Saturday, September 29, 2012


* See my article “Last Chance Tax Break: Get Your Free Investment Income” at THESTREET.COM.

* In its Tax Tip “Ten Tips to Help You Choose a Tax Preparer” the IRS provides some good advice on the responsibility of taxpayers -

·      Provide all records and receipts needed to prepare your return.

·      Never sign a blank return.

·      Review the entire return before signing it.

·      Make sure the preparer signs the form and includes their PTIN.

I was led to this Tax Tip by a “tweet” by the IRS, which also properly explained –

You are responsible for your tax return, no matter who prepares it.”

* Over at OUR TAXING TIMES, Trish McIntire follows up on my THESTREET.COM item “How to Protect Charitable Donations From IRS Nitpicking” with “Out of Pocket Charity Deduction”, which discusses deductible volunteer expenses.

In light of IRS and Tax Court “nitpicking” if you do volunteer work that results in out of pocket deductible expenses it couldn’t hurt to have the charity write you a letter of thanks at year end detailing your volunteer work.

Something like –

Thank you for volunteering to deliver meals to shut-ins for the Pike County Meals on Wheels Program.

During the months of July through December of 2011 you used your own car to deliver hot cooked meals to home-bound seniors in Hawley and Hamlin on Tuesday and Thursday afternoons, for which you received no compensation or reimbursement from the Program.

Your volunteer work for us is truly appreciated.”

Like I said – it couldn’t hurt.

* Daniel Hood tells us that even “Federal Agencies Fail to Pay Taxes” at TAXPRO TODAY.

The report, by the Treasury Inspector General for Tax Administration, noted that as of the end of 2011, 70 different federal agencies had 126 delinquent tax accounts owing around $14 million, while 18 federal agencies had not filed or were delinquent in filing 39 employment tax returns.”

* At MONEY.CNN.COM Jeanne Sahadi warns us to expect a 2% cut in pay come January in “Fiscal Cliff: Payroll Tax Cut May Not Survive”.

For all the uncertainty over how lawmakers will handle the expiring tax cuts under the fiscal cliff, there seems to be growing clarity surrounding at least one measure: the temporary 2% payroll tax cut.

Bottom line: It's likely toast.”

This payroll tax cut was the latest incarnation of Dubya’s tax rebate fiasco.  The rebate first became the Making Work Pay credit, which totally FU-ed income tax withholding for a couple of years and especially hit pensioners - and then became the 2% reduction of Social Security withholding, which was actually a better way to distribute the funds than a rebate or income tax credit.

While I was thrilled for my clients – because two-income couples earning a combined $200,000 + in wages, who would get nothing under the rebate or MWP credit, now could get up to $4,000+ “in pocket” thanks to the reduction – I felt that this was not a good thing.  If you want to put more money in taxpayers’ pockets simply reduce the tax rate.

As with any “temporary” tax cut or benefit, when it expires (and not extended) it appears to be a tax increase.

While I am sorry I, and my clients, will get a 2% pay cut in 2013, such temporary political gimmicks are not the way to go. 


I recently submitted the following question to ASK AWAY TODAY –

Having interviewed kings, presidents, actors, heroes, and local persons with legitimate stories of value, how do you feel being forced to waste time interviewing reality show "stars" with no talent and nothing of value to say?

I wonder if my question will be chosen?


Friday, September 28, 2012


Today we meet Dan Meyer, a Professor of Accounting at Austin Peay State University in Clarksville, TN, and author of the blog TICK MARKS, which I love to say has nothing to do with lyme disease (you see lyme disease is transmitted by ticks, who leave a distinctive mark when they bite you).  In this case “tick marks” refer to the mark an accountant makes when footing and cross-footing columns of numbers.

While primarily an accounting blog, Dan often discusses tax issues.

Dan used to list “The Twelve Blogs of Christmas” each year, and TWTP made the list in the tax category back in 2007.

How did you become interested/involved in preparing tax returns?

As I was settling on an accounting major in my sophomore year of college; I took an H&R Block self-study tax training class.

How were you educated/trained in preparing tax returns?

In addition to the class above; I took a tax course as an undergraduate at “Ole Miss” and several tax theory classes during my doctorate at the University of Missouri.  In addition, I got “on-the-job” training in tax preparation while working for CPA firms in Memphis, TN and Corinth, MS

When and why did you decide to write a blog on tax issues?

In 2005, there were not a lot of accounting and tax blogs in existence and I believed that starting a blog would help in my academic career at Austin Peay State University.

How has blogging helped your business?

I do not have a business, but it has helped me as a college teacher by helping me keep up on developments in the profession (and at closer to “real time” than I would get simply by taking CPE courses as a CPA), by enabling me to get a journal publication (New Accountant, 2007, Issue 723?) and I have assigned students to do a simulated blog in one of my undergraduate courses.

What do you consider the “best tax advice” you can give anyone?

Take legitimate deductions and credits to be sure, but after that, PAY your taxes.

Do you think the regulation of tax return preparers is a good thing?

From a purely ideological point of view, no; the present American economy is badly overregulated and that is an important contributor to the present high unemployment rate.  However, the tax return preparer legislation has a saving grace—accounting students with marginal GPAs can and should take the RTRP exam and have a saleable skill along with their diploma.

Do you think CPAs and attorneys should be exempt from testing and required CPEs in taxation?

In general, yes since tax is tested on the CPA and bar exam. I do agree, however, that if subsequent research by the IRS shows that CPAs and attorneys have an error rate comparable to non-EAs/CPAs/attorneys, that this exemption should be pulled (note: EAs should have an unconditional exemption).  An additional tweak that I could accept (though not support for selfish reasons) would be to pull this exemption if the CPA/attorney had prepared less than 20 returns in the past five years or if the CPA/attorney had received ethical or criminal sanction at the state or federal level in the last five years.

Do you think experienced tax preparers should be exempt from the initial RTRP competency test under “grandfathering”?

Mixed answer here since I can see good arguments for both sides—thus somewhat similar to the immigration debate in Washington.  At most, I could support something like a refund of competency test fee if the experienced preparer passed on the first try or a one-year deferral on the due date for the competency exam for preparers with over 10 years experience AND no ethical or criminal sanctions during the last 10 years.

How would you reform/rewrite the Tax Code?

Since I am in my mid-50s, I doubt that I could live long enough (even if I had the interest to do so) to read the code, regulations and court cases needed to fully understand what is in the present U. S. Internal Code of 1986, amended.  Having said that, a few superficial adjustments:

[1] Raise the capital gains and dividend rate to the lower of actual marginal rate or 25% except for sales of principal residence,

[2] eliminate the 85% provision on taxation of income for Social Security recipients and raise the floor to 50K MFJ/ 35K single/ 20K MFS,

[3] allow the first $1000 of charitable contributions and medical insurance to be deducted toward AGI,

[4] eliminate Subchapter C taxation of corporations (making virtually all business income pass-through) UNLESS they directly or constructively have taxable income in excess of $100,000,000; then a single tax rate of 25%,

[5] eliminate the estate tax on estates with net worth of less than $5 million;

[6] eliminate or drastically rework the credit for the elderly—at present, it is more hassle than it is worth.  In my blog last year, I have separately proposed several changes to extend the projected life of Social Security.

What is your favorite Broadway musical – and why?

I have never seen a musical on Broadway—I did see an off-Broadway presentation of “1776” in the Elliott Hall of Music at Purdue University in West Lafayette, IN as an adolescent and was quite impressed.

While Dan and I disagree on the basic concept of exempting CPAs from taking the RTRP exam, if we are indeed stuck with the blanket exemption I do like his suggestion of removing the exemption of CPAs who have prepared less than 20 returns in the past 5 years.  Although I would make it at least 10 Form 1040s per year in the past 5 years.

If he had to see only one Broadway musical he chose a good one.


Thursday, September 27, 2012


As Kay so eloquently pointed out in her post –

While Congress was marking time last week until it could recess until after the election, it spent its valuable limited time some important pieces of legislation.


Aside from a bill to keep the government running through March 27, 2013, the House and Senate bandied about politically themed measures to highlight their partisan positions on jobs, the economy and, of course, taxes.”

Instead of addressing the expiring tax “extenders” the idiots passed the “The Buffett Rule Act of 2012”.  This Act does not replace the dreaded AMT with minimum tax rate of 30 percent on individuals making more than a million dollars a year as BO and the Democrats have proposed when coining the phrase “Buffet Rule” – it provides a checkbox on the Form 1040 that would allow taxpayers to make a voluntary contribution to reduce the deficit.

You or I could choose to add $5.00 to our federal tax liability to go to a special account that would be used to reduce the public debt.  Or Warren Buffet could add $5 Million.

According to Republican Representative Steve Scalise, who introduced the bill –

"If Warren Buffett and others like him truly feel they're not paying enough in taxes, they can use the Buffett Rule Act to put their money where their mouth is and voluntarily send in more to pay down the national debt, rather than changing the entire tax code to inflict more job-killing tax hikes on hard-working Americans."   

While I do not support the Democratic version of the Buffet Rule Act, there is nothing wrong with this Republic alternative – and I have no problem with it.  I would support passage, and may even send along $2.00 or $3.00 with my 1040.

Of course if this bill gets to the Senate it will not pass – so it is just another waste of time by the idiots we have elected to represent us in Washington.

As Kay explains in her post, individuals at any level of income who want to help to pay down the deficit have always been able to send a check to the Bureau of Public Debt.  And claim a tax deduction on Schedule A as a charitable contribution for the payment!

If millionaires like Warren feel that they should be paying more federal income tax, perhaps out of a feeling of guilt for the source of their millions, they can simply write a check for what they feel is their “shortfall”.

However, when a group of protesting millionaires who, like Warren, felt that they do not pay enough income tax was publicly offered the opportunity to help pay down the deficit by writing a check to the Bureau of Public Debt, none of them offered to do so.

There is no doubt in my mind that the current members of Congress are all idiots.  And I firmly believe that all current members of Congress who are running for re-election this November should be voted out (as long as they are not replaced by Tea Party members or supporters).  


Wednesday, September 26, 2012


It seems I have a lot to say about what I have read in this BUZZ installment.

* See my article “How to Protect Charitable Donations From IRS Nitpicking” at THESTREET.COM.

* In his post “Effective Tax Rate Comparison” at START MAKING SENSE Professor Dan Shaviro says -

Say you were married with two children and had $60,000 of AGI in 2011, all of it wages.  You would thus have about $34,000 of taxable income after taking the standard deduction and personal exemptions. You’d pay about $4,250 of income tax. But you would also pay $4,590 of payroll taxes, at the 7.65 percent rate (counting the employee share only). So that would add up to about $8,840 of income plus payroll taxes on $60,000 of AGI, for an effective tax rate of about 14.7 percent.”

Actually the above taxpayers would have a taxable income of $33,600, and pay $2,194 in federal income tax, if we assume that their two children were under age 17 - and therefore each entitled to a $1,000 Child Tax Credit.

If one or more were over age 17 but in college they would probably pay even less, and possibly, if both were in college, actually make a profit by filing their 1040 (be one of the now famous “47%”).

And they would pay only $3,390 in payroll taxes on $60,000 of wages, if we assume the $60,000 AGI is all wages.  The employee share of Social Security is reduced by 2% for 2011.  So, using the professors numbers the combined effective tax rate is 12.73% and using my numbers assuming the children were under age 17 only 9.3%.

And if you look at the income tax only – the real issue - the couple pays an effective rate of 7.08% even using the professor’s numbers (3.66% using my numbers assuming the children were under age 17).

Romney’s effective income tax rate is 14%.  His effective combined income and payroll tax rate is 14.1%.  Mitt did pay payroll tax in the form of “self-employment tax” on his 2011 1040.  However the payroll tax was only on a small portion of his overall income.  The couple paid $3,390 in payroll taxes and Mitt paid $23,179 – almost 7 times as much.

Mitt paid a flat 15% on his long-term capital gains and qualified dividend income and, under the dreaded AMT, a flat 28% on his net Alternative Minimum Taxable income, after allowable deductions.

So what point is the professor trying to make?  In terms of the effective income tax rate, even using the prof’s probably incorrect tax numbers Mitt Romney paid almost twice as much as the married couple.

BTW – if the couple earning $60,000 also had also had an additional $30,000 in qualified dividends and long-term capital gains the additional tax on this $30,000 would have been $0 – because the tax rate on this income would have been 0%, unlike the 15% Mitt paid on similar income.

* An interesting “tweet” from the Taxpayer Advocate Office –

 Tax Fact: 46% of all correspondence exams in FY2011 covered the Earned Income Tax Credit.”

* Martin A. Sullivan adds to “My Dilemma” with his post “Will Obama Victory Kill Tax Reform?” at TAX.COM.

In this not unlikely scenario {which Martin discusses in the post – rdf}, tax reform would not be dead, but it no longer have all of Washington's deficit hawks behind it. We would be back to where we were about five years ago. Tax reform would have to gain favor on its own merits (i.e., fairness, growth, competitiveness, simplicity) and not as camouflage for a politically painful budget deal.”

* TAXGIRL Kelly Phillips Erb announces that “Congress Walks Out On The Country” at FORBES.COM.

Just like that, Congress took a walk this week. The House adjourned on Friday and the Senate took off this morning {Saturday 9/22 – rdf}. They apparently needed a vacation. You know, since they’ve been working so hard for all of two weeks. Yep, just two weeks after they came back from a five week summer vacation, they’ve taken another vacation (oops, I meant “recess”) – this one until mid-November. It seems that months of doing absolutely nothing makes a legislator tired.”

And Kelly points out quite correctly –

But let’s think about all they got accomplished before they went on vacation.

Give me a minute.

Give me another minute.

Nope, can’t think of anything.”

I am once again reminded of the lyric from 1776 that aptly describes Congress today as well –

Piddle, twiddle, and resolve.  Not one damn thing do we solve!

So, as expected, if the “tax extenders”, including the annual AMT patch, and any extension of the “Bush” tax cuts are to be passed it will not be one until December – once again inconveniencing the IRS and causing a delay in the processing of early filed returns.

Do we need any more reasons to call them idiots?

* Anne Tergesen raises an interesting question at WSJ.COM - “Should You Wait on IRA Donations?”.

One of the popular “extenders” that expired on 12/31/11 is the ability to transfer tax-free money from an IRA to a qualified charity and to apply the amount of the transfer to one’s Required Minimum Distribution (RMD).  There can be a tax savings, as the effectively permits the charitable deduction “above-the-line”, as the withdrawal from the IRA is not included in AGI.  

The item says –

Conrad Teitell, an attorney at Cummings & Lockwood in Stamford, Conn., says people age 70½ or older who itemize their deductions and wish to make a charitable gift from an IRA should go ahead. As long as they donate to a ‘public’ charity and instruct the IRA's custodian to transfer the money directly from the IRA to the charity, they will qualify for tax-free treatment if lawmakers enact the provision retroactively, he adds. (Public charities don't include donor-advised funds, supporting organizations and most private foundations.)

If Congress doesn't pass the measure, those IRA owners will still receive a tax break, in the form of an itemized deduction. (The amount of the deduction will depend on factors including the taxpayer's adjusted gross income.)

While if the amount of the transfer is equal to or less than the RMD, the individual can itemize, and the idiots in Congress do not extend the benefit it is a true wash – income on Page 1 and a deduction on Schedule A.  However, if the transfer is for more than the RMD and the idiots do not extend the taxpayer would unnecessarily increase his AGI.

I do expect that the idiots will extend this provision.  And, besides, many taxpayers wait until December to take their RMD so as to maximize the tax free accrual of earnings.  So I would suggest that you wait.

* Professor Annette Nellen adds to the discussion of “Capital Gains - What Should the Rate Be?” at 21st CENTURY TAXATION.

I tend to lean toward returning to the early days of my career when there was a 50% and then 60% “exclusion” of capital gains (50% or 60% of the capital gain just disappeared off the return – and the remaining 50% or 40% was taxed at regular rates), as Annette mentions as an option.    

* In light of Romney’s stupid decision not to claim all of his charitable contributions Trish McIntire explains on “Shorting Deductions” as they apply to business expenses at OUR TAXING TIMES.

If you spent the money on your business and have the documentation to prove it, you are required to take the expense off against your business income.”

Often self-employed individuals want to increase their net earnings from self-employment, usually to increase their Earned Income Credit.  But you cannot do so by omitting legitimate business expenses.

An afterthought on Romney’s decision – if he really wanted to pay more in taxes, like Buffet apparently does, instead of not deducting all of his legitimate contributions he could have just written a check to the Treasury.  But that would not have provided the desired result – a higher effective tax rate.

* If for some odd reason you cannot get enough BUZZ about Mitt’s 2011 tax return, Joe Kristan’s Monday “Tax Roundup: Mitt Files! And USA Bucks Trend of Lower Corporate Rates” includes links to the tax blogoshere’s reaction to the return.

* Daniel Stoica, a fellow “twit” who does me the honor of continually “retweeting” my TWTP posts, debunks some “Tax Myths That Can Cost You Money”.


An accounting joke I admit I had never heard before – courtesy of Peter J Reilly -

A business owner is interviewing potential accountants by asking them what two plus two is.  Most innocently answer four. 

One accountant leans back, strokes his chin and says ‘What number did you have in mind?’. 

Who do you think got hired?

I wonder if the accountant who asked the question was a CPA?


Tuesday, September 25, 2012


I am faced with a real dilemma when it comes to the Presidential election.

Here is my problem.  I am a tax professional, and as a result the issue of taxation is very important to me – and I do not mean this selfishly.  I am a vocal supporter of true tax reform and simplification.  I believe the purpose of the federal income tax is to raise money to run the government – period.  It should not be used to distribute social welfare subsidies or to redistribute income.

It is clear from the individual proposals of the two candidates and Parties that only the Republicans support true tax reform – rewriting the Tax Code from scratch to make it much simpler.  I truly believe that under Obama and the Democrats the Tax Code will become more of a mucking fess, regardless of the “lip service” they may give to tax reform.

President Obama, like Dubya before him, established a panel to research and report on tax reform.  The panel came up with an excellent report, and some very good suggestions.  It basically suggested that we shred the current Tax Code and start over again by initially eliminating all “tax expenditures” and adding back only those that are absolutely appropriate.  However, like Dubya before him, Obama totally ignored the report and banished it to gather dust in the government archives.

So solely from the point of view of federal tax policy, and perhaps economic policy in general, I support the Republican Party.

However, I oppose the policies of the Republicans in just about every other area.  

I was pleased when Mitt Romney was selected as the Republican candidate for President.  Of all the potential candidates he was, based on his past history, the most “centralist”.  Actually, none of the other potential Republican candidates were even marginally acceptable to me.

However, in my opinion, Romney has, like his predecessor of 4 years ago, “shot himself in the foot” by selecting Tea Party sympathizer Paul Ryan as his running mate.

Winston Churchill Is credited with having said – “If you are not a liberal at 20, you have no heart. If you are not Conservative by 40, you have no brain.

While, at age 58, I consider myself to have both heart and brain, I do tend to be more “true” conservative than “true” liberal.   

But I do not support what passes for conservatism today – especially when it comes to incorporating religious beliefs into public policy.  I am an enemy of the “religious right”.  And therefore, as well as because of their inability to cooperate or compromise, I am an enemy of the Tea Party movement, and oppose any candidate who belongs to or courts this “movement”.

I have posted in the past –

Religious belief is personal and individual.  It should not be legislated, or used as the basis for legislature.

If your religious beliefs instruct you that abortion is bad – then do not have an abortion.  You can certainly bring to the attention of those who might consider such an act the various other options available.  But you cannot force your religious belief on your inconveniently pregnant neighbor, regardless of any sincere desire to save her from the “fires of hell”.

A good example of “best practice” in this area is the Amish.  They have very distinct and unique religious beliefs that govern every aspect of their daily life – but they do not require that all others accept their beliefs, nor do they condemn those who do not believe as they do.  It is a personal choice.  I do believe (and correct me if I am wrong) that they allow their matured children the opportunity to choose for themselves.

Murder is not illegal because God says “Thou shalt not kill”.  It is illegal because it denies one of the right to life, liberty and the pursuit of happiness.  Is not the charge of murder on a federal level considered “violating civil rights”?

It is very easy for many individuals to accept a strictly doctrinized organized religion – because the extreme protocol allows them to avoid the discomfort of individual thought and reasoning.  “If the Bible says this is what we must do then this is what we must do.”   

One’s religious beliefs may cause a person to become involved in political activity as a way of helping society and one’s “fellow man”, but one’s religious beliefs should NOT be made into law.

While I like Obama, and his actions as President, on several levels, I am certainly not his biggest fan.  Yet, because of the danger of giving any credibility or potential power to the Tea Party movement and similar ilk, while I may like Mitt Romney I cannot wholeheartedly support his run for the Presidency.

I must decide if the benefit of the potential for true tax and economic reform is more important than the danger of the religious right – and I think I know the answer.


Monday, September 24, 2012


I hear that Mitt has finally filed, and released, his extended 2011 Form 1040.  I trust everyone is happy now.

So what insights did this return provide?

He made a lot of money from his investments.  His gross income for 2011 was $13.7 Million.  Hey, I should be so lucky!  (If I was I certainly would not be running for office, and the only 1040 I would ever do again would be my own).  He paid $1,935,708 in total federal taxes, which included $23,179 in self employment tax.  His effective tax rate is about 13.9%.  He was a victim of the dreaded AMT to the tune of $675,500+.

It appears Mitt and Ann gave about $4+ Million to charity in 2011, but only deducted $2,250,772.  $4 Million – God bless him!  That is almost 29% of his gross income.  In my 40 years of preparing 1040s I have come across only a handful of clients who have donated such a high percentage of income to charity – and it is not even a full hand!  I might not have supported the same charities as Mitt and Ann, but they did give the money, and property, to legitimate charitable organizations.

Why did they deduct only $2.25 Million if he really gave over $4 Million.  There is really no good reason.  He is legally entitled to claim a tax deduction for the full $4 Million – if I gave $4 Million to church and charity I would have deducted every penny.

The reason he did not claim all of his legitimate charitable deductions is because if he did a lot of vocal idiots would have been up in arms because his effective tax rate was so low.

Hey, if it is ok for the 47% to take advantage of the Tax Code to either pay no federal income tax or make a profit by filing a 1040, and it is, why is it not equally ok for Mitt and Ann to take advantage of the Tax Code to legally pay the least amount of tax possible?

And remember, the Romneys paid over $1.9 Million in federal taxes.  I expect that is more than the combined tax liability of all the residents of my new home town!  Mitt’s $1.9 Million funded an awful lot of government waste – and paid for some worthwhile and effective government programs as well.

So Romney’s 2011 return has been filed and released.  Big whoop!  Let’s move on to more important issues.


Saturday, September 22, 2012


* Jason Dinesen reinforces his good advice from an earlier post in “Tales from the Tax Field: Don’t ‘Start a Business’ Just to Get Tax Deductions” at the DINESEN TAX TIMES.  

Jason talks about a client who “wanted to ‘start a side business’ to ‘get deductions’ to wipe out the $1,500” he owed the IRS.

The bottom line (the highlight is Jason’s) –

Economically, it’s a horrible idea. Deductions don’t result in a dollar-for-dollar tax savings. The client was in the 25% tax bracket, so each dollar of tax deduction saved 25 cents. Even if they could have proven a profit motive, they would have had to generate business losses of $6,000 to eliminate a $1,500 tax liability. Spending $6,000 to save $1,500 makes no sense when you can just pay $1,500 and be done with it.”

* Learn the “10 Tax Questions the Candidates Don't Want You to Ask” and five common tax myths and misperceptions from John O. Fox.

* Joe Kristan explains “Why the Tax Law is So Picky About Documenting Travel Deductions” at the ROTH AND COMPANY TAX UPDAGE BLOG.

“The Moral?  If you want to deduct travel, meal and entertainment expenses, keep your receipts.  If you use your own car, log your miles.  For all expenses, write down who you are meeting with and the business purposes.  Even when the expenses are legitimate, if you fail to document them properly, they are gone.”

A good moral for ALL deductible expenses – “keep your receipts”!

* CPA Joshua Wilson gives us some “2012 Year-End Tax Planning Ideas”.

* And along the same line, Jean Murray advises businesses to “Take Advantage of 2012 Depreciation Rates - Who Knows What They Will Be in 2013?” at ABOUT.COM US BUSINESS LAW/TAXES.   

* NPR.ORG discusses a subject that I remember supporting back in my younger days, but really have not though about for a long time now, in “Pot Could Be Tax Windfall, But Skeptics Abound”.

Certainly something to think about.  

* Chad Bordeaux talks about “Renting Your Vacation Home” at OUR BLOG.

* Click here to check out the Form 1040 from 1913 through 2011, and to view Presidential income tax returns from FDR and Richard Nixon through Barack Obama and Mitt Romney courtesy of EFILE.COM.

Congress’s two tax-writing committees, the House Ways and Means Committee and the Senate Finance Committee, held a joint hearing Thursday to discuss capital gains taxes and how they might be reformed.”

Senate Finance Committee Chairman Max Baucus, a Democrat, is quoted as stating the obvious -

Our entire tax code—including its treatment of capital gains—needs to be rebuilt for the 21st century economy.  We need a system focused on broad-based economic growth and jobs. In order to get tax reform done, we’ll need members of both parties and both chambers willing to tackle the tough issues.”

Unfortunately, for one thing, Baucus is a Democrat, who merely give lip service to tax reform, and for another, the idiots in Congress haven’t been able to tackle even the easy issues properly.

In reading the item I was truly shocked to hear tax cheat Chuck Rangel actually say something smart - "Everyone wants reform as long as it doesn't affect them."  

* Friday’s Tax Roundup from Joe Kristan of the ROTH AND COMPANY TAX UPDATE BLOG provided an excellent quote from fellow tax blogger Prof Jim Maule (of MAULED AGAIN) that explains the effect of “tax expenditures” –

When a special interest or specific industry gets a tax break, it causes one or the other, or a combination, of two things to happen. First, if nothing else is adjusted, the reduction in tax revenues causes an increase in the federal deficit, which in turn adversely affects everyone. Second, if revenue is maintained, it means other taxpayers must pay more in taxes to make up for the reduction in taxes for the special interest or specific industry, and that clearly affects everyone.”

And, while I think of it, a thanks and tip o’ the hat to Joe for regularly referencing my TWTP posts in his Roundups


I would like to pose an open question to all of “Blogdom”.

Inquiring minds want to know -

Can anyone justify the existence of reality tv excrement such as THE JERSEY SHORE, BIG BROTHER, KEEPING UP WITH THE KARDASHIANS, THE REAL WORLD, THE BACHELOR or BACHELORETTE, THE REAL HOUSEWIVES OF ANYWHERE, SPOOKIE AND BOW WOW, or any of these type of programs?  Do they have any “socially redeeming value”?  Do they have any value whatsoever?

Please respond.

Thank you!


Friday, September 21, 2012


(1)                                                                                                                                                I have decided to revive my series of interviews with TAX BLOGOSPHERE BUDDIES as a regular Friday feature for the next several weeks.

First up in this new series is Enrolled Agent Jamaal Soloman, owner and CEO of the Brooklyn NY based J.S. Tax Corporation, and author of THE TAX FACTOR blog.

I first learned of Jamaal in a post by Trish McIntire of OUR TAXING TIMES, who was interviewed in the first TBB series (click here).

Each post at THE TAX FACTOR begins with a music video appropriate to the topic of discussion.

I was especially interested in Jamaal’s comments about his classes at “a tax franchise”.
(3)                                                                                                                                                    How did you become interested/involved in preparing tax returns?

I graduated from college with BS in Business Management, a semester after 9/11, so the job market was horrible for new graduates. My original plan was getting a job to become a store manager. Doing taxes was the last thing on my mind. However, two years after graduation I found myself taking classes at a tax franchise about how to prepare taxes. I felt that the company was only teaching us how to type our clients’ response in their program. You didn’t need to know about taxes because the computer program told you everything. I felt that the computer program was a disservice to their clients. I never worked for the company but I became fascinated with taxes. Half way through the lessons, I got a job with a small accounting firm. The firm allowed me to continue the class.

How were you educated/trained in preparing tax returns?

I started my tax career with a small accounting firm with only one owner/accountant. The owner taught me everything he knew about taxes. I learned how to complete Forms 1040, 1120, 1065, 990, 1041, 1023, 990 and payroll taxes. Plus, I learned how to communicate with clients and the IRS. I would have never received this direct experience with a large corporation. This experience encouraged me to obtain a Master’s degree in Taxation from CUNY Baruch College and get licensed as an Enrolled Agent.

Currently, I own an accounting company called J.S. Tax Corporation. I’m small now but watch out for my company in five years!

When and why did you decide to write a blog on tax issues? 

The idea popped in my head after I obtained my Master’s in 2009. The only thing I learned from my Master’s program was how to save millionaires and billionaires money on their taxes. I wanted to write posts for the average American taxpayer. However after about four posts, I became bored with the blog and decided to stop.

Fast forward three years later; I felt the need to write tax blog posts again. Too much people in my community are scared to talk about taxes. However, this time around to keep myself motivated I decided to make it a different tax blog. I decided to make it unique by adding music to most of my posts. I absolutely love music and can’t write creatively without it. On my posts, you could find songs from artists like Johnny Cash, the Beatles, Jay-Z, James Brown, etc.

How has blogging helped your business?

My blog is still new so I haven’t seen any benefits to my business. However, a lot of people have told me that they enjoy reading my posts.

What do you consider the “best tax advice” you can give anyone?

"Don't Let The Joneses Get You Down" by The Temptations

 Ow, people gather round me, it's whom it may concern.

 I'm not trying to run your life.

 But you're never too old to learn, huh.

 Stop worrying about your neighbors and the fancy things they got.

 'Cause if you do you'll find it sure, you're gonna wind up on the spot.

Don't let the Jones

Don't let the Jones

Don't let the Joneses

Get you down, oh down.”

In other words, don’t worry about what tax refund other people received. Everybody situation is unique when it comes to tax returns.  Seeking huge tax refunds tend to get people in trouble.

Do you think the regulation of tax return preparers is a good thing?

Yes, because I believe there are too many fraudulent tax preparers taking advantage of their clients. I tell my clients all the time that “I’m too skinny to go to jail.” Some of these clients are used to tax preparers making magical numbers so they can get a refund.

Do you think CPAs and attorneys should be exempt from testing and required CPEs in taxation?

Just because someone is a CPA or attorney doesn’t mean that they know about taxes. People need to respect how difficult it is to be a good tax return preparer. It is not all about entering a W-2. A lot of people think all CPAs are tax experts. However, some CPAs only dealt with taxes when they studied for their CPA exam. At minimum, CPAs and attorneys should be required to take annual CPEs in taxation.

Do you think experienced tax preparers should be exempt from the initial RTRP competency test under “grandfathering”?

No, because if you are an experienced tax preparer then the exam should be a piece of cake. Some so-called experienced tax preparers don’t know what they are doing. It is time to prove that you can correctly prepare a tax return. I don’t want to hear about the “new technology” excuse. Paper tax returns will be extinct in about five years. I don’t want to seem harsh but I have seen may people get hurt by corrupt or incapable tax preparers. This is one of the reasons why every week I create a “Tax Preparers’ Hall of Shame” post on my blog.

How would you reform/rewrite the Tax Code?

Life is too short for me to think about ways to improve the Tax Code. The Tax Code is so complex, long, corrupt and unfair. Politicians and lobbyists make the Tax Code unbearable for the little guys. Most people direct their angry towards the IRS. However, it is Congress that makes the tax laws. To change the Tax Code, voters must stand up to their elected officials. If voters don’t stand up then thinking about how to improve the code is useless.

What is your favorite Broadway musical – and why?

It is crazy that I love all types of music expect musical movies and plays. Broadway musicals are too long for me. My mind starts wandering and next thing you know I’m thinking about taxes in the middle of the play.