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/18/2008 11:57:00 AM Send this post:

Labels: comix, Obambi, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/17/2008 05:51:00 PM Send this post:

Scary look at the future from today's Lucianne.com

Labels: comix, Obambi, TaxHikes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/17/2008 10:39:00 AM Send this post:

Pension Plan Limitations

Individual Tax Brackets, Standard Deductions, Exemptions, and Gift Tax exclusion – Same as CCH announced a month ago. 

Labels: IRS

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/16/2008 09:00:00 PM Send this post:

Labels: comix, Obambi

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/12/2008 11:15:00 AM Send this post:

Labels: comix, Obambi

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/11/2008 07:18:00 PM Send this post:

Emergency Economic Stabilization Act of 2008 – The folks at The TaxBook have been hard at work preparing an excellent 24+ page pdf summary of the new tax law that is a lot easier to cope with than the 451 pages of the actual law.

Labels: NewTaxLaws

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/10/2008 03:07:00 PM Send this post:

Labels: comix, IRS

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/09/2008 07:02:00 PM Send this post:

Q:

Subject:  Exchange Question

can I exchange a retail business for another retail business?

A:

It is a little trickier than just selling one business and reinvesting into another one.

When a business is sold, the sale price is allocated between the different assets being transferred, such as real estate, fixtures, equipment, goodwill, inventory and covenant not to compete.

The profits from some of those assets can be deferred via a Section 1031 exchange if that portion of the proceeds is used to acquire like kind assets of equal or higher value within the statutory 180 day reinvestment period.

For example, if $100,000 of your sale price was allocated to the business real estate, you could defer the gain on your original real estate by acquiring $100,000 or more of new (to you) investment or business real property.

The like kind rules and definitions are also a little tricky.  Real estate has the widest scope of like kind status, with any kind of investment or income producing property being eligible on both sides of the exchange.  Equipment and fixtures have to be the same kind.

Goodwill in one business cannot be classified as like kind for goodwill in any other business; so it is not possible to defer any of that profit.

Same thing for a covenant not to compete.  That will be taxable income as it is received and cannot be exchanged tax free for anything else.

This is why, if you are considering reinvesting business sale proceeds into another business, it is critical that you work with your own professional tax advisor ASAP to have the gains and possible taxes calculate for each type of asset involved and to assist you in negotiating the allocation with the buyer of your old business and seller of your new one.  The allocations you use must be reported consistently on everyone's books.

This is a quick and dirty answer to your questions   Your own personal professional tax advisor should be able to give you more specific advice with your actual figures.

Good luck.

 Kerry Kerstetter 
 

Labels: 1031

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/07/2008 07:54:00 PM Send this post:

From an obviously new reader:

Subject: Obama for President

Dude, you are so full of it. You waste your time making fun of our next president - Obama - but are so blind to the ruins made by the republican party and their war agenda. The man is brilliant. Stop and listen, you might just learn something. You and your red neck followers have no clue what goes on around America and just want to line your pockets with more cash at the expense of hard working families and the poor. Whine Whine Whine about taxes. You really don't care about helping people do you? Can't see past your capitalistic raciest views. Do you even know about the social issues this country faces? Guru, my ass. Stop criticizing and come up with some real solutions (blogs, cartoons, etc...whatever) people over 8 yrs old can discuss and articulate on. Don't you know that all you do is spread hate and create division between people through your blog. Show some wisdom and professionalism in your work. You have no appreciation for the different opinions people have and the beliefs they stand for. So out of touch with reality, that even your portray of yourself is a cartoon.

From: (Name Removed By Request)

My reply:

I'm sorry if telling the truth about your Messiah's tax plans offends you and your fellow Marxists. You should avoid my websites in the future, as I will continue to discuss what he has in store for us.

Your idiotic and ignorant comments aside, I do appreciate your writing to let me know that what I am posting on my tiny little blog is touching a nerve with you Obama disciples. That encourages me to continue.

Kerry Kerstetter

Labels: Obambi, politics

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/07/2008 07:45:00 PM Send this post:

Sarah and Todd Palin have released copies of their 2006 and 2007 income tax returns, which you can download from the McCain website. 

I took a quick glance at the returns and had just a few comments.

I found it interesting that for both years, they had them prepared by H&R Block rather than by an expensive tax attorney or CPA, and that they e-filed.  I guess that is another part of the Palins’ bond with Joe SixPack.  I wonder if that will still be the case if she becomes VP. 

Copies of their W-2s are also included.

They claimed home office deductions for both years for Todd’s Schedule C commercial fishing business.

Some of the numbers, such as non-cash donations and vehicle miles, end in double zeroes, a sign of the SWAG method of guesstimating.

There are already stories all over the internet on how much more the Palins deducted for charitable donations than the other candidates. I don’t feel like piling on to that right now, and may discuss my opinions on that issue at a later time. 

For those even more curious about the Palins finances, the financial disclosure form on the McCain website lists many of their investments and other assets.

Labels: politics

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/07/2008 06:05:00 PM Send this post:

Labels: comix, Money

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/05/2008 10:16:00 PM Send this post:

Labels: StateTaxes

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/05/2008 03:04:00 PM Send this post:

Q:

Subject: section 179

Curious, would an atm qualitfy for section 179.  Maybe one can argue that the atm part qualifies but if it is enclosed in a building, it is not.   I presume we would have to have the atm in place and working prior to year end.  We are on cash basis for tax purposes and a S corp.

A:

You should be working with your own personal professional tax advisor on matters like this.

S/he will most likely tell you that the actual ATM machines will qualify for Sec. 179; but structures built to house them do not.

Sec. 179 and depreciation deductions have always required that the asset be actually placed into active service before the end of the tax year, regardless of when you pay for them.

It is also not relevant for Sec. 179 or deprecation purposes how you pay for the machines, cash or via a loan.

Again, your own personal tax pro should be able to give you more specific advice for your particular situation.

Good luck.

Kerry Kerstetter

Follow-Up:

Thank you for your time

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/05/2008 02:56:00 PM Send this post:

Jay Leno on Charlie Rangel's Tax Problems - Video of one of the jokes I posted previously.

Labels: Rangel, video

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 10/02/2008 03:19:00 PM Send this post: