Monday, September 30, 2013


The IRS has released the special per diem rates, effective October 1, 2013 through September 30, 2014, which taxpayers can use to claim a deduction for lodging, meals, and incidental expenses when traveling away from home for business.

Click here to download IRS Notice 2013-65.  Or click here for the General Services Administration website.

These per diems can be used by employers to reimburse employees for business travel, and the per diems for meals and incidental expenses can be used by unreimbursed employees and the self-employed to claim a tax deduction for business travel.

Under IRS Rev Proc 2007-63, self-employed taxpayers filing a Schedule C and employees who are not covered by an employer reimbursement plan cannot use the per diem method that includes lodging. To claim a deduction for lodging expenses these taxpayers must substantiate the actual cost.  And corporations cannot use the per diem that includes lodging for owner-employees with more than 10% ownership, based on direct or indirect ownership.  

Similar to how the Standard Mileage Allowance works for business use of your automobile, you can elect to deduct either the actual amount of your out of pocket expenses for meals and “incidental” expenses while away from home on business, or claim the appropriate federal per diem allowance determined by the location of the trip.  If you claim the per diem allowance you do not have to save receipts for actual expenses.

You can decide whether to deduct the GSA meals and incidental per diem rate or actual expenses on a trip by trip basis, but you must use the same method for all days within any single business trip. You can use the actual expenses when attending a conference in New York City in May and the per diem rate for an August convention in Las Vegas.

The per diem rate for meals and incidental expenses includes tips given to porters, baggage carriers, bellhops, hotel maids (the “incidental” expenses) – so the actual out of pocket for these incidentals are not deductible if you claim the per diem.

On the first and last day of a business trip you claim 75% of the per diem amount, unless you can show you leave before breakfast on the first day and return after dinner on the last.


Friday, September 27, 2013


* An obituary for THE TAX PROFESSIONAL

* I am quoted in "New York State Proposes Regulating Preparers" at ACCOUNTINGTODAY.
* Christopher Bergin suggests “We Need a Tax Professional to Run the IRS”.
No thanks.  I am not available!

* Peter J Reilly tells us, as his promoting “tweet” says, “Saxophonist toots his own horn in TTax Court and wins” in his post “Musician Wins Hobby Loss Case” at FORBES.COM.

* Some good advice via Paul Caron, aka THE TAX PROF – Don't Die in Maryland or New Jersey”.

I would add - don’t live in NJ.

Just received a payment from a Maryland estate – 10% of my inheritance went to the State of Maryland.

* Jason Dinesen finds another same-sex marriage tax opportunity in “IRS Guidance on FICA Refunds for Same-Sex Married Couples” –

The IRS has released a streamlined procedure for recovering FICA taxes withheld on the pay of same-sex married couples in cases where benefits (typically health insurance) were counted as taxable income to an employee.”   

It would seem to me that employers would want to look into this topic and file amended 941-Xs and W-2cs – since they also pay FICA tax on this income.  This way employees would be able to get refunds of overpaid FICA tax directly from the employer, although they would still need to file amended 1040s to get a refund of income tax paid.

* Kay Bell reports “State Tax Amnesties Underway” in Connecticut, Louisiana and Arkansas at her TAXES BLOG.  I had already told you about Connecticut’s amnesty program in an earlier BUZZ installment.  

* Nothing to do with taxes, but FYI – “U.S. Postal Service Announces New Prices for 2014”.

The proposed changes that would become effective Jan. 26, 2014 –

•Letters (1 oz.) — 3-cent increase to 49 cents
•Letters additional ounces —  1-cent increase to 21 cents
•Letters to all international destinations (1 oz.) — $1.15
•Postcards — 1-cent increase to 34 cents

* Check out the complimentary September 25, 2013 “issue” of “Parker's Federal Tax Bulletin” from PARKER TAX PUBLISHING.  

* Bruce McFarland, the MISSOURI TAXGUY, explains “How to Write Off Travel Expenses As Business Expenses”.

* AARP reminds us to “Beware of the Latest Health Law Cons” and provides “8 ways to protect yourself from crooks trying to cash in on the health insurance exchanges”.


Thursday, September 26, 2013


Today we meet Jim Blankenship CFP®, EA of Blankenship Financial Planning, Ltd. (“Excellent Financial Advice for Everyone”) located in New Berlin, Illinois.  Jim writes the interestingly titled blog “Getting Your Financial Ducks In A Row” (something we all should do), which provides “advice on IRA, Social Security, income tax, and all things financial”.

I have found Jim’s advice and information on Social Security topics especially helpful.  He has written two books – “A Social Security Owner's Manual” and “An IRA Owner's Manual” which I recently ordered and look forward to reading.

(1) How did you become interested/involved in preparing tax returns? 

I had started doing my own tax returns in college and then helped others with their returns.  I had a “head” for the work and enjoyed helping others, so I sought training and started taking on other folks’ returns.

(2) How were you educated/trained in preparing tax returns? 

In 1987 I took a correspondence course in tax prep from the National Tax Training School.  Since then my studies to become a CFP® practitioner expanded on that knowledge.

(3)  When and why did you decide to write a blog on tax issues? 

I started blogging about financial issues back in 2004, as a way to communicate with the world about the services that I offer.  Tax issues became a regular part of my blog posts since taxes are a huge, often misunderstood part of everyone’s financial lives.

(4)  How has blogging helped your business?

I think it serves as public education, as well as an attraction to find my blog and website. It gives readers an opportunity to find out more about my business without having to actually meet in person.  I have found that most all of my new clients in the past couple of years have read my blog (or articles from it) before calling for an appointment.

(5) What do you consider the “best tax advice” you can give anyone?

That’s a tough one because everyone has a different set of circumstances.  I guess the one thing that could have helped folks out of big problems is: Don’t ignore the IRS when they send you notices.  They won’t go away – you’re much better off to address the situation, however ugly it is, head on.  Ignoring it will only make it worse.

(6) Do you support the decision in Loving v IRS, or do you support mandatory regulation?

I believe tax preparers need to be regulated.  Taxpayers should know that they have a conscientious professional working for them when preparing their taxes.  It’s a cold enough world out there having to deal with all of the rules and onerous taxes, as a taxpayer you should at least expect the preparer to have your best interests at heart by being fully-trained and subject to a code of ethics.

7)  How would you reform/rewrite the Tax Code?  Under the “clean slate” method of tax reform what tax expenditures (deductions, credits, exclusions) would you keep and why?

I honestly haven’t given this much thought.  I suppose on the one hand a flat tax with no deductions or exclusions seems to be the fair way to go – but the tax code has always been a method to at least try to spur certain types of activities.  If it were a flat tax some activities (such as charitable donations) might suffer. In addition, a lot of preparers would be out of business, but I’m not sure that’s such a bad thing either – we’re a necessary evil in the present course.

(8) Do you think the Tax Code should be used to deliver social welfare benefits?

I don’t think adding more complexity to the Tax Code (beyond the parts that are already in there) to deliver social benefits would help matters, and it likely would introduce additional delays and problems.

(9)  What is your favorite Broadway musical – and why?

This is an area that I know very little about, as I have never seen a musical other than adaptations to movies.  If I had to choose something I’d say either Spamalot (because, you know, Monty Python!), or Mamma Mia! (because, you know, ABBA!).

I, too, took the National Tax Training School correspondence course on 1040s back in the mid-1970s so I could have some kind of tax credential/diploma.

Regarding the need to regulate tax preparers – as you know I believe there is a need to provide a universally accepted non-EA credential for tax preparers to identify to the taxpayer public those who are competent and current in 1040 preparation, but I do not believe in mandatory government regulation other than that which is already in place via preparer penalties.  The credential should be a voluntary program.

I do not agree that a flatter and simpler tax system would put a lot of tax preparers out of business.  At least not me.  As I have often said, if I did nothing but 1040As all day during the tax season I would make more money, experience less agita, and substantially reduce the number of extensions.  And even with a flat tax there will always be the need to calculate business, investment sale, rental, and farming gains and losses on Schedules C, D, E and F and Form 4797.
A flatter and simpler tax system would put unethical tax preparers out of business - there would be less opportunity for fraud (i.e. no refundable tax credits).
Never seen a musical?!?  Jim, get thee to a local regional equity theatre ASAP!  As for his choices – I recently saw SPAMALOT at a regional equity theatre and found it entertaining (I have always enjoyed the songs) and, although it is still running on Broadway, I have never seen the live version of MAMA MIA!, although I did like the movie.

Jim, of the movie adaptations of Broadway musicals you have seen which is your favorite?


Wednesday, September 25, 2013


Speaking of regulating tax professionals, the JOURNAL OF ACCOUNTANCY tells us that “New York State Proposes to Regulate Tax Return Preparers”.  According to the article -

“. . . the New York State Department of Taxation and Finance has proposed amendments to its Personal Income Tax Regulations and Procedural Regulations to regulate tax return preparers (N.Y. Comp. Codes R. & Regs, tit. 20, proposed Part 2600). Currently, Section 32 of the N.Y. Tax Law requires tax return preparers to register with the state. The proposed rules would add to the requirements contained in Section 32 by imposing minimum standards on who can become a tax return preparer, instituting a continuing education requirement, and requiring a competency exam.”

As mentioned above, un-initialed tax professionals, regardless of their state of residence or where their office is located, are currently required to register with the State of New York and pay a $100.00 fee if they want to prepare NY state income tax returns.  FYI, I add a $5.00 charge to the invoice of all 1040 clients for whom I prepare a NY resident or non-resident income tax return that is identified on the invoice as “NYS Tax Preparer Extortion Surcharge”.

The article further states that, under the current and proposed state law (highlight is mine) -

Attorneys, enrolled agents, public accountants, and CPAs, and their employees who prepare returns under their supervision, are not tax return preparers and therefore are not subject to these rules.”

Duh!  Enrolled Agents are certainly tax return preparers, and attorneys, public accountants, and CPAs, and “supervised” employees thereof, may very well be tax return preparers – but apparently not as the term “commercial tax return preparer” is defined in the law.  Since the only purpose of the current law is to extort money, since these professionals, except for EAs, already pay a license fee to New York, they were not included in the extortion scheme.  EAs were originally included, but the NY chapter of the NAEA fought and won exemption.

Obviously I believe that attorneys, CPAs, and “supervised employees” should not be exempt from any state licensing requirements.

Under the new proposal -

“. . . experienced preparers with three years or more experience preparing  New York State tax returns will be required to take four hours of accredited CPE annually, while less experienced preparers will have to complete 16 hours by the end of their first calendar year.”

And -

The proposed rules impose a requirement to pass competency exams . . . but limits the requirement to pass it to registrants in the third calendar year after the exam has been made available.”

Since I am already a victim of the current extortion scheme, I would not object to taking 4 hours per year of NYS CPE to keep up-to-date.  I am glad that NY limits the CPE requirement for “experienced” preparers.  However I have no intention of taking a test, and would hope that experienced preparers will be exempt from this test via “grandfathering”.  Anyway, I won’t have to worry about testing until at least 2017.


Yesterday morning, as I mentioned in the BUZZ, a three-judge panel of the U.S. Court of Appeals for the District of Columbia heard oral arguments in the IRS appeal of the District Court decision in Loving v IRS.

Three tax return preparers, Sabina Loving of Chicago, John Gambino of Hoboken, N.J., and Elmer Kilian of Eagle, Wisconsin, had argued that the IRS exceeded its statutory authority by imposing a mandatory Registered Tax Return Preparer (RTRP) regulation regime.  In January U.S. District Court Judge James E. Boasberg ruled in their favor, putting an immediate halt to the RTRP program.

This victory came as a great surprise to the tax preparation community, me included, as well as the Internal Revenue Service.  It was a true David vs Goliath victory.

I personally did not agree with the Loving et al argument that the requirement to maintain continuing professional education in taxation was “prohibitive”.  I strongly felt, and still feel, that if a serious tax professional was not already taking at least 15 hours in CPE in taxation he or she should have been.  The cost of such CPE is reasonable, and is a necessary cost of doing business. 

What I did agree with, as did the Court, was the assertion that the IRS did not have the authority to “license” tax return preparers.

National Society of Accountants Executive Vice President John Ams attended the hearing and reported his observations in “Oral Argument Held in Loving v. IRS Case Regarding Tax Return Preparers” at the NSA BLOG.

Here is some highlights from John’s observations (any highlights are mine) -

First, the IRS could not have drawn a worse three-judge panel since each of the judges is a Republican appointed by President Ronald Reagan.  Prior decisions by each of the three judges indicate they are unlikely to find IRS regulatory authority unless they can be directed to wording in a statute clearly giving IRS that authority.  Sure enough, the first question at the hearing was, ‘Did Congress empower the IRS to regulate tax return preparers?’ 

The judges also “asked the IRS whether there is any statute defining ‘practice’ as that term is used in (a)(1) above.  After some discussion, the IRS attorney had to concede there is no language in a statute, case law, or even public discourse defining practice before the IRS.”

John quotes the text of the relevant statute, 31 USC §330 -

“(a) Subject to section 500 of title 5, the Secretary of the Treasury may—

(1) regulate the practice of representatives of persons before the Department of the Treasury; and

(2) before admitting a representative to practice, require that the representative demonstrate—

(A) good character;

(B) good reputation;

(C) necessary qualifications to enable the representative to provide to persons valuable service; and

(D) competency to advise and assist persons in presenting their cases.”

Dan Alban of the Institute for Justice, the attorney for the three preparers, spoke on the difference between preparation and practice.

Dan explained, and I agree, that in preparing a 1040 “the preparer is merely providing a service.  The service is assisting the taxpayer in preparing a return that the taxpayer must sign and submit to the IRS.  It is only when the IRS disputes the return and a tax controversy arises that the preparer or other professional may provide a representation function.” 

It is this “representation function” that is “practice before the Department of the Treasury”.

Reflecting on the hearing, Dan Alban told me –

“It went very well today.  The judges seemed very engaged and we were encouraged by their lines of questioning.  They seemed rather skeptical of the IRS’s arguments and generally receptive to our position.  They seemed focused on the meaning of the statutory language, and also noted the significance of the long period of time (130 years) that it had taken for the IRS to suddenly “find” this new power in the statute (31 U.S.C. 330).”

Dan also gave me the link to the audio of the oral argument.  Click here.

When will we hear the panel’s decision?  John Ams tells us -

The Court is expected to take several months to announce a decision, and it may even be sometime in 2014 before there is a resolution.”

Based on what he observed at the hearing, John does not feel the panel will overturn the lower court ruling in Loving v IRS.  Others attending the hearing agree.  Let us hope they are correct.


Tuesday, September 24, 2013


Today is the day!  The United States Court of Appeals for the District of Columbia Circuit Court hears oral arguments in the Loving v. IRS case at 9:30 AM, and, hopefully, the mandatory RTRP regulation regime will be buried for good.

* I found Professor Jim Maule’s post “Deductions Require Evidence and a Bit of Care”, at MAULED AGAIN, very interesting.  The reason – it involved “the attempt of a tax return preparer to deduct a vacation as a business expense” -

She explained that she operated her tax return business from her home, and explained that ‘living in her neighborhood was stressful and that she felt harassed by her clients who would call her home at any hour’. Accordingly, she concluded that she needed to travel ‘just to get rest so that . . . [she] could function’. The Court, not surprisingly, denied the deduction, characterizing the cost of the vacation as a personal expense.”

While I obviously agree with the decision of the Court, I do sympathize with my fellow tax preparer’s argument.  A post-tax season vacation is a mental health necessity (maybe she should have tried to claim her vacation as a medical expense). 

I, too, need to get away for at least a few days beginning April 16th just to get rest so that I can continue to function.  And I never answer my telephone “cold” (I use my answering machine to screen all calls), and do not disclose my home address (even though I work out of a home office) to most clients, using in NJ a Private Mail Box and now in PA a Post Office Box as my office address.

The occasional client, who knew where I lived, would not only call me at all hours, but also show up unannounced at my apartment building.  Luckily visitors had to be “buzzed in” and I never did so for anyone (I did not even inquire via intercom, and thereby announce that I was home) unless I was expecting someone.

Now that I live on average 100 miles away from my NJ clients I don’t have to worry about that anymore.

* We’ve all seen the tv ads with RJ Wagner, Law & Order’s Fred Thompson, and the Fonz touting reverse mortgages.  I learned from a “promoted tweet” that back in May of this year ERATE.COM’s Nancy Osborne discussed the “Drawbacks to a Reverse Mortgage”.

* For those who want more on the subject, Roger Wohlner has a guest post on “Reverse Mortgages – The Basics” at THE CHICAGO FINANCIAL PLANNER.

* 360 DEGREES OF FINANCIAL LITERACY poses the FAQ “Pay Down Debt or Save and Invest?”.

I tend to favor the “pay down debt” option - especially considering the current interest rates on savings vs those on credit card, home equity, and mortgage debt.  And the fact that investment income is taxable, but personal credit interest is not deductible.

The article lists some other things to consider when pondering the question.

* Attention tax pros – “CCH Tax Briefing Focuses on Final ‘Repair’ Regulations”.  Click here to download the report.

* “Separate Checking for a Small Business?  Duh!  Trish McIntire gives the correct answer – of course – at ANSWERS.COM.

In all my years of tax blogging I have only come across one advisor who said that you did not need a separate checking account for a Schedule C business – and she actually berated me for advising that this was a necessity.  At the time I recall that about half the tax blogosphere came to my support.


Did you know that Dr. Joyce Brothers, who went to her final audit earlier this year, first appeared on television as a game show contestant? 

Wikepedia explains – “In 1955, she became the only woman ever to win the top prize on the American game show ‘The $64,000 Question’, answering questions on the topic of boxing, which was suggested as a stunt by the show's producers.”

In 1958, she was given a television show on which she dispensed psychological advice.  Her show was the predecessor of today’s certainly much inferior Dr. Phil Show.


Friday, September 20, 2013


A meaty BUZZ today!

* I review the latest developments, with a little help from Jason Dinesen, in “IRS Announces Policy for Tax Treatment of Same-Sex Marriages” at MAINSTREET.COM.

* Is there anyone out there who has still hasn’t checked out THE LAKE REGION SOMETHING? 

* Robert W Wood of FORBES.COM lists “20 Things Taxpayers Don't Get” –

The incredible popularity of ‘20 Things 20-Year-Olds Don’t Get’ {huh? Never heard of it – rdf} made me reflect on the many important things about taxes most taxpayers don’t get. Across a huge age range and even bigger economic spectrum, we all pay taxes. Yet we may not know key points.”

Some of the 20 worth highlighting (things I have been advising for years)–

2. Forms 1099 Really Count.

7. Reply to Every IRS Letter Unless it Says Not To.

12. Keep Your Old Tax Returns Forever.

16. File Returns Even if you Can’t Pay.”

I do take exception to 2 of RWW’s things –

6. Pay Small Tax Bills. If you get a small tax bill, pay it even if the IRS is wrong. What’s “small” varies, but don’t risk an audit or dispute escalating by fighting over small dollars.”

I do not believe you should pay the IRS if they are wrong – unless we are talking about a couple of dollars.  If you have nothing to hide and you have documentation to prove you are right and the IRS is wrong you should explain to the IRS where they went wrong. 

And –

13. Avoid Amending Tax Returns. Don’t take amending tax returns lightly. Amended returns have a high audit rate, especially if they request a refund.”

In my 40+ years of preparing 1040s I have prepared many amended returns to claim a refund, both large and small, and have NEVER had any of these amended returns audited or questioned.  Again, if you have nothing to hide and you have documentation to prove the correction you should amend the return.

* The MIAMI HERALD of all places is where I heard “Conn. Launches Latest Tax Amnesty Program” –

The Department of Revenue Services is offering a 75 percent reduction in accumulated interest and will waive all penalties for individuals and businesses that have not filed, have underreported or have existing state tax liabilities for any period ending on or before Nov. 30, 2012.”

* William Perez tells you what to do if you are “Missing a Tax Document for 2012?” that is needed to complete your extended 2012 tax return at ABOUT.COM - TAX PLANNING:US.

* Bill Bischoff of Market Watch’s TAXWATCH warns “Don’t Make This Common Estate-Planning Error”.

He tells us to “Keep beneficiary designations up to date or your ex may get everything”.

Whether or not an “ex” is involved it is important to frequently review, and update if necessary, the beneficiaries on “your bank, brokerage, retirement, company benefit plan, life insurance, and 529 college accounts”.

* Trish McIntire of OUR TAXING TIMES provides an overview of the “Disasters and Chutes and Ladders”.

What is she talking about?

Flood victims or any taxpayer suffering a personal disaster or casually loss have the possibility to receive a tax deduction. But before you count on a bigger refund, you need to understand how a Form 4684, Casualties and Thefts works. It’s very much like the children’s game Chutes and Ladders.”

* It seem obvious, but Jason Dinesen still reminds us that “Having a Side Business in Multi-Level Marketing Doesn’t Make Personal Expenses Deductible” –

“. . . anything that you buy and consume for personal purposes is a non-deductible personal expense.”  

* FORBES.COM’s TaxGirl Kelly Phillips Erb reports on the CCH estimates of inflation adjustments for 2014 in “2014 Tax Brackets, Exemption Amounts Likely To Save Tax Dollars”.

CCH is usually right, but I will wait until the numbers are officially released by the IRS before I publish them.

Of course this is based on current tax law, and assumes, possibly rightly so, that the idiots in Congress will not pass substantive tax reform in the next 3+ months.

* Kelly also points out that the fat lady has yet to sing in “Surviving Tax Season: It's Not Over Yet”.  And it won’t be for another month.

I truly miss the “good old days” when the tax season, for me, truly ended on April 15th.  For most of the first half of my tenure in the business I never had to file an extension for a client.  I do indeed hate GD extensions, although they are almost impossible to avoid.

* And FORBES.COM also gives us a slide show of “15 Ways To Invite An IRS Audit”.

I agree for the most part.  However, as I have been saying for years, if you legitimately have excessive documented charitable contributions or employee business expenses claim the full amount.  Do not NOT claim legitimate documented deductions simply because you are afraid of being audited.  As long as the deductions are legitimate and documented an audit should result in “no change”.  

* The NANNY BLOG details “Other Costs Besides Wages that Nanny Employers Should Expect to Pay”, advising –

“. . . before parents take the leap and hire a nanny they need to carefully consider how much it will cost to hire and keep a qualified caregiver.”

An important other cost on the list – taxes.  Especially important if one of the parents intends to run for public office, or be nominated to a cabinet position.

They must pay their portion of Social Security and Medicare, federal and state unemployment and any additional local and state taxes required. These taxes generally add up to 9 to 11% of their nanny’s gross wages.”

* Professor Annette Nellen tells us what is in the Spring/Summer 2013 issue of “Contemporary Tax Journal”, the student-run, online journal of the San Jose State University MST Program.

* According to Michael Cohn of TAXPRO TODAY “IRS Streamlines Innocent Spouse Relief” -

The Internal Revenue Service has issued new guidance and streamlined procedures for spouses who are seeking equitable relief from joint income tax liability.”


Wednesday, September 18, 2013


I welcome, and solicit, legitimate, responsive comments to my posts, and to my tax tips and articles at 

And not just if you agree with me.  I also want to hear from those who disagree with my opinions and proclamations.  And I certainly want to know if I have, or you believe I have, made a factual error in any tax advice or information I have provided.

I also want to hear from tax pros who have been in similar situations and perhaps handled an issue differently.

Unfortunately almost every comment I receive is true “spam”.  They are usually a very general compliment, often written in poor English, followed by a link to the sender’s website.  The person sending the comment has not read my post, but only wants to use my “traffic” to promote their own, sometimes probably legitimate and sometimes “shady”, enterprise.

I obviously identify these comments as spam to and delete them.

So, if you have actually read a post and disagree or have something to say or contribute to the discussion, please, please do submit a comment.  But please, please be intelligent and mature in your submission.

Do not submit a situation-specific tax question as a comment.  As I state in the right margin - I do not give free tax advice to non-clients by e-mail, comment response, or phone.     

And spammers – don’t waste your time or mine.  Your non-responsive self-serving comment will never be published!


Tuesday, September 17, 2013


* I provide some commentary on New Jersey state income taxes for fellow blogger Peter J Reilly of FORBES.COM at the end of his post “Real Estate Partnerships and State Income Tax - Nasty Surprises”.
My bottom line is this - don’t live in New Jersey!

* Have you seen my latest item at MAINSTREET.COM – “Expiring Tax Benefits”?

* Is there anyone who has not checked out THE LAKE REGION SOMETHING yet?  Why not?

I am interested in your thoughts on my tax-related editorial.

* Joshua Wilson correctly suggests that “many employees are probably not aware of the risk that they are taking by being given check signing authority”.  He gives a real life example of the possible consequences in his post “Employees Liable for Payroll Taxes?”.

As PP explains –

They are aimed at reducing controversy over the determination of whether an expense may be currently deducted as a repair or must be capitalized.”

* For those of you who have been following these two blog series – TAXPROF Paul Caron is up to “The IRS Scandal Day 130” and Prof Jim Maul’s MAULED AGAIN series on partnership taxation is up to “Polishing Subchapter K: Part XX”!  
* According to Phil Hodgen of the HODGEN LAW INTERNATIONAL TAX blog,"Tax Law is Considered Harmful”.

Phil makes some excellent observations –

Tax law is written by 10,000 authors of wildly varying intelligence and intention. Different pieces were written at different times — sometimes decades apart.

Sometimes the authors of the novel we call the Internal Revenue Code talk to each other. Sometimes they read what they wrote, but other times they just take someone’s assurance that the passage they just wrote is OK.

I’m talking about Congress of course. None of them read the laws they pass. If they did, do you think they would understand it? NFW. They listen to staffers and lobbyists and vote accordingly. I would wager that there are people in Chief Counsel’s office right now who have spent 20 years in a particular area who from time to time get handed some new law from The Hill and who can only look at it and utter ‘WTF is that?’”

I am pretty sure I do not have to explain WTF (I was using this acronym in the 1990s, if not earlier).  But do I have to explain NFW?


I found it odd that Paula Deen received a 10-minute standing ovation during her return to television on a Houston TX cooking show.

She was not returning to the public eye after being away for medical treatment.  She had been away for making an indefensible racial slur.

Her statement was not made in the heat of anger, or a slip of the tongue.  It was a purposeful casual statement made in the context of a pleasant family setting.  While I do think Paula’s racism is inbred – and can be explained as a result of her upbringing in the deep south – it certainly does not deserve a standing ovation.

An indication that, despite electing a black President twice, perhaps we have not progressed as much as we thought.


Monday, September 16, 2013


Here is some good advice for college grads who are starting their first job -

·      If your employer offers a 401(k) plan contribute as much as you can afford to the plan – preferably at least the maximum that will be “matched” with employer contributions if this is done - and consider splitting your contributions between a “traditional” plan and a ROTH 401(k) if a ROTH option is offered by your employer; and

·      If your employer does not have a 401(k) plan, or if you cannot yet participate in the plan yet – or even if you can - contribute as much as you can afford to a ROTH IRA account.  If you want to be safe, invest in an “index” mutual fund. 

Tax-free compounding is a great thing.  Here, from “Getting an Early Start on Saving for Retirement” at 360 FINANCIAL LITERACY, is a chart that illustrates the power of tax-free compounding and hits home the benefit of starting to save for retirement early -

Contribute $200/month to age 65 at different hypothetical earnings rates
Start at age 20
Start at age 30
Start at age 40
Start at age 50