PAUL’S TAX BLOG

This is the third installment in my blogs about charitable donation deductions. Previously, we discussed the new rules for Haitian Relief deductions (1/27/2010), and donations of autos & boats (12/7/2009). We are now seeing a steady inflow of individuals bringing in their 2009 data for tax return prep. One common question is: What can I deduct as charitable donations? Many people think that if you give money to a nonprofit you can always deduct it. But its not necessarily so. Let me give you a few examples. Money given to a charity or religious organization in exchange for a service...

California’s fiscal crisis does not show any signs of resolution. Despite assurances from the Governor and legislators that the state will remain able to pay its bills through June 30, John Chiang, State Controller, has released a warning that that may not be the case. According to Mr Chiang, California could very well run out of cash by March 30. Does this mean that we will be treated to IOU’s and delayed tax refunds? Right now it’s not looking very clear and if you take steps to prepare for it you can limit your exposure to making involuntary loans to...

As I‘ve previously shared with you, we frequently receive questions from clients asking what else they can deduct to lower taxable income. In the “bet you haven’t tried this one” category falls a recent tax court decision that allowed a taxpayer to deduct the costs of a sex change operation as a medical deduction.The taxpayer was born male, but was diagnosed with gender identity disorder. The treatments for the disorder included gender reassignment surgery and breast augmentation. IRS disallowed all of it, calling it cosmetic surgery and claiming that the disease had to arise from an organic pathology.Enter the tax…

Driving in to the office today I was able to see clouds dumping snow on the local mountains. It was a good reminder that nature sometimes has an effect on our lives, and I thought it would be appropriate to discuss the tax incentive signed into law this week to help the Haitian earthquake victims. Here’s the straight scoop: If you donate money after January 11, 2010 and before March 1, 2010 to a qualified US charity and it is earmarked to aid Haitian earthquake victims you have the choice to take the deduction on your 2009 or your 2010…

Albert Campbell was a whistlebower. He turned in his former employer, Lockheed Martin for defrauding the Federal government and ultimately received a reward of $8.75 Million under a law dating back to the civil war designed to catch contractors who were gouging Uncle Sam during the war effort. Good job, Albert!But in what can best be described as greed induced stupidity, Albert decided (on his own) that the reward he was paid was not taxable income to him. Dumb move, Albert.In the year he received his settlement of $8.75mil, Albert disclosed part of the settlement (net of a whopping 40%…

Cell phones used for business purposes currently are one of the “Listed” assets that IRS has special rules for. If you use a cell phone for business, there are draconian rules which you are supposed to be following that force you to document all of your calls and make a distinction between business and personal use. Personal use is deemed to be a taxable fringe benefit if the phone is provided by your employer or a nondeductible expense if you pay for the cell phone and try to deduct it yourself.As you can imagine, people rarely itemize out a cell…