Posts Tagged ‘Radio Iowa’

Tax Roundup, 4/9/14: Common K-1 problems. And: if the preparer doesn’t have a brain, give him a diploma!

Wednesday, April 9th, 2014 by Joe Kristan

S-SidewalkSo you read yesterday’s post and you’re still preparing your own return?  You’ve answered the questions you need to ask yourself before starting to put numbers from your S corporation/Partnership/Trust (collectively, “thing”) K-1 onto your 1040 schedules?  OK, if you are intrepid enough to be doing your own return here, you are mostly on your own.  Don’t shortcut it.  This is one chore where you really should read the instructions (S corporation, Partnership, Trust), rather than just opening the box and putting pieces together.

There’s no point in me trying to walk through the whole K-1 with you; that’s what the instructions are for.  I will point out a few items on the K-1 (or left out) that frequently cause errors and trigger questions.

On the partnership K-1 the ending capital account is probably not your “basis.” The capital account is frequently useless in measuring basis.  It might be the same as your basis if the “Tax basis” box is checked, but the only sure way to track your basis is to keep your own running basis schedule year-by-year.  S corporation shareholders can find their basis computation schedule here.

Don’t double-count your gains.  The “Unrecaptured Section 1250 gain” in Box 8c of your S corporation K-1  (9c of the partnership return) is a part of the “Net Section 1231 gain” (S corporation box 9, partnership box 10).  The total income is the Section 1231 gain, not the sum of the unrecaptured 1250 and 1231 amounts.  You use the “Unrecaptured 1250 gain” on your Schedule D worksheet to figure out how much of your Section 1231 gain is taxed at a 25% rate, rather than the normal 20% top capital gain rate.

Don’t double count “investment income.”  If you have interest, dividends or capital gains on your K-1, the partnerships is required to tell you how much of that is “investment income” with a code “A” in the “other information” box on the K-1.  You only need that number if you are computing an investment interest expense deduction on Form 4952.  You don’t add it as additional income on your return.

Beware the “net investment income” disclosure, code “Y” in the “other information” section.  The partnership and S corporation instructions for computing this came out late, and this number is likely to be wrong.  If you have to fill out Form 8960 to compute your Obamacare net investment income tax, you shouldn’t count on this number, especially for a K-1 with trade or business income.  Use instead the separate items from the K-1 that are investment income for Form 8960 purposes.

Be careful out there, and come back tomorrow for a new 2014 filing season tip!

 

20140307-1Russ Fox, Bozo Tax Tip #5: Procrastinate.  You mean waiting won’t solve my tax problems?

Tony Nitti, Tax Geek Tuesday: Are Those S Corporation Distributions Taxable?

 

William Perez, Tax Freedom Day 2014.  April 21.

Kay Bell, Being DIFferent could prompt a tax audit.  Kay points out things that can attract IRS attention on your 1040.

Jeremy Scott, Audit Electability (Tax Analysts Blog).  ”However, a taxpayer’s choice of entity can have broad tax ramifications, including some consequences unintended even by the complicated U.S. tax regime.”

Stephen Olsen, Summary Opinions for 4/4/2014.  (Procedurally Taxing), A good roundup of some recent tax cases, including coverage of the Ohio accounting firm’s unpleasant breakup that we covered last week.

 

20140409-1The IRS Commissionerwho apparently can’t regulate his own employees sufficiently to provide subpoenaed documents to Congress, still wants to regulate tax preparers.

The idea is no more than what the Wizard of Oz told the scarecrow: regulated preparers wouldn’t be any smarter, but they would have a diploma.  An IRS-issued Doctorate in Thinkology doesn’t make an inept preparer competent, any more than granting a CPA or a JD makes somebody a good tax preparer.  I would much sooner have uncredentailed Robert D. Flach do my 1040 than any number of fully-credentialed CPAs and attorneys I know.   All regulation would accomplish would be to raise prices, lining the pockets of the big tax prep franchises while driving many taxpayers to self-prepare or stop filing.

TaxGrrrl, House Committee Gunning For Criminal Charges In IRS Scandal

TaxProf, The IRS Scandal, Day 335

 

Roberton Williams, If You Have High Income, Your Taxes Are Going Up (TaxVox)

Tax Justice Blog, “Tax Extenders” Would Mean Even Lower Revenue than the Ryan Plan

Jim Maule, How Shocking is Tax Evasion?

Radio Iowa, Senator Grassley says fouled up tax system is depressing.  He’s depressed?  As a senior taxwriter for most of the last three decades, he’s answerable for a lot of the depression.

 

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Tax Roundup, 3/4/14: Des Moines votes on refunding illegal tax. And: life after football!

Tuesday, March 4th, 2014 by Joe Kristan

20121002-2Des Moines voters decide today whether to approve a legal tax to refund a similar tax imposed illegally.  The Des Moines Register reports:

A special election Tuesday will determine how the city pays back a portion of a franchise fee it illegally collected from 2004 to 2009.

The Iowa Legislature gave Des Moines the authority to temporarily increase its franchise fee — a tax assessed on anyone who connects to electric and natural gas utilities — to pay off the judgment.

However, if voters reject the proposal, city officials will be forced to raise property taxes for at least 20 years in order to issue and pay municipal bonds to cover the court judgment.

When the tax was ruled illegal, the city appealed all the way to the U.S. Supreme Court before finally conceding that it would have to issue refunds — incurring enormous legal bills in the process, including a $7 million bill to the winning lawyers on the other side.  From the District Court opinion awarding the fee:

This case has been in our courts since 2004.  To say it was highly contested would be a gross understatement.  The history of this case shows that the City, while it was entitled to do so, erected one barrier after another in an attempt to prevent the class from being successful in obtaining a refund.  Almost without exception, class counsel was successful in dismantling each of those barriers.

It just goes to show that the city will do the right thing, once it has exhausted all appeals.  Maybe next time they won’t be so quick to enact an illegal tax.

The state legislature voted to allow Des Moines to impose the tax legally to repay the illegal tax.  Somehow I doubt the legislature would do a similar favor for taxpayers by letting them, say, legally not pay income tax for a few years to help them repay the taxes they had illegally avoided in prior years.  

 

William Perez, Deducting Work-Related Expenses

TaxGrrrl, Taxes From A To Z (2014): A is for Affordable Care Act

Leslie Book, EITC Snapshot: Overclaims and Commercial Preparer Usage (Procedurally Taxing).  ”In fact, there is a steady decline in the use of paid preparers among EITC claimants, while the rate of paid preparer usage overall has remained fairly steady.”

Another reason why preparer regulation to cut fraud is like pushing on a string.

Jack Townsend, The Scariest Tax Form? Scary Is in the Eye of the Beholder.  I think the article he cites, which chooses Form 5471, makes a good case, considering the almost-automatic $10,000 fine for filing it late.

Kay Bell,  Tax moves to make in March 2014

 

TaxProf, Tax Court Issues 63-Page Opinion Debunking Cracking the Code Book

 

taxanalystslogoTax Analysts Blog is having a tax reform party:

Clint Stretch, 10 Reasons Republicans Should Embrace the Camp Tax Bill.  This is pretty faint praise:  ”2. If they want a credible claim that Obama and Democrats are responsible for the failure of tax reform, they must pass a bill in the House.”

Jeremy Scott, Comparing the Camp and Obama Bank Taxes:

Including the bank tax in his plan is one of Camp’s most intriguing decisions, if only because the gain for him isn’t obvious, even after a closer look. The tax doesn’t raise much money. It is very similar to an Obama proposal that congressional Democrats didn’t really like, meaning it doesn’t buy the chair any bipartisan support. And it comes about four years too late to take advantage of widespread public anger at financial institutions. All Camp seems to have accomplished is legitimizing a revenue raiser for future use by the progressive caucus and undermining his own party’s opposition to this kind of tax increase.

Just… brilliant.  I prefer ending the “too big to fail” subsidy directly, if necessary by denying deposit insurance to such institutions.

Martin Sullivan, 25 Interesting Features of Camp’s New Tax Reform Plan.  ”Biggest disappointment. Camp and fellow House Republicans all but promised to reduce the top rate to 25 percent. They failed.”

Christopher Bergin, Tax Reform Only a Mother Could Love:

Many political observers think the GOP has a good chance of not only increasing its majority in the House, but also taking the majority in the Senate. I’m among those who believe that the Republicans will shoot themselves in the foot before that happens. I’ll bet there are more than a few Republicans this week who fear that Camp just put a bullet in the chamber.

I think the Camp plan will be quietly forgotten long before November, but there is still plenty of time for the GOP to demonstrate its skills with a Glock 40.

Norton Francis, Camp Tax Reform Would Create New Challenges for States (TaxVox).  The repeal of the deduction for state and local taxes and limits on muni bonds won’t win friends in the state capitals.

 

National Review, via InstapunditThe IRS Is the Problem:

Representative Camp’s thou-shalt-not list is fine so far as it goes, and, unlike the IRS bureaucracy, Congress does have the authority to rewrite the law. But his proposal falls short in that it assumes that the IRS is a proper and desirable regulator of political speech. It is not. It is not even particularly admirable in its execution of its legitimate mission, the collection of revenue: Its employees have committed felonies in releasing the confidential tax information of such political enemies as the National Organization for Marriage and Mitt Romney, and the agency itself has perversely interpreted federal privacy rules as protecting the criminal leakers at the IRS rather than the victims of their crimes. 

Instapundit comments: “Abolish governmental immunity and make them personally liable for damages for misconduct.”  Hard to argue with that; it would be a good addition to my “Sauce For the Gander” reforms.  I still don’t understand why a nonprofit should lose its exempt status for being primarily political.  Isn’t freewheeling debate a good thing?  The IRS certainly hasn’t shown itself a neutral observer here.

TaxProf, The IRS Scandal, Day 299

 

Scott Drenkard, Johannes Schmidt, Guess Which State Has the Highest Liquor Taxes in the Nation? (Tax Policy Blog).  Think coffee.

 

Preparing for life after football.  Two former members of a Sioux Falls indoor football league team may have to change their post-athletic career plans.  From the Sioux Falls Argus:

A federal grand jury has indicted six people for conspiracy to defraud the United States and aggravated identity theft.

Two of those indicted – Undra Stewart Franks, 27, and Donta Moore, 28 – are former Sioux Falls Storm players.

The new federal indictment says Moore, Franks and the others conspired to defraud victims by using names, Social Security numbers and dates of birth stolen from others to file fraudulent income tax returns that claimed false income tax refunds.

Identity theft isn’t just a Florida thing.  If you deal with Social Security numbers at work, treat them as valuable confidential data — because that’s what they are.  Guard your own identity by never giving out your social security numbers, protecting your bank account info, and being sure never to transmit those things in unencrypted e-mails.  If you need to send documents with that info electronically, use a secure file transfer site, like our rothcpa.filetransfers.net.

 

News from the Profession.  10 People Not Cut Out to Be Partner (Going Concern)

 

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Tax Roundup, 3/27/2013: Iowa leads the nation! In high corporate tax rates. And: film scam? No prize for you!

Wednesday, March 27th, 2013 by Joe Kristan

We’re number one!  Weekly Map: Top State Corporate Income Tax Rates (Nick Kasprak, Tax Policy Blog):

Via Tax Policy Blog.

Just another dubious leadership role for Iowa.

 

 

Monday Open Thread: The Tax Man Cometh(The Other McCain).  If you were tax dictator, what would be the first bad tax law to go?  I would get rid of (in order) The AMT, Section 409A on deferred compensation, and the new net investment income tax.  But there are so many worthy candidates…

 

Philip Panitz, guest-posting at Janet Novack’s blog,  How Real Estate Investors Can Protect Themselves From The IRS:

So save all your expense receipts, try to keep a log, and try to stay friendly with—and maintain contact information for—workers and tenants. You might, for example, need to call as a witness a gardener who can say he got his instructions directly from you instead of a real estate company.  And maybe the guy who is always grousing about his plumbing needing fixing or the woman who wonders why the gardener missed a spot in his watering will be asked to testify that they kvetched to you —not a real estate agent–when the toilet needed fixing.

 

U.S. film festival cancels award to UK film after tax scamPerhaps the least of actress Aoife Madden’s problems, considering the 54 month prison sentence she got out of it.

 

Jason Dinesen,  Married Filing Separately, Iowa Tax Returns & Itemized Deductions — Am I Missing Something?  On the quirks of Iowa’s separate-combined filing status.

Roberton Williams, DOMA’s Tax Hassles for Same-Sex Couples

 

Clint Stretch,  Which Kind of Imbalanced Solution Do You Want?  (Tax.com).  Mr. Stretch is, or maybe was, a career lobbyist for a national accounting firm that I once worked for.  Considering that his career involved crafting loopholes, this is a fascinating observation (my emphasis):

I am no fan of spending through the tax code. Tax expenditures are government grants with the barest of qualification criteria administered by an agency with no subject matter expertise when it comes to the purpose of the incentive.  The incentives – from business tax credits to mortgage interest deductions – may influence behavior at the margins,
but many of the beneficiaries are rewarded for doing what they were going to do anyway.  Like direct spending; tax expenditures are spending and individuals do benefit.  Although a rate reduction or a fiscally sound government might cushion the blow, reducing tax expenditures will be another spending cut that takes resources away from affected taxpayers.  We should stop talking about spending versus taxes.  Instead, we should work on how to make reasonable, holistic reductions in major areas of government influence. 

That’s why I think he must have retired.  I don’t think he could say stuff like that if he were still lobbying.

 

Joseph Thorndike : Why the Tea Party Should Support Soda Taxes.  Because it would really annoy people, leading to a tax revolt.   It sounds like an underpants gnome approach to me.

Jack Townsend, IRS Identifies Its Dirty Dozen Tax Scams for 2013

Principles of the tax law.  Heads They Win – Tails You Lose (Paul Neiffer).  The Obamacare tax on wage income cannot be offset with farm losses.

TaxGrrrl,  All I Needed To Know About Taxes I Learned From My Kids

 

No, no, that’s not how it works, Senator.  You’re supposed to give them money.  Bored Politicians Taxing Strippers (David Brunori, Tax.com)

Group that stands to benefit from government spending calls for government spending.  (Radio Iowa)

Now the IRS is in trouble. William Shatner ‘appalled’ at IRS Star Trek video spoof (Kay Bell)

News you can use.  If You’re Failing the CPA Exam, You’re Not Making the Most of Bathroom Breaks (Going Concern)

 

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Tax Roundup, 11/26/2012: Is there a good side to tax evasion? Plus more fiscal cliff jumping!

Monday, November 26th, 2012 by Joe Kristan

Via Wikipedia

Is it better to cheat on business taxes than to be out of business?  A British researcher says much of the UK economy is only possible through tax evasion.  From FastCompany.com:

As he and colleagues argue in a recent paper, the informal economy isn’t just for shady figures looking to squeeze out as much profit as possible; in large measure, it’s inhabited by entrepreneurs whose fledgling businesses might simply fail if they played strictly by the rules.

As taxes and regulations get more complicated and difficult to comply with, more businesses will fall on the wrong side of the law (never a good idea, by the way).  The politicians who make compliance prohibitively difficult and expensive will then blame “greed.”

 

That’s why they are called plea “bargains.”  From the Newport Beach Patch:

A 52-year-old woman who pleaded guilty in 2009 in connection with a $2.5-million tax fraud and money laundering scheme that included two Newport Beach properties and was later allowed to withdraw her plea was convicted today following a jury trial.

Safieh Fard had struck a plea bargain in May 2009 with federal prosecutors that recommended a 30-month prison sentence. Now Fard could face up to 20 years in prison, her attorney Correen Ferrentino said.

Sadly, prosecutors can overcharge to force a plea bargain.  Even when a defendant thinks she is innocent, the risk of a long prison sentence can make it hard to keep fighting.   It will be interesting to see how long the sentence turns out.

 

Really?  Not all tax prosecutions are justified?  No.  Tax Analysts today carries an appalling story from New York State (unfortunately available for now only to subscribers) where a small businessman was falsely accused of evading taxes on $1 million of income.  The indictment was based on shockingly lazy investigation; a close reading of the taxpayer’s return alone would have cleared the taxpayer.

It was almost as though the prosecution believed that once the department demonstrated that Monsour had received the money deposited into his accounts, the burden had somehow shifted to Monsour to prove that the receipts were not taxable income. That approach might have applicability in a civil tax audit, but it has no place in a criminal prosecution. In a criminal case, it is always the people’s burden to prove every element of the offense, whether before the grand jury or at trial, and in this case the people had to show that Monsour knowingly and fraudulently filed a false return that misrepresented his income. Showing that he had received money without also showing that the money received was taxable income was not enough, and the prosecution would have known that mistake if Monsour had been alerted to the investigation before he was indicted.

The taxpayer had borrowed money and sold property (reporting the sales properly on his return), accounting for the bank account deposits that led to the indictment.  Those calling for ever-harsher punishment and looser prosecution standards for tax crimes ought to be the first to experience it.

 

Tom Harkin, cliff jumper.  From thefiscaltimes.com:

In a recent call with reporters, Democratic Sen. Tom Harkin of Iowa signaled he was willing to let the country topple over the fiscal cliff unless President Obama and Congress strike a deal to force wealthy Americans to pay more in taxes and that protects Medicare and Medicaid from deep cuts.

“No deal is better than a bad deal, because things will change after Jan. 1, the positions will change,” Harkin explained. “Quite frankly, if we don’t get a good deal, we’ll just take it up in January or February.”

The deal is already bad.  The only question is how much worse it will get.

TaxProf,  Should the Top Marginal Income Tax Rate Be 73 Percent?  Short answer: no.

Martin Sullivan,   Should CEOs Lobby for a Carbon Tax?  (Tax.com) They might as well lobby for an oxygen tax, for all the good it would do.

Jim Maule,   Is Grover Norquist Singing a New Tax Tune?

Maybe not:  Members of Congress Appear Ready to Break With Anti-Tax Pledge As Norquist Doubles Down (TaxGrrrl)

Peter Reilly,  S To LLC As A Fiscal Cliff Acceleration Strategy ?  That means paying tax on all of your built-in gains now, but at a 15% rate.  It’s a strategy only for taxpayers with cash reserves to pay taxes now.  It makes the most sense if a sale is likely in a few years anyway, but at a higher tax rate.  The biggest risk is that the value of the business will go south before you sell the business, and you pay tax on gain that won’t be there when it’s time to cash out.

Howard Gleckman,  What Happens if Congress Extends Tax Cuts for Those Making $500,000?  (TaxVox)  It just changes where the harmful and futile policy begins.

 

That’s one way to use the $5 million lifetime gift exemption before it goes away next year.   Lindsay Lohan gets $100,000 gift from Charlie Sheen to pay toward IRS bill; Sheen now faces estate, gift tax issues  (Kay Bell)

Paul Neiffer,   IRS Bumps 2013 Standard Mileage Rates by a Penny per Mile

Jack Townsend,   The Cheek Defense in IRS Disbarment Proceedings.  Tax protest guru and former IRS agent Joe Banister is barred from practicing before the IRS; he was unable to convince the Ninth Circuit that his belief in the silly “Section 861 argument” is reasonable.

 

News you can use:  SWANS ARE EXPENSIVE! (Robert D. Flach)

I would have read the article, but I decided not to risk it.  Optometrists warn: Don’t stare at your computer screen too long (Radio Iowa, via The Beanwalker)

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Tax Roundup, October 22, 2012: can houses have cowl lamps? And why Iowa tax reform will be hard.

Monday, October 22nd, 2012 by Joe Kristan

20110119-1.jpgIt’s the housing version of “cowl lamp violations.”  A few years ago an Iowa county prosecutor ended up in hot water over the practice of rewriting serious traffic offenses, like drunk driving, down to “cowl lamp” violations, sometimes in exchange for contributions to charities or government agencies.  Cowl lamps are something your great-grandpa’s car might have had.

That may have given the Iowa Civil Rights Commission an idea.  From Reason.com:

The Des Moines Register reports that for five years ending in February 2011, the Iowa Civil Rights Commission shook down landlords for “voluntary contributions” in exchange for dropping discrimination complaints. The Register obtained copies of 27 settlement agreements involving about $20,000 in contributions. Unlike money from fines, which end up in the state’s general fund, the donations went directly to the commission, creating “the impression that justice is for sale,” as state court administrator David Boyd puts it. The commission ended the practice after Winterset attorney Mark Smith questioned its propriety.

Creates the “impression?”  Creates the fact.   Instapundit explains:

I think that all revenue collected by all agencies should go to the general fund.  Otherwise, it doesn’t just give the impression of corruption, it’s corrupting. 

 

Why Iowa tax reform will be hard.  The politicians will no longer get articles like this from Radio Iowa:

State economic development officials approved financial help for six companies Friday. The Iowa Economic Development Authority awarded tax benefits to Alfagomma America to move its stainless steel tube production from its plant in Italy to its only U.S. plant in Burlington.

The company is investing 1.3 million dollars and is expected to create 14 new jobs.

With a non-corrupt system where everybody is treated the same, there would be no more press releases.  The state economy would be much stronger, but the politicians wouldn’t get to cut any ribbons.

In a more just world, the economic development bureaucrats would have to call a press conference any time a business closed or fled as a result of Iowa’s whimsical, byzantine and sometimes punishing state tax system.

 

Crime doesn’t pay, but turning state’s evidence might.  The ex-wife of a Minnesota real estate magnate gets three months after cooperating in the case against him.  He got 4 1/2 years.

 

That won’t stop them for a minute?  “Do education tax benefits produce more educated Americans? Congress has no idea.”  (Marie Spirie, Tax Analysts – subscriber link)

 

Andrew Mitchel,  Repatriate Now? (Before the Bush Tax Cuts Expire).  “There may never be another opportunity for individuals to pull cash out of foreign corporations at such a low U.S. tax cost.”

Roberton Williams,   Understanding TPC’s Analysis of Limiting Deductions (TaxVox)

Anthony Nitti,  Tax Court: Spec Home That Was Never Built Was Not A Trade Or Business

Jim Maule,  The Expensing Deduction is an Expensive and Broken Idea

Peter Reilly,  Beware Of Partnership Status Sneaking Up On Your Business Venture

Alisa Martin,  Things That You Can Do To Get Ready For Tax Season (Guest post at the Missouri Tax Guy)

TaxGrrrl,  Gun and Ammo Tax Proposal Draws Fire.  Yes, that will put Chicago’s violent criminals out of business…

The weekend Buzz from Robert D. Flach.  This part is very true: “In my 40+ years in ‘the business’ I have found that IRS notices are more often than not incorrect (and state notices even more so).”

And I’m eight feet tall!   Maryland Governor O’Malley Says State Has Third Lowest Taxes in the Country! (Joseph Henchman,Tax Policy Blog).

Going Concern,  Arthur Andersen’s Bones Still Have Some Meat on Them.  Not very tasty by now.

Fortunately, the election will be over in about two weeks.  Smelly, destructive bug entering Iowa (TheBeanwalker.com)

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Tax Roundup, 8/2/2012: You pay for everything. If you pay less, where’s my benefit? Plus beating the sales tax holiday to death, but missing the film credit story again.

Thursday, August 2nd, 2012 by Joe Kristan

TPC: Romney Plan Would Cut Taxes for Rich, Raise Taxes on Middle Class and Poor.  (Tax Prof).  Some news, folks: if spending doesn’t come down drastically, taxes are going up for the middle class and the poor anyway.  If you raised the rates on “the rich” to 100%, it still wouldn’t cover what the government is spending now.

How Did the Tax Code Get So Progressive? (William McBride, Tax Policy Blog) talks about the TPC study:

The main thing missing here is the context of our current federal income tax code.  Imagine a society with 5 people, where the two richest people pay all the taxes, the middle person pays nothing, and the two poorest people actually have a negative tax rate, meaning the rich are paying them through the tax code.  Then any cut in the tax rate will disproportionately benefit the rich guys.  This is the federal income tax code, in a nutshell.  According to the CBO, the top 20 percent of households pays 94 percent of federal income taxes.  The bottom 40 percent actually have a negative income tax rate, and the middle quintile pays close to zero. 

An illustration:

 

If “the rich”  pay all the taxes, then of course tax cuts will disproportionally benefit them.

We’ve cut government spending to the bone!  The bone just seems to keep getting bigger (Donald Marron, TaxVox)

 If you look at the two lines on the chart, you can see that spending on “goods and services” isn’t going up much.  That means they’re just taking a lot more of your money to give to their friends.

Still no media coverage of the last film tax credit trial.  Seeing that the Des Moines Register just jacked up home delivery for my usually-unread papers to $25 per month, it would be nice if they actually covered something.  Well, there’s this: Celeb tweets to Gabby Douglas.  Of course, they all missed the real story when the film tax credit was enacted, so at least they’re consistent.

Missouri Taxpayers paying taxes to cover the K.C. Royals payroll taxes.  (810whb.com, via Going Concern)

In case you haven’t heard, Iowans, the Annual sales tax holiday is Friday and Saturday (Dar Danielson, Radio Iowa). It applies for clothes and shoes. Jason Dinesen reminds us about Back to School Supplies and the Iowa Tuition and Textbook Credit.

Big charitable contribution, no deduction?   My new post at IowaBiz.com covers traps in appreciated property charitable contributions.

Phil Hodgen is back from a scouting trip to Quetico Provincial Park, the Canadian side of the Boundary Waters wilderness, with Basis step-up on assets inherited from nonresident

Sort-of related: more pictures from my recent Boundary Waters scout trip.

Peter Reilly, IRA Rollovers – Let’s Be Careful Out There

Patrick Temple-West, Essential reading: Payroll tax cut on track to quietly expire (Tax Break)

Trish McIntire, Drought, Farms and Taxes.

TaxGrrrl, Marriage Or Divorce Can Be A Name Changer

Kay Bell, Tax moves to make in August 2012

The New Jersey Tax Guy is fleeing to Pennsylvania.  Good luck with the move, Robert!

Asking the tough questions: Why Am I Paying for a Prancing Horse? (Christopher Bergin, Tax.com) and  Should Our Olympic Heroes Pay Tax on Their Winnings? (Anthony Nitti)

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Tax Roundup, 4/4/2012

Wednesday, April 4th, 2012 by Joe Kristan

http://www.hiwtc.com/photo/products/22/20/14/201422.jpgBut don’t you dare give the bank the client’s return with only oral permission, because that would be unauthorized disclosure: “TIGTA: IRS Is Not Monitoring 34% of its Servers, Putting Taxpayer Data at Risk” (TaxProf).

Pennies on the dollar for late-night cable operators: “TaxMasters Leaves CNN, Fox News, MSNBC Holding Empty Bag” (Janet Novack)

Gee, who didn’t see this coming?  Iowa jacks up its cigarette taxes.  Taxpayers respond creatively.  Iowa tries to close the “loophole.”  Taxpayers will respond creatively again.  (Radio Iowa.com, via TheBeanwalker.com.)

Deducting that home office?  Jason Dinesen warns us to Beware of Depreciation Recapture on Home Office Deduction.

“Zappers” aren’t just a Canadian thing anymore: States target tax fraud software.

The tax fraud bet didn’t work out:Northridge woman gets 18 months for tax fraud.”  The story quotes the prosecutor saying “She’s someone who liked to go to Las Vegas.”

Harold Hill would approve: Alabama Education Funding Diverted to Pay for Film Incentives. (Tax Policy Blog)  UPDATE: Not that education there necessarily deserves funding.

It’s a long way down from Patty Hearst and O.J. Simpson: F. Lee Bailey as Lionel Hutz (Anthony Nitti).

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Subsidize them and they will take it

Thursday, February 9th, 2012 by Joe Kristan

Iowa’s disastrous experience with film subsidies hasn’t quite cured the legislature of its starry eyes. An Iowa Senate Subcomittee yesterday approved a bill (SF 2110) to let the owners of the “Field of Dreams” site keep sales taxes collected there for themselves to help finance their project. A similar subsidy benefits the NASCAR speedway in Newton.
Of course this facility, if built, will compete with other businesses seeking tourist dollars and providing entertainment. They will have to collect sales taxes from their customers to provide the services received by the Field of Dreams. The legislature can never make a convincing case that this development is so special that it deserves this break. Don’t assume that will stop them.

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Sharks circle goat

Friday, August 5th, 2011 by Joe Kristan

Things got a little hotter for Tom Wheeler, the former director of the Iowa Film Office, today. O. Kay Henderson reports an announcement that filmmaker Bruce Elgin has pleaded guilty to a reduced misdemeanor charge and will cooperate with prosecutors — presumably against Mr. Wheeler. Mr. Elgin had faced felony charges.
Mr. Wheeler faces charges of felony misconduct in office arising out of his administration of the Iowa Film Tax Credit program, which collapsed in scandal in 2009. Subsequent investigations have revealed systematic abuse and chaotic administration of the program, including funding of luxury cars for filmmakers.
While Mr. Wheeler seems to have been cast for the role of scapegoat in this production, the legislature that passed the ill-conceived program with only three dissenting votes faces no charges; nor does the former Governor who signed the program into law and appointed Mr. Wheeler to run it.
Mr. Wheeler’s trial is scheduled to begin later this month.
Related:
Iowa Film Follies: Harold Hill meets The Pussycat Dolls
Let them eat canapes
Complete Tax Update film credit coverage.

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Other than about everything, he’s right

Monday, June 6th, 2011 by Joe Kristan

Think twice before you hire tax-increase activists to help you with your taxes. Based on this report from Radio Iowa, at least one is unusually uninformed on Iowa tax law. Here he manages to pack four errors into two sentences:

David Goodner, with Iowa CCI, says loopholes in the corporate tax code allow big corporations on Wall Street to hide their profits.

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Iowa individual rate cut advances to House floor

Thursday, February 3rd, 2011 by Joe Kristan

In a surprising bi-partisan vote, a bill to reduce Iowa’s individual tax rates by 20% across-the-board passed the Iowa House Ways and Means Committee yesterday. The bill passed out of the committee 19-5, with four Democrats joining the Republican majority in sending HF 4 to the House floor.
The progress of the bill is surprising to me, considering the state’s fiscal situation and that the bill is not part of the Governor’s budget. With bipartisan support in the House, it might not be as doomed in the Democratic-controlled Senate as I had thought.
Meanwhile, the legislature is pondering whether and how to update Iowa’s tax rules to conform with recent federal tax law changes. Iowa has left many federal computation changes out of its tax law in recent years, including increases in depreciation and Section 179 deductions, the $100,000 IRA donation rule, and teacher and tuition deductions. Jennifer Jacobs reports in the Des Moines Register:

For much of the past two decades, the Legislature approved its update to the tax code by the end of January, said Sen. Randy Feenstra, R-Hull. But no update bill was passed in the last two years because the tax breaks would have put a deeper hole in recession-pinched state revenues, Democratic lawmakers said.

This is shaping up to be an interesting tax legislation session. Too bad they don’t seem ready to embrace a solution that allows rate cuts, coupling with federal rules, and great simplification of Iowa’s tax rules without impairing state revenues.

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2011 College Savings Iowa deduction max set at $2,865

Thursday, January 6th, 2011 by Joe Kristan

The deduction for contributions to the College Savings Iowa Section 529 plan for Iowa individual tax returns has been set for 2011 at $2,865 per donor, per donee. The amount was $2,811 for 2010. That means a married couple with two children can deduct $11,460 in CSI contributions for the kids this year. Radio Iowa has more.
While you have until year-end to make your 2011 contributions, making them sooner means you get the advantage of tax-free investment buildup longer. You can also contribute more than the maximum deductible amount. There is no deduction on the federal return, but CSI provides all of the usual benefits of Section 529 plans.

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Harold Hill’s Film Credit Follies Thursday Roundup

Thursday, September 24th, 2009 by Joe Kristan

It’s been almost a week since the film credit scandal broke, but the news continues to come thick and fast. Yesterday one state agency said that we might be able to wiggle off the hook for our $363 million film credit liability, but today the Iowa Attorney General’s Office isn’t so sure.
While the Attorney General says we might have just found a way to send $363 million from Iowa to California, he says we should take it calmly:

Iowa Attorney General Tom Miller says lawmakers and others should avoid “overreacting” to alleged abuse and mismanagement of a state tax credit program until all of the facts in the case are fully reviewed.

Meh. Overreacting would look something like this:
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…and it would be “overreacting” only if they locked the legislators in first. With fire ants and rabid wolverines.
Meanwhile, the political fallout continues. From the Des Moines Register: Rants: will movie scandal break state budget? Too bad he didn’t ask that question before he voted for the program.
Like the girl who wakes up with a black eye, big, ugly stranger and a hangover after a night on the town, some of our elected leaders are starting to think maybe the binge wasn’t such a great idea:
Culver calls for review of all state tax credits
Governor: review all state tax credits
Vander Plaats calls for tax shift:
Republican gubernatorial candidate Bob Vander Plaats says he would get rid of most state tax credits and instead, cut the state

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