Wednesday, November 17, 2010


I just want to begin by expressing my thanks to Peter Reilly of the blog PASSIVE ACTIVITIES AND OTHER OXYMORONS for his many substantive, helpful and interesting comments to my TWTP posts. I do urge my readers to be sure to check out the comments to my TWTP.

* Must I remind you again to check out the MISSOURI TAX GUY’s “Week in Perspective”?

* If at first you don’t succeed . . . According to a Senate Finance Committee press release “Baucus to Introduce Bill to Repeal Form 1099 Income Reporting Requirements for Small Businesses”.

Good luck!

* Janet Novack tells us that, although there is no increase in Social Security benefits or the basic Medicare Part B premium, “Higher Income Seniors Hit with Medicare Doctor and Drug Premium Hikes For 2011” in her TAXING MATTERS blog at

* And Janet talks about “Names You Need To Know in 2011: Tax Expenditures” in another post.

What are “tax expenditures” – “the term covers dozens of special provisions—everything from the earned income, child, college and research and development tax credits; to the deductions for mortgage interest, charitable contributions and state and local taxes; to the exclusion of employer provided health insurance from the taxable income on your W-2; to the special lower rate for long term capital gains.”

The article provides several sources that agree with me (that many of them do not belong being administered in the Tax Code) on the subject –

“. . . the Peterson-Pew Commission on Budget Reform released a report proposing that Congress get control of tax expenditures by treating them as “entitlements”, incorporating them in the annual budget process and subjecting them to proposed spending caps.”

And, as a matter of policy, many of them don’t work very well or can’t be effectively administered by the IRS, they make the tax system more complex, and are unfair, so there’s ample good-government grounds to scale them back.” Len Burman (a Treasury official during the Clinton Administration, and now the Daniel Patrick Moynihan Professor of Public Affairs at the Maxwell School of Syracuse University).

* Joe Arsenault discusses some “Roth Conversion Planning Ideas” at CAFETAX.

* Beans, beans, good for your heart. And, in this case, also good for your head - when they are “BlogRoll Beans”, presented by the previously mentioned Joe Arsenault.

One of the items in this edition of the Beans tells you what John Grisham, Mick Jagger, Janet Jackson, Bob Newhart, and J.P. Morgan have in common. And, oh yeah, TWTP is also represented. Thanks, Joe!

* Joe Kristen brings us up-to-date on the soap opera of tax cheat Chuck Rangel in his post “Sorry Charlie” at the ROTH AND COMPANY TAX UPDATE BLOG.

The fact that this crook was easily re-elected (with, did I read correctly, 80% of the vote!) says a lot about the intelligence, or lack thereof, of the cafones in his constituency.

I thank God regularly that Rangel is no longer chairman of the House Ways and Means Committee.

I agree with Joe that the crook’s punishment will be minimal. Congress tried to impeach Bill Clinton for having done what many of them also did, but did not get caught at, yet they won’t impeach a member for actually breaking the law and cheating the American taxpayer.

* Wait – breaking good news! According to “House Ethics Panel: Rep. Rangel Violated Rules” from yahoo news –

Rep. Charles Rangel, once one of the most influential House members, was convicted Tuesday on 11 counts of breaking ethics rules and now faces punishment.”

Right on!

* A “tweet” from NATP reports “The U.S. Railroad Retirement Board (RRB) has announced that the Tier I & II taxable wage bases and tax rates will remain the same in 2011.”



Peter Reilly said...

Thank you for the mention. You have really made my day.

Anonymous said...

Jeffrey F. 1 month ago
Regardless of which side of the aisle you might be on, with regard to the expiration of the Bush tax cuts, we should keep in mind the significance of a bill just passed by Congress and signed a few days ago by the President. That small business bill of 2010 allows - for the first time ever - small and mid-size companies (up to $50m in sales) to utilize valuable tax credits, the R&D credit in particular, to offset Alternative Minimum Tax starting in 2010. My firm, Tax Point Advisors, works primarily with small and mid-size clients across the country, and I know first hand that many of our clients have had little or no benefit from R&D credits in previous years, specifically for AMT. The new bill will change that. The key point is that a large majority of Americans work for small to mid-size employers, and many of those employers should enjoy six-figure to even low seven-figure reductions in tax liability as a result of the just-enacted legislation. Interestingly, were we to extend the Bush tax cuts, we would actually be offering cuts in excess of Bush when you consider that the extended Bush cuts would be coupled with the new benefits of the small business bill.

Regardless of the fate of the Bush tax cuts, companies in many industries, and from small companies on up, should be taking a closer look now at filing for an R&D tax credit for 2010 as well as for earlier years. Since the new 2010 small business bill allows for the 2010 R&D credit to reduce 2010 AMT, that AMT reduction could then allow for utilization of R&D credits carried forward from prior years into 2010. Let's say you are a small business owner and you have a potential 2009 R&D credit of $50K, but you were in AMT in 2009. In such case, you couldn't use any of your credit on your 2009 return and the credit carries forward into 2010. Now, let's say further that you also are entitled to a $50K R&D credit for 2010, and in 2010 you are once again in AMT. In such case, your 2010 R&D credit reduces you AMT by $50K, which can then allow for utilization of that $50K credit carry forward from 2009. How significant is this? It's huge: in our example you have $100K in utilization of R&D credits, whereas without the new small business bill you would have zero utilization. And $100K in utilization of R&D credits in this example means a $100K lower tax bill.

Please feel welcome to contact me for further info about the new small business bill and the implications for R&D credits. And also keep in mind the breadth of industries within which companies often qualify for R&D credits, including fabrication, package design, architects, engineering services, civil engineering, plastic mold injection, all sorts of job shops, manufacturing, software development, food products and food processors, furniture makers, farms, wineries, petrochemical, etc. There's a list of most of the qualifying industries at

Jeffrey Feingold
Founder and Managing Partner
Tax Point Advisors - the R&D tax credit experts
(800) 260-4138