OK, we’ve got all of the corporations done or extended. Now it gets serious.
For the last several years, our 1040 practice has become more and more a three or four-week death sprint. Most of our individual returns are business owners or executives, or their families. That means most of them are waiting on K-1s. Ever since the enactment of the reduced dividend rate, it has taken longer every year for brokerages to issue their 1099s. It’s common for “corrected” 1099s to come out several weeks after the originals. So it just takes longer for our clients to assemble their 1040 data.
While the start of the returns is delayed, April 15 is still April 15. That means all of the most complicated returns hit in the four weeks after the corporate return deadline. This isn’t good for many reasons — not least of which is that you don’t want a bleary-eyed tax pro helping you deal with big-dollar decisions, like the grouping options under the passive activity rules that kick in this year.
What I’m getting at: if your tax pro recommends an extension, don’t object. This stuff is hard — if it wasn’t, you wouldn’t be paying someone else to do it. You don’t want to risk an expensive mistake by rushing things. There is nothing to the myth that extensions increase your risk of getting examined. I have extended my own 1040 every year for 20+ years without an exam. Errors, on the other hand, absolutely do increase your audit risk.
Your tax return is worth the wait.
Russ Fox, The Flavor of the Season
Paul Neiffer, Real Estate Includes Land but Not For Depreciation Purposes.
William Perez, Alternative Minimum Tax
Leslie Book, Insider Trading and Forfeiture of Millions in Stock Gains Runs into Section 1341 and Issue Preclusion (Procedurally Taxing)
One of the changes to the Iowa Business Corporation Act that went into effect this year is a new requirement that corporations deliver financial statements to their shareholders. These financial statements must include a balance sheet, an income statement and a statement of changes in shareholders’ equity. The financial statements must be sent within 120 days of the end of the fiscal year.
I did not know that.
Jeremy Scott asks, Would a Republican Senate Improve the Chances for Tax Reform? (Tax Analysts Blog):
Republican chances for retaking the Senate have improved…
And that would be good for tax reform proponents, even those who don’t support GOP policies or want to see Republicans in office. Senate Democrats aren’t interested. And they aren’t going to work with a Republican House at all. Tax reform takes a lot of legislative groundwork, and right now at least, the GOP is the only party with any real interest in doing it.
There is, of course, another factor. I don’t think President Obama will sign anything big coming out of a GOP Congress.
William McBride, Some Questions Regarding the Diamond and Zodrow Modeling of Camp’s Tax Plan. (Tax Policy Blog).
Eric Todor, Who Should Get the Tax Revenue from Apple’s Intellectual Property? (TaxVox)
TaxProf, The IRS Scandal, Day 313
Great moments in tax evasion. A Texan who was worried about being sentenced to prison came up with an ingenious plan: hire someone to murder the sentencing judge. Because then the court system would just forget about him, or something.
Somehow that plan went awry, and Phillip Ballard was sentenced to 20 years in federal prison yesterday for his trouble. Mr. Ballard is 72. This will impact his retirement options. (via Going Concern)