President Obama is meeting with world leaders at the Group of 20 Summit this weekend in Korea. Our financial overhaul regulations need to be completed before the President’s trip and Lawmakers are scrambling to sort out their differences on a range of certain provisions. According to the Wall Street Journal, in their debate they are are discussing everything from bank regulations to consumer protection. If they don’t complete their work this week, Obama will go to the Group of 20 Summit without a bill and Congress might not be able to pass a law before their July 4th recess, which is what they have been pushing for.
One provision under debate is the Volcker Rule (originated by former Federal Reserve Chairman, Paul Volcker) which had originally imposed a ban on banks making investments with their own money—a practice called proprietary trading. Lawmakers are looking to compromise with allowing large banks to invest a small amount, like 2%, into certain privately managed funds. "Mr. Volcker wants and expects a really strong bill," said the former Fed chairman's assistant, Tony Dowd. "He doesn't want it to look like Swiss cheese."
They were also divided about how to set up stricter capital rules for banks with more than $10 billion of assets, as required by an amendment Senator Susan Collins (R., Maine) attached to the Senate bill last month. Banks are saying the new rules would restrict their ability to lend. Lawmakers on Monday did reach a deal that would limit the amount of fees banks are allowed to charge retailers for processing debit cards.
The conference committee of congressional negotiators seeking to resolve differences between the House and Senate versions of the bill plans to work through the consumer-protection issues on Tuesday, the Volcker Rule on Wednesday, and derivatives regulation on Thursday. The timing could slip if lawmakers need more time to resolve disputes. The very reason for the Summit is to discuss measures to promote the financial stability of the world—having our domestic issues worked out would sure look better for the President during the Summit.
Tuesday, June 22, 2010
Nebraska Town Votes to Banish Illegal Immigrants
The New York Times reports the residents of Freemont, Nebraska are trying to pass a law banning illegal immigrants from all other jobs and even rental homes. The new law, if it passes, will try to bar landlords from renting to those in the country illegally, requiring renters to provide information of the person to the police and to obtain city occupancy licenses.
Opponents say paying to defend such a local law would require a significant cut in Fremont city services or a major tax increase — or combination of the two. But advocates feel federal authorities failed to enforce immigration restrictions, forcing places like Freemont, Nebraska with a small but growing Hispanic population to take matters into their own hands.
The advocates of the law complained that illegal immigrants were causing an increase in crime, taking jobs that would once have gone to longtime residents and changing the character of their quiet city, some 30 miles of farm fields from Omaha.
Fremont’s Hispanic population, practically nonexistent two decades ago, has grown to about 2,000 people, according to some estimates. No one knows how many illegal immigrants live in Fremont, and the estimates (depending on which side of this debate one is on) vary enormously—as stated by the New York Times article.
It’s interesting to note how the new law wouldn’t apply to the area’s two largest meatpacking plants –including Hormel. They happen to be just outside official city limits.
This is what the A.CL.U. had to say in a statement about the Nebraska issue, “If this law goes into effect, it will cause discrimination and racial profiling against Latinos and others who appear to be foreign born, including U.S. citizens,” Laurel Marsh, executive director of A.C.L.U. Nebraska , said in a statement issued late Monday. “The A.C.L.U. Nebraska has no option but to turn to the courts to stop this un-American and unconstitutional ordinance before the law goes into effect. Not only do local ordinances such as this violate federal law, they are also completely out of step with American values of fairness and equality.”
Some residents were outraged by the choice, and began collecting signatures on a petition to put the question to a vote — the vote that ultimately came on Monday.
Read the the full article here. Tell me your thoughts on Facebook or @ronideutch on Twitter.
Opponents say paying to defend such a local law would require a significant cut in Fremont city services or a major tax increase — or combination of the two. But advocates feel federal authorities failed to enforce immigration restrictions, forcing places like Freemont, Nebraska with a small but growing Hispanic population to take matters into their own hands.
The advocates of the law complained that illegal immigrants were causing an increase in crime, taking jobs that would once have gone to longtime residents and changing the character of their quiet city, some 30 miles of farm fields from Omaha.
Fremont’s Hispanic population, practically nonexistent two decades ago, has grown to about 2,000 people, according to some estimates. No one knows how many illegal immigrants live in Fremont, and the estimates (depending on which side of this debate one is on) vary enormously—as stated by the New York Times article.
It’s interesting to note how the new law wouldn’t apply to the area’s two largest meatpacking plants –including Hormel. They happen to be just outside official city limits.
This is what the A.CL.U. had to say in a statement about the Nebraska issue, “If this law goes into effect, it will cause discrimination and racial profiling against Latinos and others who appear to be foreign born, including U.S. citizens,” Laurel Marsh, executive director of A.C.L.U. Nebraska , said in a statement issued late Monday. “The A.C.L.U. Nebraska has no option but to turn to the courts to stop this un-American and unconstitutional ordinance before the law goes into effect. Not only do local ordinances such as this violate federal law, they are also completely out of step with American values of fairness and equality.”
Some residents were outraged by the choice, and began collecting signatures on a petition to put the question to a vote — the vote that ultimately came on Monday.
Read the the full article here. Tell me your thoughts on Facebook or @ronideutch on Twitter.
New Jersey Democrats fail to extend millionaires tax
Do you think millionaires should be charged a hefty income tax? What if it was to solve one of the highest budget short-falls in history?
According to Reuters.com, New Jersey Democrats had wanted to reimpose a one-year, 10.75 percent tax on income above $1 million that would have hit 16,000 people. New Jersey's fiscal shortfall, at 37.4 percent of the current year's budget, is the second-highest among U.S. states, second only to Nevada, according to the Center on Budget and Policy Priorities. However, New Jersey Democratic legislators on Monday failed to gather enough votes to extend a tax on millionaires that would have been used to provide property tax relief for senior citizens and the disabled.
The millionaires' tax would have raised $637 million for rebate checks of up to $1,295 for some 600,000 senior citizens who would otherwise face steep increases in their property taxes during fiscal 2011.
Gov. Christie claimed the tax would keep the millionaire business owners from hiring in our tough economy. However, he proposed a constitutional amendment placing a 2.5 percent cap on annual increases in residential property taxes.
Read the full article here. Tell me what you think on Facebook or @ronideutch on Twitter.
According to Reuters.com, New Jersey Democrats had wanted to reimpose a one-year, 10.75 percent tax on income above $1 million that would have hit 16,000 people. New Jersey's fiscal shortfall, at 37.4 percent of the current year's budget, is the second-highest among U.S. states, second only to Nevada, according to the Center on Budget and Policy Priorities. However, New Jersey Democratic legislators on Monday failed to gather enough votes to extend a tax on millionaires that would have been used to provide property tax relief for senior citizens and the disabled.
The millionaires' tax would have raised $637 million for rebate checks of up to $1,295 for some 600,000 senior citizens who would otherwise face steep increases in their property taxes during fiscal 2011.
Gov. Christie claimed the tax would keep the millionaire business owners from hiring in our tough economy. However, he proposed a constitutional amendment placing a 2.5 percent cap on annual increases in residential property taxes.
Read the full article here. Tell me what you think on Facebook or @ronideutch on Twitter.
The Price of Saving Fuel
We may soon see more “green” vehicles on the road. According to Kiplinger.com, a survey by Capital One Auto Finance found that a third of their participants would likely purchase a green vehicle as their next auto purchase. People are considering one of the alternative-energy vehicles for a number of reasons, including the high price of gas. Some also want to do their part to help the environment, such as our air quality. But no matter the reason, most green vehicles qualify for tax deductions—and this alone is a great reason to buy one. However, you should know you'll pay an average of $5,500 more for a 2010 hybrid than for its gasoline-engine counterpart.
One way to see whether it pays to buy a green vehicle is to calculate the five-year ownership costs. What are your long-term savings at the pump as well as tax credits for the many green vehicles? When we compared the ownership costs of hybrids versus conventional vehicles in early 2009, gas prices we’re hovering just above $2 a gallon, and few hybrids earned back their extra cost with savings at the pump. But with gas now closer to $3 and with more eco-friendly vehicles on the market, you can more often save green by buying green.
The Kiplinger.com article updated calculations, pitting 19 hybrids and 11 diesels against comparable gas-engine vehicles. The numbers assume that you drive 15,000 miles a year and that regular gasoline is $2.85, premium is $3.15 and diesel is $3.08, with a 3.5% annual increase for each fuel. The math also includes depreciation, maintenance and repairs, and it assumes you finance the vehicle with a five-year loan after a 15% down payment. Don’t forget to account for federal tax credits for vehicles that still qualify for them; they've expired for Ford, Honda, Lexus and Toyota hybrids. (If you're hit by the alternative minimum tax, the credit won't help you, so your payback time will be a bit longer.)
Winners and losers according to Kiplinger.com: Diesels pay back their premium more often than hybrids do. Over five years, every diesel except one -- Volkswagen's Golf TDI -- costs less to own than the comparable gas-engine model. The savings range from $307 on the BMW X5 35d to $6,082 on the Mercedes-Benz GL350 Blue-Tec (the $60,825 diesel GL is priced $1,000 below the gas-engine GL450 and has a tax credit of $1,800). Among hybrids, you're more likely to be on the losing end of the deal as long as a gallon of gas still costs about $3. You'll save the most buying the super luxury Mercedes-Benz S400 hybrid ($92,475). It beats the S550 by $6,764 over five years -- mainly because it costs $3,650 less than the S550 and carries a tax credit of $1,150. But in general, the more expensive a hybrid, the less likely it will save money over its gas-engine sibling. For example, the biggest losers are the Chevrolet Tahoe and GMC Yukon hybrids (both about $52,000) -- which would cost you $10,000 more than their gas-engine comparables over five years -- and the Lexus LS 600h L ($109,675), which would cost a whopping $41,428 more to own.
I recently wrote a blog on the topic, 10 Vehicles that Still Qualify for a Federal Tax Credit. Check it at http://ronideutch.blogspot.com/.
One way to see whether it pays to buy a green vehicle is to calculate the five-year ownership costs. What are your long-term savings at the pump as well as tax credits for the many green vehicles? When we compared the ownership costs of hybrids versus conventional vehicles in early 2009, gas prices we’re hovering just above $2 a gallon, and few hybrids earned back their extra cost with savings at the pump. But with gas now closer to $3 and with more eco-friendly vehicles on the market, you can more often save green by buying green.
The Kiplinger.com article updated calculations, pitting 19 hybrids and 11 diesels against comparable gas-engine vehicles. The numbers assume that you drive 15,000 miles a year and that regular gasoline is $2.85, premium is $3.15 and diesel is $3.08, with a 3.5% annual increase for each fuel. The math also includes depreciation, maintenance and repairs, and it assumes you finance the vehicle with a five-year loan after a 15% down payment. Don’t forget to account for federal tax credits for vehicles that still qualify for them; they've expired for Ford, Honda, Lexus and Toyota hybrids. (If you're hit by the alternative minimum tax, the credit won't help you, so your payback time will be a bit longer.)
Winners and losers according to Kiplinger.com: Diesels pay back their premium more often than hybrids do. Over five years, every diesel except one -- Volkswagen's Golf TDI -- costs less to own than the comparable gas-engine model. The savings range from $307 on the BMW X5 35d to $6,082 on the Mercedes-Benz GL350 Blue-Tec (the $60,825 diesel GL is priced $1,000 below the gas-engine GL450 and has a tax credit of $1,800). Among hybrids, you're more likely to be on the losing end of the deal as long as a gallon of gas still costs about $3. You'll save the most buying the super luxury Mercedes-Benz S400 hybrid ($92,475). It beats the S550 by $6,764 over five years -- mainly because it costs $3,650 less than the S550 and carries a tax credit of $1,150. But in general, the more expensive a hybrid, the less likely it will save money over its gas-engine sibling. For example, the biggest losers are the Chevrolet Tahoe and GMC Yukon hybrids (both about $52,000) -- which would cost you $10,000 more than their gas-engine comparables over five years -- and the Lexus LS 600h L ($109,675), which would cost a whopping $41,428 more to own.
I recently wrote a blog on the topic, 10 Vehicles that Still Qualify for a Federal Tax Credit. Check it at http://ronideutch.blogspot.com/.
Permanent middle class tax cuts too costly
We are entering mid-term elections and thus everything is becoming a “political issue.” Not outside of the norm, tax cuts have become a primary focus. Tax cuts enacted under former President George W. Bush are scheduled to expire at the end of the year, affecting taxpayers at every income level. President Barack Obama proposes to permanently extend them for individuals making less than $200,000 a year and families making less than $250,000 — at a cost of about $2.5 trillion over the next decade.
Many Democrats want to extend them before the elections, so they can campaign on passing tax cuts for the middle class. But Republicans argue that many of the high earners who would face tax increases under Obama's plan are small business owners struggling to stay afloat in a tough economy.
House Majority Leader Steny Hoyer said Tuesday that tax increases will eventually be necessary to address the nation's mounting debt, and pull in revenue, raising a difficult election-year issue.
Hoyer raised the possibility that Congress will only temporarily extend middle-class tax cuts set to expire at the end of the year. He suggested that making them permanent would be too costly.
In the short term, government spending has been necessary to stimulate the economy, Hoyer said. But in the longer term, Congress will have to rein in spending and raise taxes to tackle the debt, he added.
"Raising revenue is part of the deficit solution, too," Hoyer said.
Senate Republican Leader Mitch McConnell said, "It's now official. Top Democrats on Capitol Hill are starting to signal their intention to raise taxes on the middle class."
Read the full Associated Press article here.
Many Democrats want to extend them before the elections, so they can campaign on passing tax cuts for the middle class. But Republicans argue that many of the high earners who would face tax increases under Obama's plan are small business owners struggling to stay afloat in a tough economy.
House Majority Leader Steny Hoyer said Tuesday that tax increases will eventually be necessary to address the nation's mounting debt, and pull in revenue, raising a difficult election-year issue.
Hoyer raised the possibility that Congress will only temporarily extend middle-class tax cuts set to expire at the end of the year. He suggested that making them permanent would be too costly.
In the short term, government spending has been necessary to stimulate the economy, Hoyer said. But in the longer term, Congress will have to rein in spending and raise taxes to tackle the debt, he added.
"Raising revenue is part of the deficit solution, too," Hoyer said.
Senate Republican Leader Mitch McConnell said, "It's now official. Top Democrats on Capitol Hill are starting to signal their intention to raise taxes on the middle class."
Read the full Associated Press article here.
10 Vehicles that Still Qualify for a Federal Tax Credit
Unfortunately, many of the federal tax credits for popular hybrids – such as the Toyota Prius – expired quite a while ago. However, although a handful of vehicles no longer qualify for the tax incentives, there are plenty of energy efficient automobiles that can still result in a decent tax credit.
To assist the readers of my blog looking to invest in a hybrid vehicle, please enjoy the following list of 10 vehicles that are still eligible for the IRS credit. I have provided information as to the amount of the credit and basic information on each automobile.
1. 2010 BMW Active Hybrid X6 – Credit: $1,500
The 2010 Active Hybrid X6 BMW boasts superb fuel efficiency while maintaining the speed and class of a regular BMW. Although the vehicle does not have the best fuel efficiency rating or the lowest price tag, the vehicle is being marketed towards consumers who want an efficient luxury vehicle that can go from 0 to 60 in less than 6 seconds. The BMW Active is listed at $88,900 and qualifies for a federal tax incentive of $1,550.
2. 2010 Audi A3 TDI – Credit: $1,300
The 2010 Audi A3 TDI is a clean diesel SUV with the same capabilities as any typical sports utility vehicle; it also seats seven. Since the automobile uses diesel fuel, drivers can claim a tax credit for this car of up to $1,300. The Audi A3 TDI is one of the first of its kind, and was even awarded the 2010 Green Car of the Year award from Green Car Journal.
3. Chevy Volt – Credit: $7,500
Although the Chevy Volt has not hit sales floors yet, there is already a lot of anticipation of its upcoming release. The vehicle has an electric motor – powered by lithium ion batteries – and the car can travel 40 miles on a single charge. Although an official price has not been announced, experts predict it will be priced around $40,000, which would correlate with a tax credit of $7,500.
4. Tesla Roadster – Credit: $7,500
The most significant federal tax credits are available for plug-in electric vehicles, such as the Tesla Roadster. The credit amount may not seem as significant compared to the Roadster’s steep $109,000 price tag. However, many states including California are offering additional incentives for taxpayers who buy or lease a Tesla Roadster.
5. 2010 Mercedes Benz ML450 Hybrid – Credit: $2,200
The 2010 Mercedes Benz ML450 is another hybrid offering drivers a luxury car that can be driven on only electricity, only gasoline, or an efficient combination of the two. The small scale SUV gets around 24 miles per gallon and qualifies for a $2,200 federal tax credit.
6. 2011 Nissan Leaf – Credit: $7,500
The 2011 Nissan leaf is among the most affordable electric vehicles. It has not hit the market yet, but according to reports it can travel 100 miles on a $3.00 charge of electricity. The leaf will arrive at Nissan showrooms across the country this December. The MSRP should be around $32,780 before the credit, and the vehicle will also qualify for a $5,000 Californian clean vehicle rebate.
7. 2010 Chevrolet Tahoe Hybrid – Credit: $2,200
The Chevy Tahoe Hybrid has an MSRP of $51,185, however if you purchase one before December 31st then it will qualify for a $2,200 federal credit. The vehicle averages 21 miles per gallon. Although the Tahoe is not the most efficient vehicle on my list, considering its size the mileage is still impressive.
8. 2010 GMC Sierra Hybrid – Credit: $2,200
If you need to drive a truck that can haul items, but are looking for a way to cut your fuel expenses, then you should consider the 2010 GMC Sierra Hybrid. The truck is best for city drivers, who can benefit from a 21 mile per gallon average. Additionally, the Sierra has a $38,710 MSRP and will qualify for a $2,200 federal tax credit.
9. 2010 Mercedes Benz GL350 BlueTec – Credit: $1,800
Car buyers looking for clean-diesel technology as well as enough room for the whole family should look to the Mercedes Benz GL350 BlueTec. The vehicle also boasts impressive safety features such as a fuel system shutdown in the event of an accident. Although the price is a bit high at $60,825, the GL350 does qualify for a $1,800 tax credit.
10. 2010 Cadillac Escalade Hybrid – Credit: $2,200
Energy conscious Cadillac Escalade fans can now get the full-sized luxury SUV they love, in the form of an efficient hybrid. With a base MSRP of $51,185, the automobile boasts a 5-star crash rating, and 3-row seating. It also qualifies for $2,200 federal incentive if you purchase before the end of the year.
People Buying Gold Coins to Avoid Taxes
I was on FOX Business news today discussing how and why taxpayers are using gold coins as a way to avoid taxes. For those of you who might have missed the segment, I have included the embedded video below.
Tax-Saving Moves for Small Businesses
There are a lot of important business tax changes on the horizon, and I always encourage my readers to stay up to date on these new developments. By studying the tax code, and planning your finances throughout the year you can save money when next tax season arrives.
The other day the Wall Street Journal posted a great article on easy tax-saving moves business owners can make. I have included a section of the article below, but if you are self-employed or own a business then I highly recommend reading the full text here.
Higher Taxes on Dividends
The maximum federal rate on dividends will automatically leap to 39.6% from the current 15% on Jan. 1 as the Bush tax cuts expire. Although the president has promised more than once to limit the maximum rate on dividends to 20%, the little-known fact is Congress must take action for that to happen. It's no sure thing. Even if it does happen, the maximum rate on dividends will jump again to 23.8% in 2013, thanks to the additional 3.8% Medicare tax that takes effect that year. So you're facing a 59% increase in the maximum federal tax on dividends (at least).
Higher Taxes on Long-Term Gains
Starting Jan. 1, the maximum federal rate on long-term capital gains will automatically increase to 20% from the current 15%. Starting in 2013, it will jump again to 23.8% due to the additional 3.8% Medicare tax. So you're facing a 59% increase in the maximum federal tax on long-term capital gains too.
What Can You Do?
Thankfully, you still have some time to take advantage of this year's historically low tax rates on dividends and long-term gains. Here are three strategies to consider right now. Don't ponder too long, because these ideas will take some time to execute, and Jan. 1 will arrive before you know it.
Strategy No. 1: Take Low-Taxed Dividends This Year
NY: Get Ready for $11 a Pack Cigarettes
Yesterday legislators from New York passed a bill that will levy an additional $1.60 in excise taxes on every pack of cigarettes sold in the state. The new tax is scheduled to take effect July 1st, and will increase the total taxes on a pack of cigarettes to $11. Check out the following CNNMoney.com article on this recent development.
New York City smokers already pay the highest cigarette taxes in the nation, but a new state law will push those taxes even higher this summer.
The state legislature on Monday approved a bill adding an additional state tax of $1.60 to every pack sold, effective July 1. This bill, which was signed by Gov. David Paterson on Monday, will raise the state tax to $4.35 per pack.
New York City smokers pay an additional municipal tax of $1.50 per pack, for a current total tax of $4.25 per pack. That's the highest state-local tax whammy in the country, according to the Campaign for Tobacco-Free Kids. Chicago is the runner-up, at $3.66 per pack.
This new tax increase means that smokers in the city will pay $5.85 per pack in taxes. This drives the average local price up to nearly $11 per pack, according to some estimates.
The tax hike is aimed at generating an additional $440 million in 2010-2011 tax revenue to support healthcare programs.
World's Rich Got Richer Amid '09 Recession
From MSNMoney.com:
The United States was home to the most millionaires in 2009 -- 2.87 million -- followed by Japan with 1.65 million, Germany with 861,000, and China with 477,000.
Switzerland had the highest concentration of millionaires: nearly 35 for every 1,000 adults.
Yet as portfolios bounced back, investors remained wary after a collapse that erased a decade of stock gains, fueled a contraction in the global economy and sent unemployment soaring.
The report, based on surveys with more than 1,100 wealthy investors with 23 firms, found that the rich were well served by holding a broad range of investments, including commodities and real estate.
"The wealthy allocated, as opposed to concentrated, their investments," Merrill Lynch head of U.S. wealth management Lyle LaMothe said in an interview.
Three Signs Housing's Getting Weaker
Towards the end of 2009 there were reports suggesting the housing marketing was improving. However, as this new article from NPR.org points out, new statistics are suggesting a weakening real estate market once again. Listed below are their top three signs that the housing market is getting weaker.
1. Sales of previously-owned homes fell by 2.2 percent in May, the National Association of Realtors said today. Economists were predicting that sales would rise, driven by the tail end of the homebuyer tax credit.
2. Home builders' confidence in the housing market fell this month, according to a monthly survey of the industry.
3. Home prices have been falling this year, according to the Case-Shiller index.
To qualify for the home-buyer tax credit, people had to sign a contract by April 30 and close by June 30. Programs like this often encourage people who are planning to buy a home to hurry up and do it before the program ends. In that way, they sometimes steal home-buyers from future months.
In a note this morning, Ian Shepherdson of High Frequency Economics argued that this phenomenon will lead to more weakness in the housing market in the coming months.
Questions for the Tax Lady: June 21st, 2010
Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!
Question #1: When does the 10% tanning tax take effect?
According to IRS guidelines the tanning tax is due to take effect on July 1st, 2010. For more information check out this blog entry I posted last week on the subject.
Question #2: Do I need to report the sale of a second home?
IRS ETAAC Presents Annual Report to Congress
According to the newest IRS press release, the Electronic Tax Administration Advisory Committee (ETAAC) presented its 2010 Annual Report to Congress earlier this month.
The ETAAC provides feedback on the development and implementation of the Internal Revenue Service’s electronic tax administration strategy.
The report includes recommendations to further expand the use of electronic filing. The report recommends the IRS use a three-year phase-in approach to successfully implement the tax preparer requirement to electronically file individual tax returns. The report also calls for continued funding and completion of the modernization of IRS systems as well as collaboration between the IRS and industry regarding tax software standards and the implementation of the return preparer regulations.
“ETAAC plays a significant role in IRS efforts to improve the taxpayer’s experience via e-file and the Internet,” said David Williams, director of Electronic Tax Administration. “The IRS appreciates ETAAC’s recommendations, which we will consider as we plan our strategy for electronic tax administration.”
The 13-member panel provides an organized public forum for discussion of electronic tax administration issues and the overriding goal that paperless filing should be the preferred and most-convenient method of filing tax and information returns.
“ETAAC believes a fully e-enabled IRS is critical to meeting the overarching e-file goal and enhancing tax administration,” said Phil Poirier, ETAAC Chairman.
Corporations Reap Tax Windfalls on Stock Options
From Web CPA:
Corporations that issued stock options to their executives claimed tax deductions that were collectively $52 billion larger than the expenses shown on their books in 2008, according to newly released data.
Senate Permanent Subcommittee on Investigations Chairman Carl Levin, D-Mich., highlighted the IRS data Wednesday. “Current stock option accounting and tax rules are out of kilter, lead to corporations reporting inconsistent stock option expenses on their financial books versus their tax returns, and often produce huge tax windfalls for companies that pay their executives with large stock option grants,” he said in a statement.
IRS data from 2008 shows that U.S. companies reduced their taxes by billions of dollars by claiming $52 billion more in stock option tax deductions than the stock option expenses shown on their books, Levin noted. The figures from prior years are $48 billion in excess stock option tax deductions in 2007; $61 billion in 2006; and $43 billion in 2005.
Tax Court Denies Charitable Deduction for $200 Cash Given to Panhandlers & $29k of Stuff Donated to Goodwill
Last Thursday, the US Tax Court ruled on Roberts v. Commissioner and denied a taxpayer’s attempt to claim a charitable deduction for $200 cash given to panhandlers and $28,655 of household items donated to Goodwill. You can check out a section of the opinion below, courtesy of the Tax Prof, or click here for the full PDF.
For 2005 petitioner claimed, on Schedule A, Itemized Deductions, a $200 cash charitable contribution, which he described as donations to panhandlers and the Salvation Army, and $28,655 of noncash charitable contributions. Included with his 2005 Federal income tax return was a self-prepared substitute Form 8283, Noncash Charitable Contributions, in which petitioner claims to have contributed more than 450 items of property consisting primarily of used clothing, but also including, among other things, towels, bedsheets, books, costume jewelry, children's toys, and glass lamps. Petitioner's descriptions of the items of property allegedly contributed to charity are vague and include self-assigned estimates of their values. Petitioner also provided copies of five receipts from Goodwill Industries (Goodwill) dated January 9, April 13, May 18, September 16, and October 1, 2005. Only one of the receipts bears a signature indicating that the donated items were received by Goodwill, and the receipts provide nothing more than vague references to the items allegedly donated; e.g., "men's boots", "ladies' clothes", "men's clothes", "boy's clothes", "women's clothing", and "4 bags of clothes". ...
With respect to the claimed $200 of cash contributions to charity, petitioner has failed to offer anything more than his self-serving testimony that he made various donations to panhandlers and the Salvation Army. ... Petitioner did not offer any canceled checks, receipts, or other reliable evidence to substantiate the claimed $200 of cash contributions to charity. Accordingly, we sustain respondent's determination to deny to petitioner a deduction for the claimed $200 of cash contributions to charity.
Monday, June 21, 2010
White House to hold bipartisan talks on energy reform
From CNN.com:
Politicians and others are trying to use the disaster and devastation of the Gulf oil spill as a way to get people motivated to pass the energy reform bill this year. Usually this would not be pushed during an election year, but Senator Joe Lieberman, an independent from Connecticut who sits with the Democratic caucus, told CNN's "State of the Union" on Sunday that he believes an energy bill "does have a chance" this year. He further stated that we need to put a price on carbon to let the private sector create the jobs and energy industries we need in the form of a carbon emissions cap on the energy utilities across the country.
How will it do? "There are about 50 Senators who want to vote for a strong, comprehensive energy bill that puts a price on carbon pollution," Lieberman said. "There are about 30 who are set against it and there are 20 undecided. You've got to get to 60 to pass anything in the Senate. We need half of the undecided and we can do it."
Traditional energy industries like the oil and coal producers oppose this cap-and-trade policy, but supporters say it is the best way to start to reduce the nation's dependence on fossil fuels which are responsible for most of the greenhouse gas emissions by the U.S. (the world's largest emitter per capita).
Senator Lieberman added that “…the less we depend on oil, the less chance there is of another environmental disaster like this."
Do you agree with Liebernam’s statement? Why or Why not? Let me know on my Facebook page or @ronideutch on Twitter.
Read the full article here.
Politicians and others are trying to use the disaster and devastation of the Gulf oil spill as a way to get people motivated to pass the energy reform bill this year. Usually this would not be pushed during an election year, but Senator Joe Lieberman, an independent from Connecticut who sits with the Democratic caucus, told CNN's "State of the Union" on Sunday that he believes an energy bill "does have a chance" this year. He further stated that we need to put a price on carbon to let the private sector create the jobs and energy industries we need in the form of a carbon emissions cap on the energy utilities across the country.
How will it do? "There are about 50 Senators who want to vote for a strong, comprehensive energy bill that puts a price on carbon pollution," Lieberman said. "There are about 30 who are set against it and there are 20 undecided. You've got to get to 60 to pass anything in the Senate. We need half of the undecided and we can do it."
Traditional energy industries like the oil and coal producers oppose this cap-and-trade policy, but supporters say it is the best way to start to reduce the nation's dependence on fossil fuels which are responsible for most of the greenhouse gas emissions by the U.S. (the world's largest emitter per capita).
Senator Lieberman added that “…the less we depend on oil, the less chance there is of another environmental disaster like this."
Do you agree with Liebernam’s statement? Why or Why not? Let me know on my Facebook page or @ronideutch on Twitter.
Read the full article here.
Latest Budget Extender Includes Tobacco Taxes
According to an article on msnbc.com, lawmakers in Albany, New York will soon vote on an emergency spending plan in hopes of avoiding a government shutdown. The New York state budget is 80 days late; a large tax increase on tobacco products totaling $290 million is included in the latest bill. For example, the tax on a pack of cigarettes would go from $2.75 a pack to $4.35 a pack. Should the bill pass, the new taxes would take effect September 1. Because all State Republicans have indicated that they would vote ‘no’ on any tax increases. In order to pass, the bill would require all 32 Senate Democrats to vote ‘yes’.
What are your views on “sin taxes” such as these? Comment on my Facebook page or message me on Twitter @ronideutch!
What are your views on “sin taxes” such as these? Comment on my Facebook page or message me on Twitter @ronideutch!
California unemployment falls to 12.4 percent
Here in California the unemployment rate is falling, but not making much of a difference. It fell to 12.4 percent in California last month and the state had its fifth straight month of job growth, but the numbers are still very weak, according to the California Employment Development Department. The statewide unemployment rate fell only a tenth of a point, from 12.5 percent in May, while 28,300 jobs were added. However, most of the jobs were temporary government jobs, probably those from the Census.
In May, California still had the third highest unemployment rate in the U.S., trailing Nevada (14 percent) and Michigan (13.6 percent). May marked the first time since April 2006 that a state other than Michigan had the worst unemployment in the nation.
In May, California still had the third highest unemployment rate in the U.S., trailing Nevada (14 percent) and Michigan (13.6 percent). May marked the first time since April 2006 that a state other than Michigan had the worst unemployment in the nation.
Nearly 1,400 O.C. Residents Miss IRS Refunds
Almost 1,400 residents of Orange County, California have not received their IRS refunds, reportedly because of a mailing error. The IRS is trying to identify and re-send the failed refunds, however many taxpayers from Orange County are apparently fed up with waiting. The Orange County Register posted a story on the ongoing problem; you can read a section below or the full story here.
Some 1,380 Orange County residents have yet to claim their 2009 IRS refunds for one simple reason -- the IRS can't find them.
They're not alone. This year, $123.5 million in 107,831 refund checks were returned to the IRS by the U.S. Postal Service due to mailing address errors.
To get the money, you need to update your mailing address with the Internal Revenue Service. The IRS will then send out all checks due.
Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.
UBS Customers: You May Want To Call The IRS Right Now
Customers of UBS that have not come clean about their association with the troubled financial giant should speak up before it’s too late. After a lengthy debate, the Swiss Parliament and UBS have agreed to finally release the names of 4,450 clients.
According to the Business Insider, if you've still got a secret Swiss bank account with UBS that you haven't told IRS authorities about, now may be the time. You may have mere hours to do so, before the Swiss do it for you, according to Bloomberg.
The Swiss Parliament recently passed a law forcing UBS to reveal the names of 4,450 clients.
One New York law firm, Rubinstein & Rubinstein LLP, said they've been getting, "panicked calls all week."
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