PAUL’S TAX BLOG

I haven’t written anything recently, not because there has been a lack of interesting stuff, but a lack of time on my part. Tax Season hits our business and we ramp up hours, production, and stress. All the stories you hear about accountants working late hours in a mad frenzy are true! This last week saw Congress finally succeed in repealing a small, onerous part of the Obamacare Law that dealt with increased 1099 reporting for businesses. Under that provision, businesses would be required to issue 1099 forms for ALL payments, not just to noncorporate recipients for services. It was...

This case got my attention real quick. Probably had something to do with the 300# of Buffalo meat I brought home from Montana last month… A professional Body Builder claimed deductions for Buffalo Meat, Posing Body Oils, and Protein Shakes, all as business expenses. He ate three pounds of buffalo meat a day all year round for its healthful protein content. He claimed it was necessary to maintain his competitive physique, making it a business expense. Unfortunately the tax court killed that idea, reasoning that if it could be eaten by anyone, it wasn’t a professional expense. This reasoning seems...

Ok, that may not be quite what she had in mind at the time, but that was the effect. DN, a minor, received a distribution from his father’s 401(k) plan as a secondary beneficiary. He received the distribution because the primary beneficiary, his mother, was in prison for murdering the father. Under Oregon law if you murder your spouse you aren’t entitled to receive his/her retirement benefits. (This law by itself probably prolongs many husbands’ lives more than any healthy lifestyle ever could.) DN, the child, argued that even though he received the money that his mother was ineligible for,...

Very rarely do we have a client ask us to fabricate a tax return. Most people, even if they were inclined to do that, know better than to even ask. I have had taxpayers after being asked for their deductions say something like “how much can I get away with?”, but that’s usually as far as it goes. Years ago I actually had one fellow take his data back to another preparer when I explained that his nonexistent horse was not a deductible horse racing business. Even after admitting he didn’t have a horse, he felt that he had gotten...

I am rarely in a position to praise the IRS for a job well done. In fact, if you look back at all the previous blogs on the website, I’d be surprised if you found even one entry giving IRS any kind of complement. That’s about to change. Recently the IRS announced that a free app called IRS2Go can be downloaded from either the Android Marketplace or the Apple App Store. This Smartphone Application will let you check on the status of your refund as well as give you helpful tax information, right on your mobile device! You can also...

Last fall we saw Congress extend the Bush tax cuts through 2012. This extension provides for the same Capital Gains tax rates and ordinary income tax rates that we have used for the last several years and extends or maintains popular deductions and credits such as the deduction for teacher’s supplies, some college tuition expenses, and child tax credits that were scheduled to expire last December. In addition, the Alternative Minimum Tax exemption for 2011 was set slightly above the 2010 amount so that we can comfortably predict who will be impacted by AMT in advance this year. That’s all...