Secrets of a Tax Free Life

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I'm so excited to share this news with you!  Several months ago, I was asked to collaborate with some of the top Certified Tax Coaches from all around the country, assembling our best strategies for legally planning for and minimizing your tax burden.

We've all been hard at work writing "Secrets of a Tax Free Life, Surprising Write-Off Strategies Most Business Owners Miss!"  

Would you please consider marking your calendar to buy the book during the third week of January 2012? I'll send you a link as the date gets closer to help you remember.   

Your support would mean a lot to me and help me in my efforts to become a  best-selling author!  

I appreciate your support!   

Thanks!

 Larry Stone


P.S. - We've put together a bonus package for those of you who help us launch the book that day. Stay tuned for details! 

Tax Detectives on the Case

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Tax Detectives, on the Case

The IRS is busy playing detective! But are they building cases, clue by meticulous clue, like the supersleuths of television's CSI? Or are they falling on their faces like the bumbling Inspector Clouseau?

Last month, a federal judge gave the IRS permission to serve a "John Doe" summons on the California Board of Equalization, demanding names of residents who transferred real estate to children or grandchildren for little or no consideration. The IRS sought the names as part of a nationwide effort to find taxpayers who transfer property to relatives without filing gift tax returns. (The IRS had already rounded up information from Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington state and Wisconsin -- but California officials objected that state law prohibited them from ratting out residents without court approval.)

Most people don't know much about gift tax, for the simple reason that most people won't ever pay gift tax. Gift tax law lets you give up to $13,000 per year to as many people as you like. Once your gifts to any single person (other than your spouse) top $13,000 in a year, you're required to file gift tax returns. Your cumulative lifetime gifts count against your estate tax "unified credit," which is the amount you're allowed to leave free of estate tax. And once your cumulative lifetime gifts top $5,012,000, you owe a 35% tax on the excess. If you're gifting to a grandchild or some other person more than one generation removed, you might even owe an extra 35% "generation-skipping" tax.

How does that lead the IRS to combing state property records like a sleazy private investigator tracking down a cheating husband? Well, transferring property into an heir's name is a common estate-planning move. Let's say you own a beloved vacation home, or a stock portfolio, and you don't want to see it burdened by probate. You can just add your child's name to the deed or account as "joint tenant with right of survivorship," and at your death, voila, the property automatically passes to your child. But there's a catch -- transferring property like that counts as a "complete gift." If that property is worth $1,000,000, you've just made a $500,000 gift!

This particular IRS "project" is already yielding results. The IRS filed an affidavit in the California case stating that they had examined 658 taxpayers who transferred property to relatives -- and concluded that 238 of them should have filed Form 709 to report the gift. Twenty of those 238 were assessed actual tax because the transfers pushed them over their lifetime exemption.

This isn't the first time the IRS has used the "John Doe" summons to flush out members of suspect groups. Back in 2002, the IRS subpoenaed MasterCard and Visa to find taxpayers using debit cards tied to accounts in offshore tax havens. And in 2008, they used it to find taxpayers hiding Swiss bank accounts. The Internal Revenue Manual puts strict limits on this tool. But if today's efforts succeed in finding lost revenue, we can probably expect to see more in the future.

There are a couple of lessons here. First, many financial moves -- like transferring property into your kids' names -- have hidden tax consequences that are easy to miss. And second, the IRS has more ways than you realize to find those consequences. So don't take chances, especially when they might land you on the wrong end of an IRS subpoena! You know how the utility company tells you to "call before you dig"? Well, call us before you dig, and we'll help you avoid all sorts of nasty surprises!

How to Beat the IRS Legally!

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If you’re like most real estate investors, you waste thousands of dollars every year in taxes you don’t need to pay. Attend our entertaining, fast-paced seminar to learn how to take advantage of these strategies and more:

  • The single most expensive tax mistake of all

  • How to slash your audit risk (Fly under the IRS radar!).

  • Powerful strategies for property “flippers”.

  • Tax-advantaged retirement savings strategies.

  • How to make the most of meals, entertainment, and gifts.

  • The “mileage allowance” mistakes that cost thousands!

  • Write off family medical bills as a real estate expense.

  • How to deduct your kids’ private school and college tuition

Larry Stone, Stone CPA-Colorado Tax Coach, is a Certified Tax Coach and successful real estate investor in multi-family housing.  He has specialized training in tax reduction strategies and uses a comprehensive system to save you money in the real estate industry.  Larry is co-authoring a book called “The Secrets of a Tax Free Life” with an expected publishing date of January 2012.

                                                                           

Costs to Attend

Guests can attend for $15 per person.  Or, you can join the BCREI for only $120/year.  Members attend meetings for free and get access to the member-only website for real estate investing resources and the member-only Discuss@BCREI.com email list to connect with the other members for questions, resources, deals, etc.  See www.BCREI.com and click on membership to learn more and even join on-line!

Our Location

Our meeting location is now at the conference center at the Longmont Plaza Hotel.  The hotel is located on 1900 Ken Pratt Blvd (aka Hwy 119).  But, we will be meeting in their conference center to the northwest of the hotel at approximately 1890 Industrial Circle.  I don’t believe there is an address number on the building.

Click Link for Google Map: http://maps.google.com/maps?hl=en&source=hp&q=1890+Industrial+Circle,+longmont,+co&um=1&ie=UTF-8&hq=&hnear=1890+Industrial+Cir,+Longmont,+CO+80501&gl=us&ei=cnRGS9-pM4-Qtgf0hdzyAQ&sa=X&oi=geocode_result&ct=title&resnum=1&ved=0CAoQ8gEwAA   

Look for the A-Frame signs to guide you in to the building from Ken Pratt Blvd.

Nickels and Dimes

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Last Thursday, cellphone carrier Verizon Wireless announced a new $2 fee for one-time payments made online or over the phone. On Friday, the Federal Communications Commission immediately announced they were "concerned about Verizon's actions" and planned to look into the matter. At the same time, over 158,000 visitors signed an online petition demanding that Verizon drop the fee. In fact, the website hosting the petition expressed shock that "while you are instituting this new fee, Verizon paid zero federal income tax from 2008-2010, and actually got almost a billion dollars in rebates from taxpayers." Verizon immediately beat a hasty retreat and dropped the proposed fee.

Verizon is hardly the only corporate giant to float new fees, only to see them immediately fall back to earth. Back in September, Bank of America announced plans to charge a $5 monthly fee for customers making debit card purchases -- then, after howls of customer protest, backed off just five weeks later. Other banks, which had tested similar debit card fees, killed their fees too in the wake of the protests.

There's a pattern developing here. In today's struggling economy, companies can't impose the broad-based price hikes they really want. So they settle for nickel-and-diming us with junk fees. Unfortunately for them, consumers are pushing back -- and at least with Verizon and the banks, the customers are winning.

There's a similar pattern at work in today's Washington. Candidates can talk 'till they're blue in the face about bold sweeping change, like Rick Perry's 20% flat tax and Herman Cain's attention-grabbing "9-9-9" plan. (If you close your eyes right now, I bet you can still hear Cain saying "9-9-9" in your head.) But in today's hyper-partisan Congress, the actual legislators in charge of implementing all those bright ideas can't find the consensus to name a Post Office, let alone remake the tax code in any meaningful way. So they settle for nickel-and-diming the system -- extending the payroll tax holiday for a miserly 60 days instead of a full year, and paying for it by levying fees on mortgages sold to Fannie Mae and Freddie Mac rather than by raising taxes on million-dollar earners. Even when legislators extend new breaks, they tend to be for small amounts, like the $800 "Making Work Pay" credit or $1,500 for home energy improvements. New tax breaks also tend to be short-lived: the 2009 deduction for sales tax on new cars lasted 10½ months, and the much-ballyhooed "Cash for Clunkers" program lasted just 56 days.

The problem, of course, is that Washington's version of nickel-and-diming us adds up fast. A couple of bucks for online bill payments here and $5 for monthly debit-card usage there? Maybe it cuts into your Starbucks budget. But closing tax breaks hurts. As former Senate Minority Leader Everett Dirksen famously said, "A billion here, a billion there, pretty soon you're talking real money." And IRS "customers" can't threaten to take their "business" somewhere else like customers at the bank.

2012 is an election year, of course, which means we can expect even less in the way of substantive action -- at least for the next 10 months. But that may all change after November 6, as the Bush tax cuts expire after December 31. If the upcoming election leaves Washington as divided as it is now, we can expect a repeat of last summer's debt-ceiling battle. Our job is to keep on top of all the news to safeguard your nickels and dimes, regardless of what happens in November. And that means planning. Remember, being proactive, now, is the key to keeping your tax bill as low as possible in 2012 and beyond. So, if one of your New Year's resolutions is to get out in front of the tax nickel-and-dimers, give us a call!

Avoid Big Real Estate Investors Tax Pitfalls in 2012

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10 Most Expensive Tax Mistakes That Cost Business Owners Thousands

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10 Most Expensive Tax Mistakes That Cost Business Owners Thousands!

 If you’re like most real estate investors, you waste thousands of dollars every year in taxes you don’t need to pay. Attend our entertaining, fast-paced seminar to learn how to take advantage of these strategies and more:

 The single most expensive tax mistake of all

  • How to slash your audit risk (Fly under the IRS radar!)

  • Powerful strategies for property “flippers”

  • Tax-advantaged retirement savings strategies

  • How to make the most of meals, entertainment, and gifts

  • The “mileage allowance” mistakes that cost thousands!

  • Write off family medical bills as a real estate expense.

  • How to deduct your kids’ private school and college tuition

 Larry Stone, Stone CPA-Colorado Tax Coach, is a Certified Tax Coach and successful real estate investor in multi-family housing.  He has specialized training in tax reduction strategies and uses a comprehensive system to save you money in the real estate industry.  Larry is co-authoring a book called “The Secrets of a Tax Free Life” with an expected publishing date of January 2012.

Thursday, January 5th

6:00 PM

Mastermind Investor Group

Double Tree Hotel

3203 Quebec Street

Denver CO 80207

For more information, see http://mastermindinvestors.net/calendar-of-events.  Mastermind Investors Group requires a $10 fee from all attendees of their meetings.

We're Number One!

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We're Number One!

New Year's day is almost here, and for millions of Americans, that means college football bowl games. Fans and alumni across the country are gearing up to root for their favorite school. LSU fans cry "Geaux Tigers!" 'Bama fans chant "Roll, Tide, Roll!" But only one team will be champion come January 9.

Regardless of which gridiron gladiators we support for the BCS championship, Americans are #1 in another competition. That's right, Americans cheat their government out of more tax dollars than the citizens of any other country in the world!

A recent study by the Tax Justice Network, a British think-tank dedicated to transparency in international finance, shows the U.S. government lost $337 billion annually to tax evasion. We're followed by Brazil ($280 billion), Italy ($238 billion), Russia, Germany, France, Japan, China, U.K., and Spain. Overall, the study finds that worldwide tax evasion tops $3 trillion, or 5% of the world's economy.

However, while Americans are #1 in absolute dollars lost to cheating, we're not actually the biggest fibbers. The report attempts to quantify the size of each country's "shadow economy" that hides from official view to avoid tax. Russia is the biggest loser here, with 44% of its Gross Domestic Product (GDP) lurking underground and evading tax. Brazil is next, with 39% of its economy hiding in the shadows. Our own shadow economy, at 8.6% of GDP, is actually the smallest of those top ten tax evaders listed above.

Looking at it from a different perspective, next to the cost of financing government, the cost of financing health care is perhaps our country's biggest fiscal challenge. The Tax Justice Network's report draws an interesting contrast between each country's cost of tax cheating and cost of health care. Worldwide tax evasion costs an average of 55% of worldwide health care costs. But that average encompasses an enormous range. Here in the U.S., for example, tax evasion drains the equivalent of just 15% of our national health care budget. By contrast, in Bolivia, where the "shadow economy" accounts for 66% of GDP, tax evasion costs that nation more than four times the amount of their annual health care spending.

American tax cheats may even show a conscientious side. The Charities Aid Foundation, a British organization dedicated to encouraging efficient charitable giving, just released their World Giving Index 2011 report. They found that the U.S. is #1 in charitable giving, out of 153 countries surveyed. "Using data from Gallup's Worldview World Poll," the report says, "the results show that the USA is officially the most charitable nation in the world." Now there's something we can all take pride in this holiday season!

The irony here is that there are so many legal ways to pay less tax that nobody needs to cheat. Proactive planning is the key to paying less tax without having to hide in the shadows. As 2012 dawns, remember that we're here to deliver that planning -- for you, and for your family, friends, and colleagues as well.

More Money for Millionaires

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Last year's federal budget deficit topped $1.48 billion. With money so tight, you'd expect government to focus its efforts on those who really need the help. But that's far from the case, according to Oklahoma Senator Tom Coburn. Last month, he released a 37-page report entitled Subsidies of the Rich and Famous, outlining "sheer Washington stupidity" that he claims costs taxpayers billions of dollars every year.

The first part of Coburn's report focuses on direct payments like Social Security and Medicare benefits, unemployment benefits, and farm subsidies. (NBA star Scottie Pippen, rocker Bruce Springsteen, and billionaire broadcaster Ted Turner have all gotten federal farm subsidies.) But Coburn also heaps his scorn on specific tax breaks that he calls a "reverse Robin Hood style of wealth distribution." He claims he's not interested in raising rates on anyone. And he cautions against demonizing "those who are successful." But he does want to means-test benefits, close loopholes, and limit deductions that pamper millionaires with "unnecessary welfare to create an appearance everyone is benefiting from federal programs."

What sort of tax breaks have Senator Coburn so upset? Here are three:

  • "Subsidizing Millionaires' Mansions": For 2009, 143,441 out of the 235,413 taxpayers reporting incomes over $1 million claimed mortgage interest deductions, averaging $30,995 each.

  • Rental Expense Deduction: 69,074 of those million-dollar earners claimed a total of $12.5 billion in rental property expenses, including mortgage interest, cleaning and maintenance, and depreciation.

  • Gambling Losses Deduction: Finally, 8,225 of the top earners reported a total of $4.2 billion in gambling losses.

Coburn's points seem reasonable at first glance. Does Oprah Winfrey really "need" a tax break for her $50 million California mansion? Should Vegas high-rollers count on us to bail them out when the dice come up snake eyes? On closer look, however, his objections may not hold up. The mortgage interest deduction, for example, is already limited to interest on $1 million of "acquisition indebtedness" on a primary residence and one additional residence, plus $100,000 of home equity indebtedness. Coburn would ditch the deductions for second homes and home equity interest, and drop the overall cap to $500,000 of indebtedness. But critics respond that over 11% of American homes are valued over $500,000, and limiting the deduction would cut home prices off at the knees at a time when they need all the support they can get.

Coburn's objections to deducting rental real estate expenses and even gambling losses seem to make less sense. Paying tax on gross rents and gambling winnings? Rental real estate losses are already limited by "passive activity" rules. If millionaires can't deduct their rental real estate expenses, they won't invest in real estate at all. That would drag prices down in the same way as limiting mortgage interest deductions. And gambling losses are deductible only to the extent of gambling winnings. Is it fair to tax anyone, millionaire or not, on gross winnings without letting them net out losses?

As the economy continues to struggle, Washington gridlock intensifies — just look at the bickering over the payroll tax cut extension, which both parties say they want. And the 2012 presidential election draws near, we can expect to hear more rhetoric like Coburn's. What do you think? Do tax breaks for millionaires offend your sense of fairness? Or should millionaires get to take advantage of the same rules as the rest of us?

The Dog Ate My Tax Return

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A Date Which Will Live In Infamy

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Today marks the 70th anniversary of the bombing of Pearl Harbor that propelled the United States "officially" into World War II. The consequences of that single event still reverberate today, in dozens of unseen ways — including how you pay the taxes that support the national security apparatus that works to prevent such an attack from ever happening again.

World War II has been called the single most significant event in world history. So it's no surprise that financing the war led to some of the most significant taxes in history.

The Roosevelt administration had been gearing up to support the war effort long before the actual attack. When bombers struck on December 7, 1941, taxes were already high by historical standards. There were a dizzying 32 tax brackets, starting at 10% and topping out at 79% on incomes over $1 million, 80% on incomes over $2 million, and 81% on income over $5 million.

Just a few short months after the attack, in April, 1942, President Roosevelt proposed a 100% top rate! At a time of "grave national danger," he argued, "no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000 a year" (roughly $300,000 in today's dollars). Patriotic Americans were eager to pay more to support the war effort — starlet Ann Sheridan, known as Hollywood's "Oomph girl," even famously announced "I regret that I have only one salary to give for my country."

Roosevelt never got his 100% rate. However, the Revenue Act of 1942 raised top rates to 88% on incomes over $200,000. (It also introduced the first deductions for medical expenses and personal investment expenses.) By 1944, the bottom rate had more than doubled to 23%, and the top rate reached reached an all-time high of 94%.

World War II also marked the introduction of payroll withholding, which is the "dirty little secret" that makes today's tax system work. Traditionally, the government had collected taxes "in arrears," when taxpayers actually filed their returns. But as the war accelerated, government couldn't wait for the new, higher taxes. That created a problem, though — how could Americans afford to pay their 1942 taxes at the same time employers were withholding tax on 1943 income? To solve that problem, the Current Tax Payment Act of 1943 actually cancelled 75-100% of the lower of 1942 or 1943 individual tax liability.

Tax rates remained high for decades following the war. It wasn't until President Reagan took office in 1981 that the top rate dropped below 70%. Today's top rate of 35% is actually low by historical standards — and tax collections are at post-war lows as well.

Seventy years after that sunny Sunday morning at Pearl Harbor, the world is once again safe for democracy. Yes, we face real threats to our security, ranging from Iran's pursuit of nuclear weapons to China's growing economic might. But none threaten us so directly as did World War II's Axis powers. Military spending, which reached 42% of Gross Domestic Product in 1942, has fallen to just 6% today — even accounting for wars in Iraq and Afghanistan.

The generation that fought the war is often called the "Greatest Generation." What would those who made such awesome sacrifices back then think of today's tax debates? Would they side with those who feel "taxed enough already" to support today's peacetime needs? Or would they side those who call for more sacrifice from the wealthiest Americans? What do you think?

A Slice of IRS Pie

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Did you know there's a way to earn "commissions" on someone's taxes? That's right — tax whistleblowers can earn "commissions" of up to 30% of underpaid tax, plus penalties, interest, and other amounts they help recover. You'll need to give the IRS "specific and credible information" about a case that leads to collection — not just educated guesses or unsupported speculation. (As the IRS says, "this is not a program for resolving personal problems or disputes about a business relationship." Of course, if your jerk of an ex-husband or crook of an ex-partner really is a tax cheat, that's a different story!) You'll use to file your report. And outlines a predictably complicated formula for calculating just how much you'll get — but don't wo rry, if you don't like your booty, you can appeal it to the Tax Court!

What's the catch? Well, if you want to make a living tattling on taxpayers, you'll have to be prepared to wait for your reward. And wait . . . and wait . . . and wait. First the IRS has to audit the targeted returns to verify your claims. Taxpayers can appeal those findings and exercise other rights that add years to the process. And taxpayer privacy laws that prohibit the IRS from even acknowledging that your target is being audited make it impossible to just "check in" with the IRS on the status of "your" claim. The General Accounting Office that over two-thirds of the claims submitted as far back as 2007 and 2008 are still being processed.

Oh, and because we know you'll ask — yes, you'll owe tax on your "commission." In fact, the IRS will helpfully withhold 28% of any award topping $10,000!

Of course, there's an easier way to slice the IRS pie. A good tax plan is the key to keeping the most of what you earn. And no one will call you a rat! But time is running out to plan for 2011. So, at the risk of sounding like a broken record, call us now for the plan you deserve. Your holiday season will be even brighter, knowing there's nothing more for the IRS to collect from you!

"Black Friday" Tax Planning Puts Taxes on Sale!

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The holidays are here, and millions of Americans kicked off the season with “Black Friday” shopping. Braving the crowds and the cold, facing scorn from family they’ve left behind, they line up at obscenely early hours (or duck out of Thanksgiving dinner before the pumpkin pie is even served) to save $20 on a DVD player or $40 on a flat-screen television.

It’s sad, but true, that most Americans spend more time planning their “Black Friday” shopping than they spend planning their taxes. But that can be an expensive mistake!

What if the IRS had a sale? What if the IRS let you discount your taxes by thousands of dollars, this year and every year to come? And what if they let you do it from the comfort of your home or your office, without lining up in the pre-dawn hours of a chilly November morning? Would you give thanks for a sale like that?

You’re probably not holding your breath for the scrooges at the IRS to hold a “sale.” The good news is, you don’t have to wait for that to happen. You just need a plan. Tax planning is the key to paying the legal minimum. And a good tax plan can pay for a holiday season full of gifts and fun.

Call me today at (970) 668-0772 or email me at larry@coloradotaxcoach.com for your free Tax Analysis. We’ll find the mistakes and missed opportunities that may be costing you thousands today, and show you how “Black Friday” tax planning can save thousands more tomorrow. We guarantee you’ll give thanks for the savings, or we’ll donate $100 to your favorite soup kitchen. So call now to schedule your Analysis.

One Small Reason to Give Thanks

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2010 tax return Of course, that's not really surprising, given the source of all the confusion. The U.S. Government Printing Office's own version of the Internal Revenue Code — available for the bargain price of just $179 — runs 3,387 pages. Add the IRS's regulations, for $974 more (shipping generously included!), and you're up to 16,845 pages. Sounds ugly, right? It is. (Trust us, we actually have to read this stuff.) But if you need any reason to be thankful this holiday season, be glad you're not responsible for filing the country's largest tax return.

New York Times 24,000 pages of paper. (That's 24,000 pages the IRS would have had to convert into electronic form anyway.)

Oh, and of course they get audited, every year. Imagine the smile that brings to everyone's faces.

Here's the good news. You don't need a staff of 975 to manage your taxes. You just need a plan to make the most of every deduction, credit, loophole, and strategy the law allows. Now the bad news. Time is running out to get that plan. So enjoy the Thanksgiving holiday with your family. Brave the crowds for some Black Friday shopping if you feel like stimulating the economy. Then call us to make sure you're not missing any opportunity to bring good things to life!

Today's Tax Deadline

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Today is November 16. And why, might you ask, is that important?

Well, on this date in 1914, the Federal Reserve Bank of the United States officially opened for business. (Some might argue it's all been downhill since!)

On November 16, 1945, the U.S. Army moved forward with "Operation Paperclip" and secretly admitted 88 German scientists and engineers to the United States to help develop rocket technology.

Oh, and November 16, 1964, marks the birthday of Canadian jazz singer and pianist Diana Krall. Her lush rendition of Boy From Ipanema was the highlight of her 2008 "Live in Rio" concert.

And tragedy struck on November 16, 2005, with the death of Donald Watson. Donald who, you ask? Watson, a British animal-rights activist, founded the Vegan Society, and even invented the word "vegan." Apparently his animal-free diet worked for him, as he lived to the ripe old age of 95.

But those aren't why November 16 is important. It's important because there are just 45 days left in the year.

That's plenty, right? Well, subtract out the weekends, and we're down to 34. Still plenty, right? Subtract all the holiday downtime and we're down to . . . what, 28 days? 29? Maybe 30?

That's not much time at all. Especially when it comes to year-end tax planning. Especially because so many tax breaks are a lot like Cinderella's carriage - that's right, at midnight on December 31, they turn into pumpkins. Some of them disappear for 2011 - you won't get a chance to use them again until next year. And some of them disappear for good - you won't ever get to use them again.

If you've already got a plan, that's great. Has anything changed in your life or your finances that we should know about?

If you don't have a plan, that's a different story. You don't have much time left to make one. And we don't have much time to help you!

The holidays are almost here. We know nobody wants to spend their holiday thinking about taxes. But nobody wants to waste money on taxes they don't have to pay, either. And good tax planning can help pay for a pretty nice holiday! We know your calendar is filling up fast. So is ours. That's why it's crucial to call now if you want a plan to save in 2011.

Tax Strategies For Kim Kardashian

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Tax Strategies For Kim Kardashian

When most women slide on a pair of jeans, the last thing they want is to make their butt look big. But socialite Kim Kardashian has parlayed her generous posterior into what passes for celebrity these days. She's appeared on Dancing With the Stars, penned an autobiography, launched her own fragrances, and starred in not one, not two, but three reality shows.

Kim married the latest love of her life, New Jersey Nets power forward Kris Humphries, on August 20. Just 72 days later - on Halloween, no less - she announced she was filing for divorce. And hearts across America sank. Why, if these two krazy kids can't make it, what hope do the rest of us have, right? Not surprisingly, skeptics have alleged that the wedding was just a hoax. (It's not clear that the groom, who has said "I love my wife and am devastated to learn she filed for divorce," was actually in on the joke.) We'll resist the temptation to heap more scorn on the situation, so we can focus on what people really want to know - specifically, how will the whole train wreck affect Kim's taxes?

For starters, how will the heartbroken Kim file, single or married? Filing status is determined as of the last day of the tax year. So if Kim rings in the New Year subject to a legal separation, she'll file at the higher single rate, even for income earned during the marriage. (Makes you wonder if anyone at the IRS has any romance in their soul.)

And what about the wedding payday? (Mock the Kardashians all you want, they still managed to turn a $10 million wedding into a profit center.) The star-krossed kouple reportedly earned $15 million from E! for broadcasting the ceremony, $2.5 million from People Magazine for photos, $300,000 more from People for their engagement announcement, and even $50,000 from Las Vegas nightclub Tao for hosting the bachelorette party. Those paydays are obviously taxable, of course. Kim will also owe tax on some of the freebies she got from publicity-hungry vendors. These include a $15,000 cake, $60,000 for three Vera Wang dresses, $400,000 in Perrier Jouet champagne, $150,000 (!) in hair and makeup, and even $10,000 in Lehr & Black wedding invitations. Dumping Humphries doesn't mean she gets to dump the taxes she owes on what she scored for marrying him!

As for Kim's ring, it's a stunner - at 20.5 carats, it's roughly the size of the asteroid that wiped out the dinosaurs. TMZ reports that Kim's pre-nup requires her to buy the ring from Kris if she wants to keep it in case of divorce - ironic, considering that under California law, the bride usually just has to say "I do" to take ownership outright. This means if Kim someday sells the ring (at auction, televised on E!, no doubt), she'll owe tax on any gain above that purchase amount.

What about the wedding gifts from the 500 guests who presumably also weren't in on the joke? Gifts are never taxable as income, so there's no problem there. But Kim has announced she'll be donating the value of the gifts to the nonprofit Dream Foundation, a charitable organization that grants wishes to terminally ill adults. So she gets a double win - tax-free gifts plus a fat deduction for the value of her donation.

Most Americans spend a lot more time planning their wedding than they do planning their taxes. That can be an expensive mistake. For some of us, a good tax plan can actually pay for a pretty nice wedding. But time is running out. If you want to save taxes for 2011, you have to plan for it in 2011. There are fewer than two months left in the year - with plenty of time out for holidays - and our calendar is filling up fast. So call now, so you have plenty of time to enjoy A Very Kardashian Khristmas!

What Would Puss Do?

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This weekend, DreamWorks Animation's Puss in Boots clawed to the top spot in the theatres, selling $34 million in tickets. The story follows Antonio Banderas's animated gato as he and his friends hunt for magic beans, grow a beanstalk to the sky, and make off with the goose that lays the golden eggs. (It's OK, your kids will follow it just fine.)

Meanwhile, here in the real world, the 2012 election is picking up steam. Federal spending has reached $3.7 trillion. But the politicians in charge of spending all that money are having no luck finding magic beans, let alone golden eggs. It looks like we're going to have to stick with plain old taxes. And of course the candidates have dramatically different visions of how to raise those taxes.

President Obama remains committed to our progressive tax system, where taxpayers with more beans pay a higher percentage of their income. Obama has proposed a new surtax for those earning over a million beans a year. And he's endorsed all sorts of targeted tax breaks for specific purposes, such as higher education, new homes, and even new cars.

Obama's Republican opponents, in contrast, lean towards broader, flatter taxes, with fewer deductions or credits and lower rates:

• Former Godfather's Pizza CEO Herman Cain has vaulted to the top of the polls with his catchy "9-9-9" plan, which would scrap the current 3-million word Tax Code for a 9% tax on personal income (minus charitable contributions), a 9% tax on business income, and a 9% national sales tax.

• Texas Governor Rick Perry would let taxpayers choose an optional 20% flat tax on earned income. Perry's plan also raises the personal exemption to $12,500 and preserves deductions for mortgage interest, state and local taxes, and charitable gifts for families earning up to $500,000

. • Libertarian Ron Paul would repeal the income tax entirely. (It doesn't get much flatter than that!)

• Even "establishment" candidate Mitt Romney has said "I love a flat tax" and proposed to eliminate tax on capital gains, interest, and dividends for those earning less than $200,000.

Realistically, even if Republicans retake the White House, we're not likely to see a true flat tax. Remember, it's Congress that actually makes the laws. And right now, the Democrats and Republicans who run things on Capitol Hill can't seem to agree on naming a post office — let alone remaking the Tax Code that powers government spending.

As for us, our job is to help you pay the legal minimum regardless of how the Tax Code works. We've told you before that planning is the key to keeping your magic beans — and that's still true even under the Republican flat-tax proposals. So why wait for the election when you can start cutting your tax now? Call us — before December 31 — to discover what we can do now!

Larry@ColoradoTaxCoach.com

Cancelled Tax Outlook Fall 2011 Presentation

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Cancelled Tax Outlook: Fall 2011

This presentation planned with the Lunch and Learn program is cancelled.  The Lunch and Learn program is being re-designed to a Breakfast educational opportunity.  Our plan is to update this presentation and present it with the new information format next year. 

Cancelled

12:00 Noon

Tuesday, November 1

Lunch & Learn

The Foundry (Teal Art Gallery)

211 N. Main Street

Breckenridge CO 80424

RSVP:  970.453.5700 or

Email to info@coworkingbreck.com

What Do Accountants Think?

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Americans love quizzes, surveys and polls. We love taking them, and we love seeing the results. Where would Nielsen be without his ratings? Who would Gallup be without his poll? Who would read Cosmo without their quizzes? So in the midst of all this polling, we felt sure you'd want to know what a bunch of accountants think of various tax topics. Every few weeks, Accounting Today magazine polls visitors to their web site — and the results just might surprise you!

  • Does the Tax Code need to be simplified? Tax pros make their living managing complexity for clients. If taxes were easy, who would need us to prepare them? So you might expect us to want to keep the current system. But fully 72% disagreed, saying the Code should be simplified. Just 19% voted to keep the system that former President Jimmy Carter described as "a disgrace to the human race," and 9% said "not sure."

  • Should Congress raise taxes to help close the budget deficit? If taxes go up, more clients come looking for ways to keep them down. So you might think accountants want taxes going up. But once again, you might be surprised. Just 40% said Congress should raise taxes, 59% said no, and 1% weren't sure. (Maybe we don't want to see our own taxes go up any more than we want to see yours?)

  • Should Congress approve legislation to require online retailers to collect sales taxes? Web retailers like Amazon.com save billions by avoiding most state and local sales taxes, and this lets them undercut local brick 'n' mortar retailers. Requiring "e-tailers" to collect sales taxes would level the playing field. But it would also create mountains of new paperwork, and thousands of new jobs. Surprisingly, site visitors are evenly split on this question, with 50% voting "yes" and 50% voting "no."

  • Do you think Herman Cain's 9-9-9 plan for a 9% individual, business, and sales tax would be viable? Former Godfather's Pizza CEO and presidential hopeful Herman Cain has taken a surprising lead atop Republican polls with his radical "9-9-9" plan. But just 17% of Accounting Today's visitors think "the Hermanator's" plan might actually work. 75% think not, and 8% aren't sure.

  • Were your clients' finances generally in better shape this tax season compared to last tax season? You can't turn on the news without hearing about the stalling economy. But maybe things are starting to turn around — 55% said their clients were in better shape this season, while 45% disagreed.

Pretty exciting stuff, right? Seriously, who cares what People magazine readers think about Lindsay Lohan's latest arrest when you can see who accountants voted their favorite movie CPA! (For the record, 25% picked Ben Kingsley as Itzhak Stern in Schindler's List, followed by 18% for Rick Moranis as Louis Tully in Ghostbusters.)

We'll let you guess how you think we would have answered those questions. But there's one area where we're in a distinct minority — and we put it to your advantage. Most accountants do a fine job putting the right numbers in the right boxes on the right forms, and get them filed by the right deadlines. But then they call it a day. At our firm, we don't just record history. We help you write it, with a proactive attitude that takes advantage of every legal deduction, credit, strategy, and concept. We know that planning is the key to minimizing your taxes. So call us when you're ready for your plan!

Fall 2011 Tax Outlook

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Tax Outlook: Fall 2011

If you’re like most business owners, you spend hours each year planning how much cash your business will generate.  Do your plans include how much cash you can keep?  You will want to know what is expected for tax rates in the future.  Attend our entertaining, fast-paced seminar to learn what the outlook is for tax rates in the future and more:

  • See a real tax form from 1913

  • Learn the history of marginal tax rates in the U.S.

  • Identify two ways to take money from your business

  • Understand how to best plan equipment expenditures to minimize your taxes

  • Learn how the changes in payroll taxes impact your wallet

Larry Stone, Stone CPA-Colorado Tax Coach, is the only Mountain Region Certified Tax Coach.  He has specialized training in tax reduction strategies and uses a comprehensive system to save you money.

12:00 Noon

Tuesday, November 1

Lunch & Learn

The Foundry (Teal Art Gallery)

211 N. Main Street

Breckenridge CO 80424

RSVP:  970.453.5700 or

Email to info@coworkingbreck.com

The More Things Change

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The More Things Change . . .

This summer's debt-ceiling debate led to creation of a 12-member "Supercommittee," charged with finding $1.2 trillion in deficit cuts over the next decade. And wouldn't you know, the committee's progress seems to be sticking over taxes instead of spending. Both sides have said they're willing to close loopholes that benefit particular groups of taxpayers. But Democrats generally want to use new revenue to close the deficit, while Republicans generally want to use it to lower overall rates.

This debate over tax loopholes is hardly new. Way back in 1937, Treasury Secretary Henry Morgenthau drafted an 11-page memo for President Franklin Roosevelt revealing some of the perfectly legal "devices which have caused our revenues to be less than they should have been, and some of the taxpayers employing them." And Morgenthau didn't just reveal how his era's bold-face names used proactive planning to avoid taxes. He revealed who, naming names in a way that would delight today's Wikileaks fans! Here are a few cases Morgenthau thought had been taken to an inappropriate extreme:

  • Creation of multiple trusts. Mr. Louis Blaustein of Baltimore established 64 different trusts for his wife and three children, saving them $485,257. Merrill Lynch founders Charles Merrill and Edwin Lynch had 40 trust funds and 23 personal holding companies. "They operate a great many numbered brokerage accounts and only at the end of the year identify for whose benefit the account has been operated. In this way innumerable transactions are carried on between the different corporations and trusts which have no effect upon the beneficial interests of Merrill and Lynch, but which are designed to reduce their tax liability very greatly."

  • Foreign personal holding corporations. George Westinghouse, Jr. "has a $3 million Bahamas corporation and in an attempt to prevent the Bureau of Internal Revenue from catching up with him, moves his home address from one small hamlet to another each year." Razor king Jacob Schick renounced his citizenship (renouncing his U.S. Army pension in the process), formed Schick Industries in the Bahamas, and transferred to it his stock in his Connecticut company, thereby evading U.S. law imposing a 25% tax on transfers of securities to foreign corporations.

  • Incorporated yachts and country places. "Mr. Alfred P. Sloan's yacht is owned by Rene Corporation, one of his personal holding companies, along with $3 million in securities. He rents the yacht from his company and the company uses its income from securities to pay depreciation on the yacht, the wages of the captain and crew, and the expenses of operating the yacht." Wilhelmina Du Pont Ross used a corporation to own her $421,000 country place, saving $20,000 in tax, and even paid her husband a salary for managing it — "she thereby supplies him with pocket money, and in effect secures a deduction for the expense of maintaining him."

  • Percentage depletion. Morgenthau attacked the percentage depletion allowance, which lets oil and gas producers deduct part of their income as an allowance that the well will someday run dry. He reports that he had recommended eliminating this break back in 1934, "but nothing was done, presumably because of the heavy pressure from the large oil and mining companies which are profiting immensely" from them. (Sound familiar?)

  • Municipal bonds. John D. Rockefeller, Jr. owned over $32 million worth of municipal bonds, while Frederick W. Vanderbilt owned $28.7 million. Morgenthau found wealthy taxpayers gradually increasing their purchases of these tax-free bonds.

Morgenthau's report reveals that legal tax avoidance is nothing new, and sophisticated planners have always worked the Tax Code to their clients' best advantage. All of the strategies he describes were legal back then, and many of them — such as percentage depletion and tax-free municipal bond income — remain legal today. (Is there anyone who seriously proposes eliminating the tax exclusion for municipal bond income?) You may not have the income or assets that Charles Merrill or Frederick Vanderbilt enjoyed. But you have the same right to arrange your affairs so that your taxes are as low as possible. Our job is to help you do just that. And make sure your family, friends, and colleagues know we're here for them, too!