Tuesday, September 30, 2008


Once again Kay Bell of DON’T MESS WITH TAXES has provided a post that falls under the category of “I couldn’t have said it better myself” with “KinderCongress Needs to Act, Not Act Up”.

Her topic is the nonsense of waiting to the last minute to deal with the issue of the “extenders”. What is said in this post needs to be repeated again and again.

Kay takes the words out of my mouth when she says -

I am tired of watching this bizarre legislative Kabuki year after year, where promises are made and political mud is slung and bills are introduced but nothing happens. All the while the lawmakers in both parties swear they support the measures.

If everyone's in agreement, then just approve them and do so early in the legislative session!

The tax provisions get pushed back and eventually resolved, but the consequences are that people can't make tax plans or moves when they need to, the filing season is disrupted and no one is happy

As I have said before the need to pass temporary extensions of tax law year after year is totally ridiculous. If Congress thinks that the tax break is a good and necessary one they should make it permanent from day one. If they change their mind at a later date they can always repeal an item.

This is much “more better” than having to go through the process of passing an annual one-year extension – which creates confusion for the taxpaying public, makes unnecessary additional work for the IRS, delays the processing of tax returns, and wastes government dollars.

As I said in a comment on another tax bloggers site – I recently saw a show in NYC called COLLEGE: THE MUSICAL which had a song titled ”College Kids Are Idiots”. If anyone wants to write CONGRESS: THE MUSICAL it should include a song with the very appropriate title “Congresspersons Are Idiots”!


I have just been informed that the “78th Carnival of Money Stories” is now appearing at FUNNY ABOUT MONEY (Simple Living = Frugality = Peace of Mind: Personal Finance and Stress Control).

As the host explains, “We have quite a passle of entertaining and interesting stories, which I hope everyone will enjoy”.

My post “Death of a Savings Bond Co-Owner” is included in the Carnival. As the entries are listed in the order in which they were submitted mine is 2nd from last.


I am not an economist. Nor have I had the time to properly review the “don’t call it a bail-out” legislation, which apparently is still up in the air. So I cannot intelligently discuss the issue. However . . .

My mentor Jim Gill, once a broker with Shearson Hayden Stone, used to always say, "Bulls make money, bears make money, but hogs get slaughtered."

It is obvious that the hogs caused the current financial “situation”. I truly hope that they get the slaughter that they so richly deserve, and are not saved by any kind of bailout. But knowing Congress I suspect that many of its members list hogs among their bigger contributors and supporters.

A 2007 post from the SURVIVING STOCK MARKET blog titled “
Bulls, Bears, Hogs and Sheeps” (from Malaysia of all places), which I found in a Google search of the quote, adds “sheep” to the list of investors. Unfortunately the sheep have also contributed to the severity of the situation.

According to the post (the highlight is mine) - “Sheeps are great followers... They don't have to make decisions... All they need to do is to follow the trend or tips.... But one thing is for sure, the stock market is a very highly competitive place... People don't give away tips.... For they need to stay in the front in order to get the profits.. Real tips are not revealed, and those revealed are lousy tips... So, sheeps who get tips, get slaughtered as well... Those that follow trends always happen to be the last and the most foolish of the block... They always enter the uptrend late and when smart people are making their exit.... So, they alone ride the slide downhill....

Do the sheep (or should we call them lemmings) deserve to be slaughtered as well for following the hogs? What do you think?

Investing, whether in the stock market or real estate, is not rocket science. All it takes is basic common sense, an asset apparently not held by many investors or even brokers.

Is it common sense to think you can buy and maintain a home with only 5% down? Is it common sense to think that housing prices will continue to rise ad infinitum and it is therefore ok to refinance annually and borrow 100%, 110% or more of the current value of a home – so that you can pay off your credit card balances and start to build them up again? Is it common sense to think that a 712 square foot condo (that is not located in Beverly Hills or Park Avenue) is worth $220,000 (though I am glad someone did when my parents were selling their unit, which cost them only $60,000+ five years earlier)?

The bottom line – obviously don’t be a hog. And also don’t be a sheep. Use the brain that God (or nature) gave you!

Before I go I should point out that the legislation does have one provision that applies to 1040 filers - the exclusion for forgiveness of home-mortgage debt, set to expire after 2009, is extended through 2012.

If I may quote from Joe Kristan’s post “
Tax Provisions in the Bailout” at the ROTH AND COMPANY TAX UPDATE BLOG – the forgiveness of home-mortgage debt is “a break to the most feckless home speculators, while those who do their gambling at casinos or in the stock market get no such break”.

Just one more thing, he said Columbo-like. Speaking of bank bail-outs, I was surprised when a client, with substantial business and personal deposits at Wachovia, mentioned this week-end that it looked like his bank (also my parents’) was also in trouble. But yesterday morning I heard on the news that Wachovia was being bought out by Citigroup. Years ago, when the trend of bank mergers first began, I predicted that one day there would be just one humongous bank left standing - the Bank of America (not necessarily Bank of America). My prediction may come true sooner than I thought!

I was reminded of my long-time advice regarding choosing a bank at a delightful dinner with friends/clients this past Saturday at The Grain House Restaurant of the Old Mill Inn in Bernardsville. I would advise clients to use the smallest bank in town – a one-brancher if you could find it (are there any left?). As a depositor at a large national bank like, for example, Wachovia you are one customer in billions - but at a small local bank you are one in hundreds, or at most a thousand or so, and would certainly receiver better, more personalized service and attention.


BTW – Speaking of Columbo – who was originally intended for the role?. Peter Falk was not the first choice.

Monday, September 29, 2008


So here is where we stand with regard to the “tax extenders” –

The Senate approved a dreaded Alternative Minimum Tax (AMT) relief and extenders bill (HR 6049) on September 23. This bill also included a package of clean energy tax incentives.

The House has taken the bill passed by the Senate and split it into separate parts, with some changes, all of which have passed –

· H.R. 7060, the Renewable Energy and Job Creation Tax Act of 2008
· H.R. 7005 – the Alternative Minimum Tax Relief Bill of 2008
· H.R. 7006, the Disaster Tax Relief Act of 2008

The most recent bill, H.R. 7060, includes extensions of various expiring tax credits and deductions, including the R&D tax credit and incentives for renewable energy, along with a provision equalizing the penalty standards for tax preparers and taxpayers.

Now CCH reports in its daily Tax Headlines newsletter item
House Attempts to Woo Senate with Separate Tax Extenders, Energy Legislation” that “Frustration at the lack of Senate movement on the House-passed tax extenders and energy bill (HR 7060) prompted House Ways and Means Chairman Charles B. Rangel, D-N.Y., on September 28 to separate the measure into two tax bills.” The items states that “Rangel introduced the Energy Improvement and Extension Act of 2008 (HR 7201) and the Temporary Tax Relief Act of 2008 (HR 7202)”.

Once again the House and Senate are at odds regarding the issue of “offsets”.

The clock is ticking!


Today (Monday) you can find my 2 cents worth on the topic MISTAKES IN CHOOSING A PAID TAX PREPARER over at Bruce McFarland’s TAXGUY blog.

I realize that my guest post may be controversial – and I look forward to your comments.

I am the second entry in an ongoing series of guest posts on the topic by tax and personal finance bloggers that is hosted by Bruce. The first guest post was last Friday, penned by Gina L Gwozdz of the TAX TIPS BLOG.

Peter Pappas of THE TAX LAWYER’S BLOG continues on Wednesday and LIVING ALMOST LARGE ends the week on Friday.

COMING NEXT WEEK – I will be locking myself behind closed doors and opening up the pages of THE WANDERING TAX PRO for a week-long series of guest posts by the best of the internet’s tax bloggers on the topic MY BEST TAX ADVICE. More information to come later in the week.


Recently a childhood friend, and long-time client, asked me about the tax treatment of savings bond interest on bonds that were owned by his recently deceased mother. His name was also on the bonds. He had not cashed the bonds yet, and wanted to know if he had to or if he could continue to hold on to the bonds.

FYI my friend provided more than half of his mother’s support and had been claiming her as a dependent on his 1040s. As his mother lived with him in his condo he filed as Head of Household. She filed a tax return each year to report a small pension and some minor interest on bank accounts, totaling slightly more than the standard deduction amount for a dependent, and used medical expenses to bring her net taxable income to “0”.

As a preface, I expect we all know that the annual interest earned on US Series E or I Savings Bonds is not currently taxed, but “accrue” and are taxed in full when you cash in the bond – unless you elect to report the accrued interest each year.

The optional method is often recommended for young children with no taxable income – to reduce the overall tax liability on the accrued bond interest. In the year or birth many children are often given savings bonds by relatives and family friends. If the parents file a tax return (with “0” tax liability) for the child’s first year reporting that year’s bond interest, and indicating on Schedule B that they are reporting the accrued interest on US Savings Bonds on an annual basis, then another tax return does not have to be filed until such time as the child has taxable income. In the early years when the child has no tax liability federal income tax is avoided altogether on the interest earnings.

The only possible downside to using the optional method for children is that it requires the parents to keep a good ongoing record of the accrued interest for each year on each bond. This becomes more involved if the child receives additional bonds each year as birthday or Christmas gifts. The amount of annual interest accrued on a bond can be determined on the Savings Bonds website.

We all also should know that US Savings Bond interest is exempt from state income taxes.

In the case of my friend, his mother had not been reporting bond interest annually – and the accrued interest added up to a very substantial amount.

To be honest the only thing I was sure about concerning interest on bonds of a deceased taxpayer was that the surviving spouse or executor can elect to include all of the interest earned on the bonds before the date of death on the deceased’s final 1040, even if the bonds were not cashed in. In this case the person who acquires the bonds after death only has to report interest earned after the date of death.

Other than that I was a bit unsure, so I did some research and found the following -

If one of two people named on a bond is deceased, the surviving person is automatically the owner as if that survivor had been the sole owner from the time the bond was issued.

If you are named in a bond's registration with someone else who is now deceased, you can:

* Do nothing with the bond
{no tax consequence, unless you report the accrued interest up to date of death on the deceased’s final 1040 – rdf};

* Redeem the bond by presenting it with adequate identification at a financial institution that pays savings bonds
{and pay the tax – rdf}; or,

* Get the bond reissued (re-registered) in your name alone or with some other living person as long as the bond is still earning interest and is not approaching final maturity
{again no tax consequence unless interest reported on deceased’s 1040 - rdf}.

To have a savings bond reissued in this situation, you'll need to send a certified copy of the deceased person's death certificate with the bonds and a reissue request
PD F 4000 to a Treasury Retail Securities Site.

If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways.

(1) The surviving spouse or personal representative (executor, administrator, etc.) who files the final income tax return of the decedent can choose to include on that return all of the interest earned on the bonds before the decedent's death. The person who acquires the bonds then includes in income only interest earned after the date of death.

(2) If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent. It should not be included in the decedent's final return. All of the interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds. If that person uses the cash method and does not choose to report the interest each year, he or she can postpone reporting it until the year the bonds are cashed or disposed of or the year they mature, whichever is earlier. In the year that person reports the interest, he or she can claim a deduction for any federal estate tax that was paid on the part of the interest included in the decedent's estate.

Example 1:

Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. He had bought the bond for $500 and had not chosen to report the interest each year. At the date of death, interest of $200 had accrued on the bond and its value of $700 was included in your uncle's estate. Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. The $200 is income in respect of the decedent.

You are a cash method taxpayer and do not choose to report the interest each year as it is earned. If you cash the bond when it reaches maturity value of $1,000, you report $500 interest income—the difference between maturity value of $1,000 and the original cost of $500. For that year, you can deduct (as a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit) any federal estate tax paid because the $200 interest was included in your uncle's estate

All of the above information is taken from here and here.

An article in THE CPA JOURNAL of the NY State Society of CPAs provides the following example-
An individual buys an EE bond, listing a nephew as co-owner (or beneficiary). The purchaser dies after several years; the nephew becomes sole and absolute owner of the bond.

The death of the original owner does not result in a taxable event for federal income tax purposes. The income tax liability on the accumulated interest would pass, along with the bond, to the nephew, and would remain his along with liability on additional accruals. (Rev. Rul. 64-104, 1964-1 C.B. 223.) However, if the person filing the final income tax return of the decedent elects to include all interest earned on all bonds owned by the decedent to the date of the decedent's death, the nephew's tax liability would extend only to the interest accruing from that date. (Rev. Rul. 68-145, 1968-1 C.B. 203.)

So what about my friend? He has decided that we will not report the accrued interest up till the date of death on his mother’s final tax return, as this would generate a substantial current tax liability and make him unable to claim her as a dependent or file as Head of Household for 2008. As the bonds have a while to go before they mature, my friend will hold on to them for now and cash them in a few each year beginning some time after he has retired, thus spreading out the tax liability.

Any questions?


Sunday, September 28, 2008


For years I have found myself faced with many questions – longing for answers.

Some answers are self-evident. Why do fools fall in love? Well, after all, they are fools aren’t they?

I have determined the answer to some questions based on history and experience. When will they ever learn? Probably never.

Some questions will probably never be answered. What’s it all about, Alfie? A totally unnecessary remake could shed no new light on the question.

With some questions only time will tell. Will you still need me, will you still feed me when I'm sixty-four? I’ll find out in 9 years and 2 months. This question is for the very few remaining long-time clients for whom I still make a house call in exchange for a home-cooked meal.

Some are no longer relevant. Where have you gone, Joe DiMaggio? Joe went to his “final audit” in 1999.
And I have given up on others. Does your chewing gum lose it's flavor on the bedpost over night? Easy enough to find out – but who cares? Actually I don’t have a “headboard” as I sleep on a futon.
There are still questions that haunt me.

I would really like to know what the mama saw. All I know is that what the mama saw it was against the law.

I also want to know what Billy Joe MacAllister and his friend were throwing off the Tallahatchie Bridge when they were sighted by Brother Taylor.

And while we are at it – I always did wonder why Mr. Baker’s secretary had to leave Harper Valley.

Can anyone provide me with answers?


Saturday, September 27, 2008


In case you were interested I just returned from my local branch of Washington Mutual.

There were no signs, notices or indications that anything was wrong or that anything had changed.

I had no problem using my debit card to enter the lobby or to withdraw cash from the ATM.

So far – so good.

My only concern is that while WaMu business checking was free Chase might have minimum balance requirements and other hidden fees.


* In light of the recent Wall Street mess TAX GIRL Kelly provides an excellent “primer” on capital gains and losses in her post “Some Straight Talk On Capital Losses”. Perhaps the best post I have read on the topic.
I remember during the early 2000s clients crying about how much they had lost on their 401(k) plans. “It was worth $900,000, but now it is down to $500,000!”. My question was always, “How much did you contribute to the plan?” If they had put in $360,000 over the years and the company had matched 10% they were ahead $104,000! The $900,000 high was a result of the artificial over-inflation of the market during the dot-com boom.
These clients also wanted to know if they could deduct their loss. First – what loss? Second – as Kelly points out it was a “paper loss” and not a “realized loss”. And third - it happened within a pension plan so it is not reportable on the 1040.
Kelly ends the post with the absolute best of advice. When it comes to capital gains and losses if you have a tax question, “ask your tax professional - not your broker, not your banker, not your financial advisor (trust me on this).” Do trust her!
* While we are on the subject of the financial FU - Kristine McKinley of THE TAX WISE MONEY COACH discusses the topic of “Keeping Your Money Safe”.
* CCH has published a Special Tax Briefing on “Tax Policies of the Presidential Candidates”.
* Trish McIntire of OUR TAXING TIMES has discovered two “New Websites” of interest.
* Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG led me to an item by someone who agrees with me about a true “minimum tax” in his post “51% Spend the Money of 49%”. According to Glenn Reynolds at INSTIPUNDANT.COM (highlight is mine) -
Personally, I'd like to see everyone pay at least some income tax, and I'd like to see the amount of tax paid, by everyone, go up or down every year in tandem with federal spending. That would encourage fiscal discipline directly. It would also make it harder for politicians to promise everybody a free lunch, but hey -- why shouldn't they sacrifice something, too?”
* Joe also provides a lesson for all those who use their car for business – don’t leave your business receipts in your car overnight (or at least don't use that as an excuse to the IRS for having no records) – in his post “Salesperson in Training Learns About Deducting Travel Expenses”.

* Drug addict Rush Limbaugh is perhaps one of the last people I would quote on anything – but I must admit that his show did provide a humorous (and probably not far from the truth) parody on Chuck Rangel’s tax problems, as identified by TAX GURU Kerry Kerstetter in his post “Rangel Audio Parody”.

* Speaking of Chuck – the Tax Foundation’s TAX POLICY BLOG provides a good summary of “Congressman Rangel's Tax Woes”. Remember, this is the guy who heads the House committee that writes tax law!

This item was new to me – “Rangel, through his lawyer, requested permission from the Federal Election Commission to transfer $64,500 from his campaign funds
to commission a painting of himself to be hung in the Ways & Means Committee room, which he would donate to the House of Representatives.”

* Michael Rozbruch of the TAX RESOLUTION UNIVERSITY blog takes us back to basics with “
5 Simple Tax Tips for Individuals and Small Businesses”.

* Peter Pappas of THE TAX LAWYER’S BLOG uses an urban tax myth to tell us one of the reasons why Americans complain about high income taxes in “
Taxpayer Pays IRS Bill With Toilet Seats”. His last paragraph is an excellent analogy.
* Bruce presents the first in his series of guest posts by fellow tax bloggers on the topic of Mistakes Made When Choosing a Tax Preparer over at TAX GUY with an entry by Gina L. Gwozdz of TAX TIPS BLOG. My 2 cents worth on the issue will appear on Monday.
* This entry appeared some time ago – I was saving it to use in a WHAT’S THE BUZZ-type posting to the no longer “in print” THE FLACH REPORT
How to Turn a Photography Hobby into a Business”, a guest post at FREE MONEY FINANCE by Stephanie Simpson, provides some good advice and information. In the introduction the blog’s host/author states “I've suggested several times that one way to earn extra money is to turn your hobby into an extra income” I have been saying this for years – and have added that if you do it right you can deduct most, if not all, of your hobby’s expenses.

* In addition to my weekly WHAT’S THE BUZZ two other tax bloggers provide a weekly overview of good stuff related to taxes and personal finance that they have found on the internet. These guys often find some real gems that I have missed. TAX GUY Bruce McFarland posts “Passing the Week . . . .” on Sundays and Peter Pappas of THE TAX LAWYER’S BLOG does a weekly “Dr. Tax-O-Sphere, Or How I Learned to Stop Worrying and Love the Tax Code” on Mondays. At times we must look like a mutual admiration society, as we all include each other in our weekly reviews.


Friday, September 26, 2008


When I reorganized my tax preparation business as Taxpro Services Corporation I opened my corporate checking account at Washington Mutual, as a new branch had just opened down the block from my apartment.
This morning I noticed the following headline on my Comcast.net homepage - “WaMu Becomes Biggest Bank to Fail in US History”.
According to the article - “The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion.”
For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," states FDIC Chairman Sheila Bair. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning."
Chase has compiled a FAQ that all those who bank with Washington Mutual should read.
I will be going to the WaMu branch either later today or tomorrow morning to use the ATM.
Cross your fingers!


As most of my regular visitors know I still prepare tax returns “the old fashioned way” – by hand. And I am very proud to say so.

Each tax season I prepare about 400 sets of returns manually. In my 36 years as a paid tax preparer (I prepared my first 1040 in February of 1972) I have never used tax software to generate a 1040, 1040A, or, for that matter, a 990, 1065 or 1120.

Whenever I attend a tax seminar and the instructor asks who still prepares returns manually my hand is among the two or three that go up (on occasion it is the only hand). This is usually followed by a statement by the instructor to the effect – “Well you are the only people here who really know tax law”, or “who really know how to prepare tax returns.” At an NSTP seminar instructor Beanna Whitlock, the association’s Executive Director, wanted to shake my hand.

At a recent IRS Tax Forum in the session on common mistakes made by preparers the instructor went so far as to say that those who use tax software to generate 1040s have basically become nothing more than glorified data entry clerks.

Whenever someone asks me what tax software I use I simply point to my head – indicating my brain.

It is not that I am a “technophobe”. I have embraced the computer and use it constantly to email, blog, keep up-to-date on tax law changes, and research tax issues for client returns, and for word processing. I have been using general ledger and payroll software since the mid 1980s.

There are several reasons why I will never use tax software to prepare tax returns.

The biggest reason is the cost. I have no intention of spending thousands of dollars upfront, and again each and every year thereafter for “updates” and “technical support”, and as a result have to substantially increase my fees without putting any additional money in my pocket or, in my opinion, without providing the client with any additional value.

I honestly do not see any benefit to me as a preparer in using tax software. It would not save me any time. I have done so many returns over the years that I have developed a good “rhythm” and can prepare accurate returns quickly.

The closest I ever came to using tax software is 25+ years ago when I worked as a “para-professional” for one of the then “big eight” accounting firms. The firm used “Computax” for some of its income tax returns. I would manually prepare an “input form” which was given to a data entry clerk for processing. It was my opinion back then that by the time I had filled out the input form I could have prepared the actual tax return!

I must admit that back then, when there was a regular tax, minimum tax, maximum tax, Ten Year Averaging and Income Averaging, I did use a computer application at the firm to verify the tax liability calculation, and the choice of calculation method, on a completed manual return, again via input form. I also admit to working with a programmer client to develop a “Tax Calculation Verification System” software program (which was never completed) to do the same thing some 20+ years ago.

The State of New Jersey requires that I, as a professional tax preparer, file all my full-year resident state income tax returns “electronically”, unless the client specifically requests that I do a manual return by filling out an “opt out” form. The only option available to me is NJWebFile, which is available to all taxpayers for free online at the NJ Division of Taxation website. I use this system whenever possible (there are certain returns that cannot be filed via NJWebFile because of the nature or volume of information reported on the return). In comparison, except for the simpler returns, entering the data for online filing usually takes longer than doing the NJ-1040 by hand.

Using tax software does not relieve one of the need to check the return for accuracy, something that many tax preparers fail to remember. I have often come across prior year returns from new clients prepared via software that contain glaring errors that would have been easily discovered with even the simplest of checking. One still has to carefully check the return for data or math errors as carefully and in the same way one has to check a manual return.

I find that tax software wastes tons of paper printing needless subsidiary statements and reports, adding to their overall cost.

At just about every tax seminar either the instructor or a participant will discuss how his/her software will not always properly handle or calculate a specific issue so that one has to “force” the correct number.

The only advantage to using tax software was pointed out to me by a colleague at a recent tax seminar. On occasion in the process of checking a return I find an error or omission that requires me to pretty much rewrite the entire return. With software all I would have to do is enter the correction(s) and the return would be automatically recalculated and revised. I would still, of course, have to check it to make sure the revisions were properly done.

Because I do not use tax software to prepare returns I also do not file federal income tax returns electronically. I am not against electronic filing – as mentioned above I file NJ state income tax returns online whenever possible, and also file just about all state payroll and sales tax returns online.

I would gladly file federal returns electronically if the IRS provided a method for online filing of 1040s and 1040As totally free of charge, and without the need for outside software or the use of a third party, on its website – similar to the way New Jersey does with NJWebFile.

Another reason why I do not file federal returns electronically is because I have no intention of giving the government my fingerprints, apparently still a requirement for becoming an ERO (electronic return originator).

I challenge my fellow tax preparers out there to give me a good reason, other than the one mentioned above, why I should use tax software to prepare a 1040.


Thursday, September 25, 2008


The House has passed the Alternative Minimum Tax Relief Bill of 2008 (HR 7005) by a vote of 393 to 30. The bill does not provide for any “offsets” to “pay for” the patch.


The Senate overwhelmingly voted to approve an alternative minimum tax (AMT) relief and extenders bill (
HR 6049) on September 23…..The Senate bill, which also includes a package of clean energy tax incentives, passed by a vote of 93-to-2.”
The item also reports that “The House has scheduled a vote on extenders tax legislation on September 24, but Democratic leaders and members of the House Ways and Means Committee said the Senate's partially paid-for package is unacceptable. Instead, Rep. Earl Pomeroy, D-N.D., said that the House might simply pass a smaller tax bill that only includes the provisions that can be paid for by the Senate-approved offsets.”

The White House has said it supports passage of the Senate bill, “despite the inclusion of several provisions that the administration opposes."

The bill contains a two (2) year extension of the expiring tax breaks.

What is it with this need for annual extension of tax breaks – it is nonsense. Either the deduction or credit is a good idea and should be in the Tax Code or it isn’t. While I do believe we have had some temporary tax breaks in the past – this new concept of having to vote to extend tax breaks every or every-other year is unique to Dubya’s term in office.

Let’s hope the cafones in Congress pass an extender bill, with the AMT patch, before the end of the week!

I will keep you informed on developments.


Wednesday, September 24, 2008


{Surprise! Surprise! Surprise! Bruce, THE TAX GUY, and I have decided to exchange our compatible/complimentary posts. So Bruce’s discussion of the Credit for Qualified Retirement Savings Contribution appears here at TWTP and my take on the topic appears at THE TAX GUY. rdf}

Here is the second post of a continuous feature of well-matched/like-minded post with Robert D. Flach, aka THE WONDERING TAX PRO. Be sure to go see his post today titled “Let Uncle Sam Subsidize Your Retirement Savings” which appears over at THE TAX GUY.
As tax time starts its approach various articles on the web and in print publications detail tips on how to save on taxes. I believe that no taxpayer should have to pay a penny more in tax than they actually owe.
One of the best parts about being a preparer is showing taxpayers new to them credits and deductions. Everyone’s face lights up when you show them something new and it makes them money (or they owe less in tax on their income – however you wanna look at it).
A good example is
Form 8880 Credit for Qualified Retirement Savings Contributions. Here an individual or couple is saving for retirement through a qualified plan and get a credit for it.
(Note: Credits reduce your tax liability dollar for dollar.)
Qualified lower and middle income taxpayers can benefit from this form. This nonrefundable credit applies to taxpayers who make retirement plan contributions.
Meaning, if you make a contribution to a traditional IRA, or a Roth IRA, certain salary reduction contributions, or contributions to a plan, you may be able to claim a credit for a contribution. That is if your adjusted gross income is low enough.
Okay some quick stats from the IRS:
You may be able to take this credit if you, or your spouse if filing jointly, made -

· contributions (other than roll-over contributions) to a traditional or Roth IRA,
· elective deferrals to a 401(k), 403(b), governmental 457, SEP, or SIMPLE plan,
· voluntary employee contributions to a qualified retirement plan as defined in section 4974(c) (including the federal Thrift Savings Plan), or
· contributions to a 501(c)(18)(D) plan.

However, you cannot take the credit if either of the following –

· The amount on Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 36, is more than $26,000 ($39,000 if head of household; $52,000 if married filing jointly).
· The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1990, (b) is claimed as a dependent on someone else’s 2007 tax return, or (c) was a student.

Types of plans allowed -

· Traditional or Roth IRAs.
· 401(k), 403(b), governmental 457, 501(c)(18)(D), SEP, or SIMPLE plans.
· Distributions from your IRA (other than a Roth IRA) rolled over to your Roth IRA.
· Loans from a qualified employer plan treated as a distribution.
· Distributions of excess contributions or deferrals (and income allocable to such contributions or deferrals).
· Distributions of contributions made during a tax year and returned (with any income allocable to such contributions) on or before the due date (including extensions) for that tax year.
· Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k).
· Distributions from a military retirement plan.

If you qualify for this credit it is great, not to mention a great surprise if you didn’t know about it. If you read this and see you could have claimed in in 2007, 2006 and/or 2005 please see your tax professional and inquire about filing an amended return. But do the math - if the refund claimed on the 1040X is less than what your preparer is going to charge for the amended return it is not worth it. Also use this next year for your 2008 filing if you can.

Tuesday, September 23, 2008


As a Silver Member of the New York Musical Theatre Festival I receive a ticket to four of the festival entries. This past week I saw three of my four selections.
First up was BEDBUGS – “a Sci-Fi Thriller Comedy Rock Musical” with book and lyrics by Fred Sauter and Music by Paul Leschen – last Tuesday evening at the TBG Theatre on 36th Street. I had been at this theatre last year for one of the NYMF offerings. It is a very small venue – perhaps the smallest stage of all the NYMF venues I have been to.
On that night, the show’s opening night, the audience was held in the equally small lobby – packed in like sardines – as a technical problem with a lighting cable delayed the opening of the theatre’s doors for seating. While waiting in the lobby I was reminded of a comment made by a friend, client, and volunteer at the Paper Mill Playhouse in Millburn many, many years ago about the cast party for the theatre’s production of GUYS AND DOLLS – “I haven’t seen so much kissing and arse-grabbing in my life – and that was just among the men!
As described on the show’s website,
BEDBUGS is “’80s rock excess meets the Creature Feature. It’s 2012 {apparently according to ancient prophesies 2012 is the year the world will end – rdf} and Carly, an exterminator hell-bent on avenging her mother’s freak death {caused by Yugoslavian bedbugs - rdf}, has accidentally mutated NYC bedbugs into bloodthirsty killer Hair Metal Rock Gods. Sweet {read ‘gay’ - rdf} sidekick Burt has a plan, and troubled Canadian chanteuse Dionne Salon has stumbled onto the scene. But will Carly listen to them and save NYC—or be seduced by her own creation?
The show was a silly mix of comedy, sci-fi, heavy metal and celebrity parody. I especially enjoyed the celebrity parody portion – a side-plot dealt with the Canadian singer and her bald manager-husband with an interest in much younger singers. The singer was performed in drag
Actor Chris Hall looked menacing as head mutant bug Cimex – somewhat like Dr Frank “N” Furter in green make-up and antennae.

This past week-end I booked 1:00 PM matinee performances for both Saturday and Sunday.
Saturday was
COLLEGE: THE MUSICAL, book and lyrics by Drew Fornarola and Scott Elmegreen, at the Chermuchin Theatre on 54th Street. A new to me venue, bigger theatre than the one at 36th Street, but frankly almost too far of a schlep. It was next to the 18th Precinct and upstairs from a Courthouse. The entrance was difficult to find.
The show was written while the authors were students at Princeton, apparently about their own experiences in a college dorm. The show does not identify the college – only that the dorm is in Gauss Hall (I do not know if that name has any significance).

The “playbill” was bigger than the usual 4 or 8 pages. This was because the “Who’s Who” had a page for each member of the cast in the format of what I expect is a Face Book webpage (I have no experience with, or interest in, such “social networking” sites). One learned not only their professional resume but also their personal likes preferences, favorite movies, tv shows, books and quotes, etc.
The story involves a new “Dweeb” freshman who attends his first dorm keg party and becomes involved with the roommates of Dormitory 211 and their friends. It seems that only one of the group actually studies and goes to class – the others spend their time playing violent video games, watching sports, going to the gym, partying, and throwing up in their room. In general, as female campus security guard Officer Alice, who lusts for the groups’ burnt-out upper-classman social leader, “College Kids are Idiots”.

The basic apathy of the students (the extra-curricular organizations referred to include a Face-to-Face Facebook Club and the Redhead Club – no political or social activism) is apparently common of “Generation Meh”. The kids sing, “Democrats are stupid and Republicans are evil!”, so why should they get involved (hey, there is a glimmer of truth in the lyric).
As I went to a local college, living at home for the four years, I could not personally relate to the dorm antics. However, it was entertaining with good group and individual musical numbers and a talented cast.
The show was 1½ hour without an intermission. To break up the schlep back to 41st Street I stopped for a late lunch of my usual Caesar Salad, Meat Loaf, and Banana Cream Pie at an empty Joe Allen’s (there were only two tables occupied) on Restaurant Row, counting the number of flops on the “Wall of Musical Failures” I had seen over the years.

Sunday was
HEAVEN IN YOUR POCKET, music and lyrics by Mark Houston and book by Houston, Francis Cullinan and Dianne Sposito, at the kind of run-down 45th Street Theatre. Another small theatre, although with a slightly bigger stage than 36th Street, at which I had seen a prior year’s festival production.
This schlep was “more better”. Eighth Avenue from 42nd Street up was closed off to traffic as there was a street fair in progress. No wonder I noticed signs all up Eight Avenue stating “No Parking on Sunday” during my Saturday schlep.
The show’s promotional blurb explains, “En route to musical stardom in Nashville, The Heavenly Belles – a female family singing trio {mother, daughter and mother’s best friend – rdf} from Heaven, Oklahoma – take an unexpected detour to Kansas City where an unusual inheritance wreaks havoc with their plans. A handsome cowboy, a kindly Miss-Fixit and a "can-do" decorator {the show’s apparently obligatory gay character – rdf} all chime in with the Belles as they face the music (and each other) in this lighthearted, tuneful romp!
The “unusual inheritance” is the “Starlight Lounge”, a broken down honky-tonk on the shores of Lake Wannalotta on the outskirts of Kansas City, which was left to the daughter by her father, who had abandoned the family years before. The trio fixes up the theatre, supposedly so it can be sold, and uses it to showcase their act. The plot concerns the daughter’s desire to break out on her own as a solo country music singer-songwriter in Nashville.
Excellent performances, both in the acting and singing categories, by the cast. Of the three shows I feel this has the best promise for a life after the festival.
A humorous exchange in the 2nd Act – it appears that the daughter and the gay decorator were childhood friends who went beyond friendship during their teens. “You were my first,” the daughter reminisces. “You were my last,” replies the decorator.
Three entertaining musicals at three small and intimate theatres. And one can’t go wrong with a ticket price of $20.00!
Next up, in early October, is I COME FOR LOVE, another 1950’s sci-fi spoof. It seems that there is at least one each year. The only problem is that it is also at the 54th Street Theatre. Maybe I will break down and take a taxi.


Monday, September 22, 2008


The office of the Treasury Inspector General for Tax Administration has prepared a report titled “Most Tax Returns Prepared by a Limited Sample of Unenrolled Preparers Contained Significant Errors” based on an “undercover” operation conducted during the recent tax filing season.
The following is from the memo to the Commissioner of the IRS Small Business/Self-Employed Division which appears at the beginning of the report.
In February and March 2008, TIGTA (Treasury Inspector General for Tax Administration) auditors posed as taxpayers in a large metropolitan area and paid to have 28 tax returns prepared at 12 commercial chains and 16 small, independently owned tax return preparation offices. Auditors paid commercial chains approximately $2,800, averaging $234 per return, and independently owned offices approximately $2,100, averaging $132 per return.
The preparers were unlicensed and unenrolled. That is, they were not practitioners (attorneys, certified public accountants, enrolled agents, or enrolled actuaries). Preparers made substantial errors when completing tax returns and correctly prepared only 11 (39 percent) of the 28 tax returns (i.e., the tax returns showed the correct amount of taxes owed or refunds due). Of the remaining 17 tax returns that were prepared incorrectly:
· 11 (65 percent) contained mistakes and omissions that auditors considered to have been caused by human error and/or misinterpretation of the tax laws.
· 6 (35 percent) contained misstatements and omissions that auditors considered to have been willful or reckless.
If these incorrect returns had been filed, the net effect to the Federal Government would have been $12,828 in understated taxes (the amount is the net effect because there were instances in which tax liabilities and tax refunds were both overstated and understated).
We recommended that the Commissioner, Small Business/Self-Employed Division, develop and require a single identification number to control and monitor all paid preparers
The study used 5 scenarios with income ranging from $16,000 to $85,000 using filing statuses of Single, Married Filing Joint and Head of Household. These scenarios included a wide variety of tax law topics related to income, deductions and credits. Detailed information on the scenarios is included in the report.
Six (6) of the returns that were prepared in the study included business expenses. According to the report none of these 6 returns were prepared correctly.
The report also states that six (6) preparers acted “willfully or recklessly during the preparation of the five scenarios. These preparers added or increased deductions without the auditors’ permission and in some situations after the auditors had questioned whether they were entitled to receive the deductions.”
The TIGTA operation is very similar to one conducted by the Government Accountability Office (GAO) a few years ago which resulted in a report to Congress titled “Paid Return Preparers: In a Limited Study, Chain Preparers Made Serious Errors”. The GAO sent undercover agents with two different tax scenarios to a total of 19 offices of 5 “fast-food” commercial tax chains, including H+R Block, in a metropolitan area. In only 2 instances was the correct refund calculated, but all 19 returns contained errors.
The first thing that I noticed is that the TIGTA undercover “auditors” paid on average $100.00+ more per return to the commercial chains than they did to the independent tax preparers ($234 vs $132)! Of course this did not surprise me – it is a known fact that Henry and Richard and their ilk overcharge.
Unfortunately I could not find anywhere in the report a breakdown of how the errors made applied to commercial preparation chains vs independent preparers or how the 6 “willful and reckless” preparers fell into these two categories.
Click here to download the complete report.
This report echoes the concerns of Congress, fueled by the earlier GAO study, that all paid tax preparers be registered or licensed. Bills have been introduced in both houses to regulate paid tax preparers.
I, too, am in favor of having the IRS register “unenrolled” tax preparers. I would also welcome the creation of a “Licensed Tax Preparer” (LTP) status. There is already in place the beginnings of a registration process – the IRS currently issues to preparers a special “Preparer Taxpayer Identification Number” so we will not have to reveal our individual Social Security Numbers when we sign tax returns we have prepared for compensation.
My only concern is that all of the legislation so far has required that registrants pass a test, similar I would expect to the EA exam in order to be allowed to practice.
For one thing, it would be very literally impossible for the IRS to properly test the probably more than a million current “unenrolled” preparers. They had enough problems administering the EA enrollment exam, with only a few thousand participants each year, and have “outsourced” the EA exam to a private company.
More important – I have been preparing 1040s for over 35 years without any problems with the IRS. At this point in my career I have absolutely no intention of taking a test to prove that I know what I am doing. While I am not against some kind of competency exam for new preparers, any legislation requiring the registration of tax preparers must include a “grandfather” clause.
I would suggest that all current tax preparers – for example who have prepared at least fifty (50) 2007 federal individual income tax returns – who have been preparing tax returns consistently for at least five (5) years, and who have earned a minimum average of 20, or even 40, hours of continuing education credits per year for the past five years, be exempt from any kind of test and “grandfathered” in.
In closing I should point out that I do agree that incompetent and unethical tax preparers are not limited to employees of Henry and Richard and their kind – there are indeed these type of preparers among the unenrolled “independents”, as well as the “enrolled” preparer community (remember all the accounting “ethical improprieties” involved with Enron and other such companies were made by CPAs). I have discussed the issue in my post “Let the Client Beware”.
So what do you think?

Sunday, September 21, 2008


I have decided to “lay to rest” THE FLACH REPORT, my blog of tax planning and preparation advice and information for Schedule C filers. I do not have the time to devote to properly maintaining this blog in addition to TWTP and the NJ TAX PRACTICE BLOG.

In the future I will include posts on Schedule C issues here at TWTP.

I will keep the “archives” of THE FLACH REPORT available. Sole proprietors and one-person LLCs who file a Schedule C can find valuable information in the archives.

Thanks to the regular visitors to THE FLACH REPORT. I hope you have found the information I have provided helpful.

Saturday, September 20, 2008


Yesterday’s post from Kay Bell at DON’T MESS WITH TAXES came to my attention after I had published WHAT’S THE BUZZ. It is a post that deserves serious attention.
The post reports “44% of U.S. Taxpayers Could Owe $0” and discusses a recent Fiscal Fact from the Tax Foundation titled “Both Candidates' Tax Plans Will Reduce Millions of Taxpayers' Liability to Zero (or Less)”.
Kay quotes the TF FF as calculating -
If all of the Obama tax provisions were enacted in 2009, the number of nonpayers would rise by about 16 million, to 63 million overall, or 44 percent of all tax returns.
If all of the McCain tax proposals were enacted in 2009, the number of nonpayers would rise by about 15 million, to a total of 62 million overall, or roughly 43 percent of all tax filers
The growing number of “tax non-payers” is a topic that has concerned the Tax Foundation, and myself as well, for some time now. The Foundation points out that based on IRS statistics for 2006 45.6 million tax filers, which is about one-third of all filers, had no tax liability after claiming all their allowable credits and deductions. "For good or ill this is a dramatic 57 percent increase since 2000 in the number of Americans who pay no personal income taxes." Who says that Dubya's tax breaks were only for the rich?
Kay speaks for me as well when she comments on the current state of the federal Tax Code -
Right now, it's a big political goody bag instead of a sensible method to fund a country's operations.
Dubya deserves credit for appointing the
President's Advisory Panel on Federal Tax Reform
{about the only thing he did right in his 8 years- rdf} that came back with some interesting ideas about how to truly reform our tax system. Too bad no one had the political stomach to even give the Panel's suggestions a second look.”
I agree with the Tax Foundation when it says, "It is time for a serious public discussion of whether it is desirable to have so many Americans disconnected from the cost of government and what the consequences are of using the tax system as a vehicle for social policy."
A while back I had proposed a different kind of “minimum tax”. I suggested that every American over the age of 18 who is not claimed as a dependent on another return should pay a minimum tax of $100.00. What do you think?


* “5 More Reasons Why To Track Expenses” by Kacper Wrzesniewski at kacperwrzesniewski.com continues where the earlier post “Track Your Expenses” ended. Kacper reports, “At the beginning of September I decided to run a 30-days trial and track my expenses. Currently, after nine days, I pretty much enjoy this new habit. I see some benefits and I know I’m learning something new about money.”

As a somewhat obsessive-compulsive (or is that anal-retentive) accountant (I confess that I at times combine the qualities of both Felix and Oscar) I have been tracking my daily expenses for quite a while now. I know exactly to the penny what I spend on what each year.

* Bruce the TAX GUY started the week off with a listing of “
Items to Bring to Your Individual Tax Preparation Appointment”.

While it is still a long way off to tax time - unless you waited to literally the last minute and need to get to your tax preparer ASAP so you can file by the October 15th extended deadline (if so – shame on you) – this post provides a good idea of what information you should be saving.

* Bruce ended the week by introducing an ambitious series of guest posts on the topic “Mistakes Made When Choosing A Paid Tax Preparer”. As Bruce rightfully puts it, “CHOOSING THE RIGHT TAX PROFESSIONAL IS A VERY IMPORTANT DECISION!"
Among the guest posters will be fellow tax-bloggers, myself included. Bruce begins with an introduction and a reference to his post on “Choosing a Tax Preparer” – and the series begins on Monday.
Bruce invites his readers to submit guest posts on this subject.

* Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG also writes regularly for the IOWA BIZ blog. His post there “Home is Where the Job Is” gives an interesting point of view on Sarah Palin’s recently uncovered “alleged” tax FU.
* And at the ROTH ETC blog Joe reports on an interesting, albeit illegal, scheme used by a California CPA to have his clients, and himself, avoid self-employment tax in “Tax Man, Heal Thyself”.
* Thanks to Russ Fox of TAXABLE TALK for the kind words in “Another Tax Blog”, and for including me in his “blogroll”. Check out Russ’s blog when you get a chance.
* Kay Bell of DON’T MESS WITH TAXES keeps us up-to-date on the energy tax bills, which include an extension of the 1040 energy tax credits, here and here. Now if only Congress would extend the AMT patch.
* The NATP weekly email newsletter reports “The Treasury Department and Small Business Administration (SBA) announced the launch of a new website to help small business employers determine whether to offer health savings accounts (HSAs) to their workers. The new
website compares HSAs to other health care coverage options and provides general information to help employers and individuals determine whether to enroll in HSA-eligible coverage.”
* Pete Pappas of THE TAX LAWYER’S BLOG brings our attention to another’s blog posting on “Seven Profiles of Tax Cheats” in his post “
Bird Flippers More Likely to Cheat on Taxes”. What do you think of the suggestion in my comment?

I found another interesting “profile” of tax cheats in the referred to post – it appears “Educated Women Tend to Cheat More”. Kelly, Gina and Kay (intelligent women all) – what do you think!
* Hey look – a trio of alleged “tax preparers” from Jersey City have made the news – “Three Members of Jersey City Family Sentenced for Their Roles in a $573,000 Bogus Homestead Rebate Applications Scam”.
* It seems that Congress finally listened to me and took up the “extenders”. However there seems to be a problem – and a possible veto from Dubya.

I first received an email from Beanna Whitlock, ED of NSTP, which included a 9/16 press release that began – “Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) today announced an agreement with the Senate's Democratic and Republican leadership to move legislation accomplishing the Finance panel's remaining major objectives for the year: passage of clean energy tax incentives, the protection of millions of Americans from the alternative minimum tax (AMT), and extensions of expiring family and business tax cuts.” The release stated that is was hoped the extenders could be passed by the end of week.

However, Friday’s CCH daily tax email newsletter included the item “
Tax Extenders Face Veto; White House Resists ‘Depression’ Label”. The item states, “As the Senate on September 18 remained deadlocked on a motion to proceed to an approximately $150- billion tax extenders bill, a White House spokesman said that President Bush would veto tax extenders legislation that is funded by tax increases.”

Oi vey!

* Beanna also emailed an article from the New York Daily News on “a different type of amnesty program for tax cheats” – the New York State Voluntary Disclosure and Compliance Program.

* From the “Always Leave Them Laughing” department - TAX GURU Kerry Kerstetter always seems to find a good political cartoon or comic strip. Check out this one and see if you can “Spot The Economic ‘Expert’”. Funny – but also sadly true!


Friday, September 19, 2008


Yesterday (Thursday) I attended the NJ chapter of the National Association of Tax Professionals’ Annual Meeting and Conference. Kudos to the chapter for an interesting mix of topics.

I just had to report to you what was stated by Lyle Lauterbach, the head of the NJ office of the IRS Taxpayer Advocate Service, in his presentation.

Lyle said that the economic “stimulus” rebate check program “has overwhelmed every aspect of the IRS”. He reported that so far 30,000 cases have been submitted to the Taxpayer Advocate Service regarding the economic “stimulus” payment (“ESP” as it is referred to by the IRS) and pointed out that because of the ESP, “everything that would normally take 60 days will now take 120 days”.

He did have some possible good news for those who, like my clients discussed in an earlier post, were “Royally Screwed”. The IRS has been dealing with the problem of a non-matching name and Social Security number as it relates to the economic “stimulus” rebate and expects to have a solution by October – so those who had been RS-ed could possibly receive a rebate check in November.

Lyle also told us what the initials IRS really stand for – “It Really Sucks”!


Tuesday, September 16, 2008


State Treasurer David Rousseau has announced that eligible non-senior, non-disabled homeowners (under age 65 and not disabled as of December 31, 2007) who filed an application for the NJ Homestead Rebate by August 15 can expect to receive their 2007 rebate checks in a mailing that went out yesterday (Sept 15).

Those who requested direct deposit will have their rebates deposited directly into their bank accounts.
Homeowners with incomes of $100,000 or less will receive 20 percent of the first $10,000 of property taxes paid in 2006; those whose incomes are between $100,001 and $150,000 will receive 10 percent of the first $10,000 of property taxes paid in 2006. Those with income over $150,000 are not eligible for the rebate this year.
The Treasurer also noted that applications for the NJ Homestead Rebate are still being accepted.
Homeowners and tenants who still have not applied for the rebate have until October 31, 2008, to file their applications. The clock is winding down, so anyone who has not yet filed should do so quickly.

Applicants who have already filed can check the status of their rebate check by calling 1-877-658-2972, or online at-

Monday, September 15, 2008


I just had to briefly put off my week-off to report that my post on Tax Amnesty is included in “Carnival of Personal Finance #170 – Famous Last Sentences Edition” at THE PERSONAL FINANCIER written by Dorian Wales.

Once again, like Oliver Twist I am last on the list – as Taxes is the last category.

This Carnival is chock-a-block with posts. I especially recommend “Ten Tips You Should Consider to Protect Your Online Financial Transactions”, a very good list on an important subject under Economy and Finance.

Speaking of Tax Amnesty – check out my newly created website for Americans for Federal Tax Amnesty, a work in progress.

Now on to the GD extensions!


Sunday, September 14, 2008


Since I no longer have the blog ANYTHING BUT TAXES I have decided to save my non-tax ramblings for posting on Sundays.

The NON SEQUITUR comic strip by Wiley often comes up with a real gem. Last Thursday’s strip showed a couple standing on a street corner looking at a sign that read “NO UNICYCLES BEYOND THIS POINT”. The husband comments, “Y’know…up until now I never had the urge to ride a unicycle.”

This same quirk of human nature is the basis for the long-running off-Broadway musical THE FANTASTIKS, which I produced in Hudson County NJ years ago. As the fathers sing in an Act One song –

Why did the kids put beans in their ears?
No one can hear with beans in their ears.
After a while the reason appears.
They did it cause we said no

How true this is – and I have proof.

Many, many, many years ago during my early college days, before we began to rent summer houses in Belmar at the Jersey shore, my friends and I would often spend week-ends at The Whitfield Hotel in Ocean Grove.

After checking in on our first group week-end stay we were told two things by the hotel’s owner –

(1) “Keep off the 4th floor” (this is where many girls who worked as summer waitresses at various local restaurants stayed), and

(2) “Don’t piss in the sink!” (most of the rooms in the hotel did not have a private bathroom – just a sink; one had to go “down the hall” to use the shower or jake)

Up until that point in time it had never occurred to me to relieve myself in a sink. However from that day forward I have pissed in many a hotel room sink when I did not have a private bathroom!


FYI – This coming week I will be going to NYC for my first selection in the New York Musical Theatre Festival, attending an all-day seminar sponsored by NJ-NATP, and visiting my folks in assisted living on two separate days (one to take my mother to a doctor’s appointment) – and I must put in some work on the GD extensions. As result I will be taking a hiatus from posting. I will return with my weekly WHAT’s THE BUZZ next Saturday.

Saturday, September 13, 2008


* William Perez of WILLIAM’S TAX PLANNING BLOG at about.com William's Tax Planning Blog reminds us that the third quarter federal and state “Estimated Tax Payments Due September 15th”.
* Madame X, a 30-something single woman living in Brooklyn, NY, gives some good advice in her post “Do It Now” at MY OPEN WALLET. I made sure I took care of all these items before moving my parents into an assisted living facility.

* I mentioned this post in an earlier posting on my recent Blog Carnival inclusions, but it bears repeating. Mr ToughMoneyLove suggests “
Let’s Make the Politicians Take Economics 101” at, where else, his TOUGHMONEYLOVE blog. Mr TML says “politicians just don’t know anything at all about economics”. As I told him in my comment politicians also don’t know anything at all about taxes.
* Peter Pappas, who helps us to make taxes less taxing at THE TAX LAWYER’S BLOG, has a good point in his post “Flip Flop or Change of Mind: Obama May Defer Rescission of Bush Tax Cuts” – “We simply must learn to honor and reward politicians who are willing to regularly review their policy positions and change them if necessary based on current circumstances”.
I agree with Pete when he asks, “do we want leaders who stick to positions that prove to be unwise? Do we want leaders who fail to recognize that facts and circumstances dictate policy? A tax increase might be wise in one circumstance and unwise in another. Nation building might be wise in one circumstance and unwise in another.”
My concern is with a politician how can you tell if the position change is indeed a heartfelt one based on an honest review of the situation or just, as Pete puts it, “based on which way the political winds are blowing” and done simply to avoid losing votes.
* Peter took time off from “Making Taxes Less Taxing” to provide some alternative interpretations to Shakespeare’s famous line “The first thing we do, lets kill all the lawyers” in his post “Did Shakespeare Really Hate Lawyers?”.

This has always been one of my favorite quotations from the bard, along with “brevity is the soul of wit” and “neither a borrower nor a lender be”. I thought it to be a find sentiment, and a good suggestion on how to cure many of the ills of society. However over the years I have softened a bit – perhaps not all the lawyers!
* And before I leave Pete, the “newbie” offers some kind words for some fellow tax-bloggers in “The Tax Lawyer Says Thanks to Joe Kristan, Robert Flach and Bruce “the tax guy”. Thanks for the thanks!
* Here’s a new one – WALLY’S WORLD OF TAXATION. It is one of the growing number of tax blogs by preparers connected to Effectur, which appears to be a tax representation company dealing with IRS collection issues. Wally provides a series of posts on the topic of IRS Appeals.

* The National Society of Tax Professionals has published its 2008 Tax Professionals Survey. Under the question “Do You Use Tax Preparation Software?” the answers were YES = 99.7% and NO = 0.3%. I am in the .3% - I don’t know how many others are in there with me. I have never used tax preparation software, and never will – unless the IRS provides it to me for free. As, as it would naturally follow, I am also in the 11.7% of paper-only (non-electronic) filers.

* Last Tuesday I commented on the tax proposals in the official Democratic and Republican platforms in “Dueling Tax Planks”. The Tax Foundation provides a “Presidential Candidate Tax Plan Comparison” tool for all of the Presidential candidates – including the Libertarian and Green Parties and perennial spoiler Ralph Nader.

* And the Tax Foundation’s TAX POLICY BLOG provides more examples of how politicians continue to showcase their ignorance of tax law in the back-and-forth of the campaign here and here. One wonders - if they are this uninformed when it comes to basic tax policy how ignorant are they on every other item they legislate?

* Joe Kristan sets us straight on just who to blame for the deficit in his post “They’re Both Right” at the ROTH AND COMPANY TAX UPDATE BLOG.

* TAX GIRL Kelly Phillips Erb provides the correct answer to a oft-asked question in her post “Ask the Taxgirl: School Uniforms” – and then goes on to show a “back-door” way to get a partial tax benefit for an otherwise non-deductible item. Good work, Kelly!
* Bruce THE TAX GUY provides a good review of "Are You Eligible to File Form 1040A?"

* AccountantsWorld.com had an article on Congressman Rangel’s tax troubles. The Chairman of the tax-writing House Ways and Means Committee failed to report $75,000 in rental income from his villa in Punta Cana in the Dominican Republic.
The article, titled “Rangel Cites Language Barrier on Unpaid Taxes”, states that Rangel had trouble getting detailed financial statements from the resort's managers in the Dominican Republic, saying, ''Every time I thought I was getting somewhere, they'd start speaking Spanish”.
Pardon my French, but what pure horseshit! For one thing, do you think Rangel actually prepares his own tax returns? I am sure he has an expensive CPA firm (is there any other kind?) on retainer to handle his finances and tax filings.
Besides, who cares about the financial statements of the resort. He was not reporting partnership income but rental income. Rangel, or his accountants, certainly would know how much money he received from the resort and how much he paid out in maintenance fees and other expenses. They certainly should know that such activity was a taxable event.
Either Rangel thought because the source of the money was offshore he would not get caught or his accountants are incompetent.
One would expect that the chairman of the committee that tells the average American how to report income and expenses and pay taxes would make damned sure that his own tax returns were letter perfect!

Friday, September 12, 2008


My post on “demutualization” is still making the rounds of Blog Carnivals. Yesterday it appeared in “Finance Fiesta #15~The Patriot Day Edition” at ON A QUEST TO BE DEBT FREE (Digging my way out of debt, one day at a time) by Anna. I head up the extensive “Other” category.
And while I am "tooting my own horn" - you will notice that my Sitemeter has passed the 80,000 mark!