In a recent conversation with a friend, we were discussing and lamenting the "state of the world". With news about Madoff, Blagojavich, joblessness, and multiple reports of shootings in various parts of the country, it was pretty easy to feel depressed and worried. But, my friend tends to be a philosopher, so he brought this part of our conversation to an end with the expression, "Well, I guess that if we tried to separate the saints from the sinners, we'd probably do well to come up with Mother Theresa."
Now, what does this have to do with accounting? Frankly, I have no idea.
BUT, the next part of our conversation focused on April 15 and, of course, income taxes - and continuing our lamentations, we couldn't help but wonder just how many "saints" out there would better fit into the "sinner" category when it comes to submitting their 1040s.
Recent studies seem to indicate that if there is a single motivation for taxpayers to at least try to remain in the "saint" category, it is the fear of an audit. This, in turn, led us to talk about any "good news/bad news" associated with an audit.
First, the "good news". This is the fact that, on an annual basis, only about 1% of the tax-paying population is audited. Of course, if we assume approximately 200 million taxpayers, this means about two million people will be notified. On the other hand, statistically speaking, the chance of an audit is pretty small.
Now, the "bad news". This is fundamentally that if you receive an audit notice, you are basically "guilty until proven innocent". This is generally the approach typically taken by the IRS, but this is mainly because the audit was provoked by the submission of an "iffy" 1040 in the first place - and if we really think about it, the auditors are really just asking for more information. So, the "bad news" may not be so bad if you have the information. On the other hand, a lack of supporting information could definitely be "bad news". This led my friend to make another of his observations. This was, "If you are audited, and don't have the supporting information you need, then IRS will probably stand for, "I'm Really Sorry.".
Interesting, huh? Let me know what your thoughts: Email me at william.vasquez@taxtalkonline.com
Accounting Philosophically is strictly a tongue-in-cheek observation and is not intended to reflect any political affiliation, lobbying cause, or other similar position
Wednesday, April 29, 2009
Can Leases Be Depreciated - Special Report?
Most of the time the answer is depends. That is why having expert counsel to interpret the laws is to your advantage. Following are the several simple factors to determine if a lease can be depreciated:
1. Lease terms. The lessor owns the property; the lessee uses the property. 2. The kind of lease. An operating lease provides that the property be returned to the lessor. A capital lease is actually a purchase in which the lease is a means of financing (rather than a bank loan). Therefore, a capital lease has payments that include principal and interest.
3. Lease conditions. A lease that meets one or more of the following criteria is a capital lease, and the lessee should depreciate the leased asset:
Ownership is transferred when the lease terminates.
There is a bargain purchase option (B.P.O.), allowing the asset to be purchased at a price far below its fair market value.
4. The lease is for 75% or more of the asset's expected life--e.g., if the asset's life is 10 years.
Therefore, working with the right accountant, bookkeeper and CPA can help put money back in your pocket!
1. Lease terms. The lessor owns the property; the lessee uses the property. 2. The kind of lease. An operating lease provides that the property be returned to the lessor. A capital lease is actually a purchase in which the lease is a means of financing (rather than a bank loan). Therefore, a capital lease has payments that include principal and interest.
3. Lease conditions. A lease that meets one or more of the following criteria is a capital lease, and the lessee should depreciate the leased asset:
Ownership is transferred when the lease terminates.
There is a bargain purchase option (B.P.O.), allowing the asset to be purchased at a price far below its fair market value.
4. The lease is for 75% or more of the asset's expected life--e.g., if the asset's life is 10 years.
Therefore, working with the right accountant, bookkeeper and CPA can help put money back in your pocket!
Tuesday, April 21, 2009
In Troubele with the IRS? Secrets to Finding the Right Tax Relief Professional
There may be no hope for major companies like Lehman Brothers, Circuit City, Bed Bath and Beyond, but many struggling small to medium sized businesses could still survive the recession - all they need is some good business sense and top quality bookkeeping.
Althought that might be the case, sometimes small to medium sized businesses still get in trouble with the IRS which can be a terrible experience for everyone. The IRS imposes harsh penalties on people that are not in compliance with tax code. Using an experienced tax professional can eliminate tricky IRS tactics and will likely save you money and stress. Using a tax professional will eliminate the intimidation factor the IRS relies on when going after individuals. Many people believe that if they work with a tax professional, this will make it look like they are trying to hide something from the IRS. Believe it or not, the IRS would much rather work with a tax professional that is aware of tax laws than dealing with individual tax payers because it makes their job much easier. With that being said, what should you look for in a tax professional if you are having tax problems?
1) Locate a few tax relief companies that say they can help with your tax problem. It is important to talk with a couple companies because each one will likely have a different approach. Most of these companies will offer you a free consultation where you will get your likely outcome and a quote for the service. Talking with a few companies will also help ensure yourself that you are getting a decent deal for the price and you don't get taken advantage of by a tax company that is trying to charge much more than their service is worth.
2) Check out the company rating with the BBB. This will give you a general sense of its past business relationships. If their rating is satisfactory then you know they can likely be trusted. Be very careful with the service if it is listed as unsatisfactory.
3) Watch out for companies that are promising an outcome that is highly unlikely. Some companies will promote pennies on the dollar settlement on tax debt. This is actually extremely rare to receive and if they tell you that it is likely you will settle for pennies on the dollar before completely analyzing your financial situation, this is a big red flag.
4) Be careful of companies that charge a retainer fee. A company that has retainer fees is normally not a service based company and is more interested in collecting money from individuals than actually helping them. It is best to hire a company that plans on getting paid based on results and the service they provide and they realize that they shouldn't be paid until that service has been completed. A company that charges a retainer will likely charge you much more overall than a company that doesn't.
Once you talk to several tax professionals you will be able to make an educated decision about which one to hire based on quote, tax resolution, and your overall financial benefit you would receive. It is very important to be extremely honest about your financial situation with the tax professionals so they can give you an honest and likely outcome. The IRS has many different methods for individuals to resolve their tax problems and it is completely dependent upon an individual's financial situation.
BackTaxesHelp.com provides trusted tax solutions to people with a large variety of financial problems. We pride ourselves on having a diverse tax team that can help with a variety of IRS and state tax problems. If you need IRS back taxes relief, consider us and let us tell you your options.
Althought that might be the case, sometimes small to medium sized businesses still get in trouble with the IRS which can be a terrible experience for everyone. The IRS imposes harsh penalties on people that are not in compliance with tax code. Using an experienced tax professional can eliminate tricky IRS tactics and will likely save you money and stress. Using a tax professional will eliminate the intimidation factor the IRS relies on when going after individuals. Many people believe that if they work with a tax professional, this will make it look like they are trying to hide something from the IRS. Believe it or not, the IRS would much rather work with a tax professional that is aware of tax laws than dealing with individual tax payers because it makes their job much easier. With that being said, what should you look for in a tax professional if you are having tax problems?
1) Locate a few tax relief companies that say they can help with your tax problem. It is important to talk with a couple companies because each one will likely have a different approach. Most of these companies will offer you a free consultation where you will get your likely outcome and a quote for the service. Talking with a few companies will also help ensure yourself that you are getting a decent deal for the price and you don't get taken advantage of by a tax company that is trying to charge much more than their service is worth.
2) Check out the company rating with the BBB. This will give you a general sense of its past business relationships. If their rating is satisfactory then you know they can likely be trusted. Be very careful with the service if it is listed as unsatisfactory.
3) Watch out for companies that are promising an outcome that is highly unlikely. Some companies will promote pennies on the dollar settlement on tax debt. This is actually extremely rare to receive and if they tell you that it is likely you will settle for pennies on the dollar before completely analyzing your financial situation, this is a big red flag.
4) Be careful of companies that charge a retainer fee. A company that has retainer fees is normally not a service based company and is more interested in collecting money from individuals than actually helping them. It is best to hire a company that plans on getting paid based on results and the service they provide and they realize that they shouldn't be paid until that service has been completed. A company that charges a retainer will likely charge you much more overall than a company that doesn't.
Once you talk to several tax professionals you will be able to make an educated decision about which one to hire based on quote, tax resolution, and your overall financial benefit you would receive. It is very important to be extremely honest about your financial situation with the tax professionals so they can give you an honest and likely outcome. The IRS has many different methods for individuals to resolve their tax problems and it is completely dependent upon an individual's financial situation.
BackTaxesHelp.com provides trusted tax solutions to people with a large variety of financial problems. We pride ourselves on having a diverse tax team that can help with a variety of IRS and state tax problems. If you need IRS back taxes relief, consider us and let us tell you your options.
Monday, April 13, 2009
Accounting Philosophically: "Food for Thought"
A friend of mine, who is a lifelong Professor of Accounting and Finance, and lives a comfortable, but hardly extravagant lifestyle, recently, shared a joking observation on our current economic situation with me. It was, "I didn't realize how bad things had gotten until Fortune magazine called me to let me know that I was #27 on the Fortune 500 list." Obviously, this was not so, but his point was made - and if you haven't heard it enough already, TIMES ARE TOUGH!
Hopefully, the old economic concept of demand and supply will soon come into play. Simply put, if we can't demand - and the suppliers want to supply - something will have to give. Ideally, it will be prices - and they will come down. But, I'm willing to bet that you, like me, are wondering exactly what the stimulus will stimulate. After all, if money is provided to buy things, then prices will not need to come down - and we may wind up buying at the same price, but with our own tax dollars.
So, let's see here. It looks like we're paying taxes so we can get a stimulus check from those taxes - to pay the same price we were paying before - that helped create the need for the stimulus in the first place.... Confusing, isn't it? Let me know what your thoughts: Email me at william.vasquez@taxtalkonline.com
Accounting Philosophically is strictly a tongue-in-cheek observation and is not intended to reflect any political affiliation, lobbying cause, or other similar position.
Hopefully, the old economic concept of demand and supply will soon come into play. Simply put, if we can't demand - and the suppliers want to supply - something will have to give. Ideally, it will be prices - and they will come down. But, I'm willing to bet that you, like me, are wondering exactly what the stimulus will stimulate. After all, if money is provided to buy things, then prices will not need to come down - and we may wind up buying at the same price, but with our own tax dollars.
So, let's see here. It looks like we're paying taxes so we can get a stimulus check from those taxes - to pay the same price we were paying before - that helped create the need for the stimulus in the first place.... Confusing, isn't it? Let me know what your thoughts: Email me at william.vasquez@taxtalkonline.com
Accounting Philosophically is strictly a tongue-in-cheek observation and is not intended to reflect any political affiliation, lobbying cause, or other similar position.
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