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November 2007
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January 2008

December 2007

Year-end auto buying tips

I love those car dealership end-of-year closeout ads that are flooding my TV screen. Those guys really, really, really want to get rid of the cars still stuck on their lots. The major impetus for the "Sale! Sale! Sale!" announcements used to be the inventory tax, the levy assessed on property held by businesses at the end of the year. Most most states and localities have done away with the inventory tax, but the year-end effort to unload autos remains. It's a proven way to move old models to make room for the newer versions. If you're thinking about taking... Read more →

IRS gets victory in major tax shelter case

The IRS got a very welcome belated holiday gift Dec. 27 when the U.S. Court of Federal Claims ruled that a "Son of Boss" transaction was an effort to avoid paying taxes. It was the first such case to go to trial. The court found that the tax shelter, successor to an earlier scheme known as a bond and options sales strategy (BOSS), generated artificial losses for Jade Trading. The entity was a limited liability corporation allegedly used by Robert Ervin and two of his brothers in 1999 to offset the income taxes due on a $40 million profit from... Read more →

Adult entertainment taxes vs.
First Amendment issues

Adults-only entertainment has long been a target of lawmakers. And recently, such establishments won one and lost one when it comes to state taxes. First the winners. Some "adult entertainment cabarets" in Chicago and Cook County were improperly denied a tax exemption simply because of the nature of their shows. That was the ruling last week by the 1st District Appellate Court in Chicago. At issue were identical city and county ordinances passed in 1999 that exempted small venues from paying Chicago's 8 percent ticket tax and Cook County's added 3 percent tax. The exemptions were designed to give a... Read more →

IRS washes out IRA wash sale work-around

You gotta say this for the U.S. tax code: It brings out the truly creative nature of a lot of folks. Take IRAs and wash sales. Under the wash sale rule, you can't sell a stock for a loss then repurchase the same or substantially similar holding within 30 days or the IRS will disallow the immediate tax benefit of the loss. Some folks, however, have gotten around the rule by buying the sold or similar stock for an IRA account. The argument was that since the retirement plan (Roth or traditional) is separate from the taxpayer's individual personal holdings,... Read more →

Tax season 2008 on schedule for most filers

Hallelujah! The 2008 tax-filing season will be as usual for the vast majority of us. This is a good thing, really! Especially for folks with simple returns and who are expecting refunds. Acting IRS Commissioner Linda Stiff announced today that the upcoming tax season is expected to start on time for everyone except certain taxpayers potentially affected by late enactment of the alternative minimum tax "patch." That means that the IRS will begin processing returns for the vast majority of taxpayers in mid-January as it does every year. However, up to 13.5 million taxpayers who plan to file five AMT-related... Read more →

Qualified dividends, the AMT and Tax Court

Talk about timing. Just as the alternative minimum tax 2007 patch was signed into law yesterday, a Tax Court ruling (129 T.C. No. 18) was issued requiring a married couple to include qualified dividends in the calculation of their AMT liability. Below are the case facts, per the opinion issued by Judge Michael B. Thornton. On their 2005 tax return, Tobias and Gertrude Weiss reported $24,376 in qualified dividends -- you know, those earnings that get the preferred capital gains tax rates. But they didn't include that amount in $265,408 that they reported as taxable income, and upon which they... Read more →

Dec. 31: A red-letter tax day

2007 is fast disappearing. That means you have just a few days to make some must-do tax moves. Luckily for us taxpayers, the calendar gods have given us an extra business day this year. Dec. 31, the last day to make many moves that could cut your tax bill, falls on Monday. So let's not waste any more time! Start with charitable donations. You've got to make them by Dec. 31 in order to claim them on your upcoming Form 1040, Schedule A. That's also the final day to make any changes to your investment portfolio and have the results... Read more →

Flexing your medical account muscle

Apparently, this week my blog is not the only thing having some issues. I feel a cold coming on. It seems to happen every holiday. I don't know if it's just that I finally let down a little or that the dark chocolate Christmas candy isn't quite the medical miracle that I'd hoped for. Maybe I just need to increase the "dosage." Whatever, I'm a tad achy and a bit sniffly and sneezy (not to mention occasionally Sleepy, Dopey and Grumpy). I'm hoping that replacing the candy with some extra orange juice and Coricidin for a couple of days will... Read more →

IRS employee implicated
in D.C. property tax scam

An IRS manager and his estranged wife are the latest individuals charged in connection with a Washington, D.C., property tax scam, first blogged about here. According to various news reports (Washington Post, WJLA, NBC4 and WTOP), Robert O. Steven and Patricia A. Steven were arraigned in U.S. District Court on charges of illegally receiving and cashing at least $2.8 million in 11 fraudulent property tax refund checks. The scheme allegedly involved D.C. Revenue Office employees who generated property tax refunds for companies that did not exist or were not owed a refund. Once the improper clerks were issued, the defendants... Read more →

The Bible and taxes, then and now

The reason for today's celebration is told in the Gospel of Luke (Chapter 2, verses 1-7 below; King James Version): And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed. (And this taxing was first made when Cyrenius was governor of Syria.) And all went to be taxed, every one into his own city. And Joseph also went up from Galilee, out of the city of Nazareth, into Judaea, unto the city of David, which is called Bethlehem (because he was of the house and lineage... Read more →

The Glitch that stole the Christmas blog

In case you're an IE user and you were unable to read my Christmas post earlier today, I think (hope!) you now can. Last night, I thought I was so cool, setting up the system to publish up bright and early (5 a.m.) so early rising blog readers could check out the photo of our tree. When I did get up four hours later, I looked and it was there. Then I merrily went off to open gifts. Then the hubby, finally checking to see that I did justice to his tree decorating prowess, tells me that the blog won't... Read more →

Last minute gift ideas
for the tax geek in your life

My dad was an inveterate last-minute Christmas gift shopper. OK. Maybe he already knew what he was getting; he just didn't go pick it up until Dec. 24. I used to have my gifts in hand by August so all I had to worry about was wrapping them. But for the last few years, I've found there's a certain rush to shopping a little closer to the big day. I started to say "when the decorations are up in stores," but that still would give me from around Halloween, so … Anyway, I still don't wait until the very last... Read more →

Home for the holidays

Like the single family detached dwelling, family and Christmas is an American ideal. Everyone coming from far and wide to gather at one place, such as the idyllic grandparents' house, and celebrate a la a Norman Rockwell painting. As I've aged, my family has, sadly, gotten smaller. But this year my mother is here and an aunt who lives down the road will be dropping by. So I can't complain … at least not until after eating too much ham in a couple of days! It's been a good year for the hubby and me. We always make a point... Read more →

'Twas a few days before Christmas ...

And all though the Internet, not a phisher was sleeping. Identity thieves and other assorted criminals don't take the holidays off. In fact, they shift into high gear, hoping that in your haste you'll slip up and hand over just what they want. For phishers, that's your personal and financial data. My spam filter does a good job of disposing of most of the malicious trash e-mail sent my way. But a few always make it through. I usually just delete them without reading. And even when I do occasionally open one, I never, never, ever open any attachment. The... Read more →

Tax relief for homeowners struggling
to pay PI and PMI

It's now the law. Debt discharged on some problematic mortgages is no longer taxable. By now everybody knows about the double whammy that hits many struggling homeowners. Some folks lost their homes to foreclosure. Others thought they were getting a lucky break by getting their lender to renegotiate the loan and forgive some of the debt. In both cases, under Section 108 of the Internal Revenue Code, the homeowners (or former homeowners) received taxable income in the form of forgiven, or sometimes called canceled, debt. The newly-enacted Mortgage Forgiveness Debt Relief Act of 2007 changes that. It was signed into... Read more →

AMT moves to make -- or not make --
by Dec. 31

The dust has settled on the alternative minimum tax legislation. Dubya is preparing to make it law. And the IRS is madly running its computer programming tests. Now it's time to look at some moves you can make by Dec. 31 if the one-year patch isn't enough to keep you out of the AMT's clutches. First, you want to ignore some earlier advice I gave: Don't prepay your state and local tax bills, either property or income. Sure, making these deductible payments early might generate a larger tax break under the regular tax laws. But since these deductions aren't allowed... Read more →

AMT winners = 2007 taxpayers
AMT losers = the wieners in Washington

Our long national AMT nightmare is over. Sorta. For one more year. But down the road, we're going to pay a hefty price for the lack of political will when it comes to taxes. Oh sure, there was lots of press release talk about tax relief for "America's working families." And politicians were going through contortions patting themselves on the back for coming through for John and Jane Average Taxpayer. Little was said, however, about how hedge fund and private equity firm managers escaped tax increases that would have paid for the revenue that will be lost because of the... Read more →

Dude! Thanks!

I got an early Christmas gift this week from a fellow financial blogger. Clever Dude, who pens the eponymous blog on family, marriage, finances and life, just added Don't Mess With Taxes to his blogroll. Not only that, he posted some very kind words about moi and DMWT. Not that I'm shamelessly self-promoting (again; twice within two days!), but I do encourage you to give it a read. Once there, spend some time cruising the blog for Clever Dude's many insights. He has a nice touch in bringing financial issues to life. Witness his post on how he found respite... Read more →

Bad news for those who owe, too

The 2008 filing season is shaping up to be a very costly tax season for all taxpayers. All you folks expecting a refund on your 2007 return already know that you're going to have to wait a little longer for your tax cash, thanks to Congressional maneuvering over the AMT (the sad, sorry details are blogged about here and here). Now there's equally disconcerting news for taxpayers who owe. It's bad enough when you have to hand over money to Uncle Sam. Well, now he wants your cash even more quickly. Big surprise ... Not! The IRS reportedly is reducing... Read more →