Wednesday, June 20, 2012


* The blog-o-sphere’s favorite TAX GIRL, Kelly Phillips Erb, has written an e-book titled “Ask the TaxGirl: Everything Parents Should Know About Filing Taxes (Including Child Care Expenses, Medical Costs, and the Earned Income Tax Credit”.

Inside this book, you'll get the skinny on the basics like filing status, claiming dependents, and determining exemptions. You'll also find helpful information about how to deduct expenses associated with raising kids, including the costs of medical care and child care. Erb tackles a number of tricky credits and deductions including the ever popular, and much maligned, earned income tax credit.”

* CFO.COM reports on a recent survey that reinforces what we in “the business” knew full well – “Small Businesses Spend More Time on Taxes”.

Sixty-four percent of the 350 NSBA {National Small Business Association – rdf} members surveyed said they spent more than 40 hours dealing with federal taxes in 2011, including calculating payroll and self-employment tax, filing reports, and working with their accountants. Forty-six percent of respondents spent more than 80 hours.”

The article also explained –

Indeed, the majority of respondents said that when it comes to tax compliance, the administrative burden is a bigger challenge than the tax bill itself.”

And –

On the whole, respondents ranked income taxes as their most significant administrative burden, followed by payroll taxes and sales tax.”

* Bill Bishoff, SMART MONEY’s “The Tax Guy” offers good advice on “Making a Tax-Smart Family Loan”.

From my point of view, the smartest thing you can do is not do it at all.  The Bard had the right idea.

* In case you are interested, TAX PROF Paul Caron provides a map of “State Income Tax Collections Per Capita”.

* MISSOURI TAXGUY Bruce McFarland posted “A Letter From a Bookkeeper” and “How I Answered the Letter”.

I agree with most of what Bruce suggests.  I do, however, think there is no legal responsibility for a tax preparer to be a “whistle-blower” if there is no clear and identifiable presence of intentional fraud, as seems to be the case here. 

Once the preparer, or potential preparer, explains that there are errors on a return he/she has not prepared, and states that an amended return should be filed, that is as far as it goes.  The preparer, or potential preparer, has no obligation to prepare the amended returns, or verify that amended returns are filed, and no obligation to notify the IRS that amended returns should be filed.

But if, in the course of an actual audit (certified or otherwise) or detailed review of the company books, a preparer discovers actual intentional fraud or an intentional significant understatement of income that is a different story.

This example is one of the reasons I decided years ago not to accept any new "entity" business clients (partnerships, corporations).  Too much potential agita.  I am happy limiting my practice to 1040 preparation.

Bruce, what do you think?

* RGI.COM’s “Fact Checker” gives us the truth about “Obamacare Sales Tax on Houses?”.

I didn’t realize this garbage was still being circulated.     

* None of my clients experienced the FU explained by Amy Feldman of REUTERS in “Avoiding Panic from Roth Conversion Glitch”.

It appears “a glitch between some of the tax software programs and the IRS” resulted in “a lot of taxpayers who converted their traditional IRAs to Roths in 2010 receiving IRS notices that they owed more taxes (and penalties)”.

Just another tax preparation software FU that I did not have to deal with – since in 41 tax seasons of preparing 1040s I have never used flawed and expensive tax preparation software.

Sorry – I couldn’t resist.

* George M Cohan does it again.  Ken Berry, I expect not the actor, wants you to “Give Your Regards to the 'Cohan Rule'” in a piece at ACCOUNTINGWEB.COM.  He refences a recent Tax Court decision that proved this 80+ year rule, from Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930), is alive and well.

I have discussed George’s rule here at TWTP on several occasions in the past.  As Ken explains – “In the landmark decision, Cohan was permitted to deduct certain business expenses, even though he didn't have all the receipts needed to back up his claims”.

However, a “talking point” within the item is important to remember.

There's no substitute for accurate recordkeeping. Good records can ensure that you're able to deduct all the expenses that you're legitimately entitled to claim.”

* Senator Orin Hatch of Utah is taking a poll at his website.  He wants you to “Please tell me your thoughts about tax reform.”  Click here to respond.

* Check out an online live interview with the yellow rose of taxes – Kay Bell of DON’T MESS WITH TAXES.  Click here to watch.  And click here to see my comment on one aspect of the interview.

* This week’s “Monday Map” from the TAX FOUNDATION shows “State Government Spending Growth from 2000-2010”.

New Jersey was #3 on the list with a 62% spending growth.  Surprisingly Oklahoma was #1 at 74%.  New York and California were in the mid-teens with 41% and 42% growth.

* Be sure to check out Bruce McFarland’s weekly “McTax Hangout” – which turned out to be an interview with Seth David of Nerd Enterprises.


A review by Claudia Puig in Friday’s USA TODAY of Adam Sandler’s latest time waster “That’s My Boy” excellently describes pretty much all of the actor’s movies, and, unfortunately, many of the so-called comedies produced today.

“’That’s My Boy’ is puerile, mean-spirited and charmless.  The laughs are almost always at someone’s expense or involve incredibly vulgar jokes about bodily functions.”

Wit, and true humor, is indeed rare in today’s comedies.

I completely avoid anything starring, or produced by, Adam Sandler.  Actually I find it a good policy to avoid any movie that stars anyone who has been a regular on “Saturday Night Live” – except for the original cast of the first two seasons and, occasionally, Eddie Murphy.


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