Feeds:
Posts
Comments

Posts Tagged ‘funny’

Point (Huffington Post): If Kim Kardashian and Chris Humphries– who married in August 2011 before Kim famously filed for divorce after 72 days — have their marriage annulled, they will not be eligible to file a joint return for 2011. If their marriage is upheld but divorce is granted in 2012, they can file jointly in 2011, but not in 2012.

Counterpoint (Double Taxation)  Kim Kardashian is worse than a mouth full of sores.

Winner? Counterpoint.

Read Full Post »

A few things you may have missed this weekend while watching Spain put on a clinic.

New Jersey Governor Chris Christie wanted a 10% tax cut included in the latest state budget, but didn’t get one. So as punishment, all state lawmakers are required to spend a 100-degree afternoon in downtown Trenton so Christie can give them a talking to. Good times.

Dwight Howard wants the Orlando Magic to trade him to the Brooklyn Nets. So to clarify: not only is he demanding to be sent to a team that won all of 22 games last season, but assuming he relocates from Florida to New York, he’s also insisting on a 8.82% salary cut in the form of increased state income taxes. Smart fella’.

How to protect yourself against tax identity theft.

Robert Wood over at Forbes discusses the tax implications of the Katie Holmes – Tom Cruise divorce. As an aside, many people are using the divorce as an opportunity to renew their attack on Scientology —  the new-age religion of which Cruise is a devote —  blaming Cruise’s faith for the split. These critics call Scientology a farce, pointing out its spurious genesis and  “outrageous” belief system, with some high-profile people going so far as to call the religion “evil.”

I, for one, find these types of attacks on any religion — fringe as it may be — to be rather narrow-minded.  When I was a kid, my parents taught me all about another so-called “wicked” guy, who had long hair and some wild ideas, and who didn’t always do what was right, but today he has countless followers who love and worship him. I’m drawing a blank on the guy’s name right now, but I remember he used to drive a blue car.

As an aside to my aside, I had dinner with some clients/friends on Friday night, and a spirited debate broke out over what I always thought was a no-brainer of a question: What is the most homoerotic movie scene in cinematic history?

Now, I’d been of the belief that this was an open-and-shut case, with the “Apollo Creed/Rocky Balboa frolicking in the shore break” scene from Rocky III as the only acceptable answer:

My client, however, insisted that the famous Tom Cruise volleyball scene from Top Gun took the prize:


 

Decide for yourself, but I hope Mike and I can come to an agreement on this soon, as this is the type of argument that can irreversibly damage the CPA-client relationship.

Read Full Post »

A few things you may have missed this weekend while trying to coerce the neighborhood kids into an impromptu knock-off of the Hunger Games.

Because the requirement that brokerage firms report the cost basis of stock sold by their clients during 2011 to the IRS was such a rousing sucess unmitigated disaster, the IRS has graciously postponed a similar requirement for bond and option sales that was slated to start in 2013 until 2014.

Charlie Hustle still owes the IRS $120K in back taxes. Let’s hope Pete had I’ll Have Another at 15-1 in the Derby.

In 2012, Americans will pay approximately $4.041 trillion in taxes, or $152 billion more than they will spend on housing, food, and clothing. Notice cigarettes weren’t included in that comparison. People spend a lot of money on cigarettes.

Berkshire Hathaway shareholders tell Warren Buffet, “We’re not interested in your views on tax policy. Now can you kindly get back to making us rich beyond our widest dreams with your wisdom and foresight? Thanks.”

Man brings boy to zoo. Boy stares at lion in wonder. Lion tries his damnedest to eat boy. Good times.

http://www.youtube.com/watch?v=EBtPFyZItEA&feature=fvst

Read Full Post »

I’m not a big fan of bitching about April 15th, because let’s be honest: nobody put a gun to our head and forced us to become accountants. We knew what we were getting into when we sat for that CPA exam; we would be trading long hours and tight deadlines for job security and sex appeal. Lots and lots of sex appeal. So it’s like I tell my three-year old son: if your pain is self-inflicted, don’t come crying about it to me.

/takes swig from whiskey bottle and returns to watching COPS

That’s why I can appreciate this list of 10 awful things about tax day; because it’s written from the perspective of non-accountant. But more importantly, it makes some valid points about the absurdity that is the current state of affairs with the U.S. tax law:

Some highlights include:

1. Paperwork: The U.S. tax code is insane and out of control. It’s tripled in a decade. It now runs to 3.8 million words. To put that in context, William Shakespeare only needed 900,000 words to say everything he had to say. Hamlet. Othello. The history plays. The sonnets. The whole shebang. But the IRS needs four times as many words? Really?

3. How they treat investment income: The tax treatment of investment income is arbitrary and stupid. We treat debt and equity differently for companies and investors. It’s irrational. The rules encourage debt. And we treat long-term capital gains better than short-term ones. That’s absurd. We only buy securities because we think they are undervalued. Why is it better if they rise in price slowly instead of quickly?

7. Taxing overseas Americans: The United States is about the only country in the world that taxes its citizens on all their worldwide income. And, most outrageously, it does this even if they live overseas. Yes, even on money they earn overseas, and on which they are already taxed overseas.

10. Alternative Minimum Tax: What kind of moron thought this up?  Forty years ago Congress — sorry, I gave you the answer — was shocked to discover that the tax code had become so complicated and insane and riddled with loopholes and the like that a few very rich people were able to game the system successfully. They were paying little, if any, tax. The sensible response to this was to treat it as a wake-up call, and simplify the entire system. Congress instead added yet another layer of complexity. They created a second, parallel tax code, the AMT. You have to run your tax calculations under both, and pay whichever bill is higher.

Valid points, all. And a refreshing change from the standard “I’ve been here 77 straight hours” game of one-upmanship CPAs engage in during busy season that invariably devolves into something out of a Monty Python sketch:

 

Accepting that we’re often our own worst enemies during this time of year — its long been my contention that CPAs have mastered the art of craftily spinning procrastination into martyrdom — that’s not to say we’re not within our rights to ponder if there’s a better way to manage the April workload. And perhaps I’m running the risk of taking food off my table, but I like what David Cay Johnston over at Reuters has to say on the topic. Couldn’t we eliminate 100,000,000 basic “W-2 and standard deduction”‘ tax returns by having the government automate the income tax calculation based on the copies provided to them of the relevant information?

Makes sense to me. Expand the W-4 to include the taxpayer’s filing status and dependent information, and if the taxpayer fails to file an expanded return by April 15th, let the IRS do it for them. Of course, that would likely force companies like H&R Block and Turbo Tax into extinction, but hey; it’s a cruel, cruel world.

Read Full Post »

Don’t be fooled: Tax Court judges are people too. They live and laugh and love, just like the rest of us. Their highfalutin position may require them to carry themselves with an excess of formality, but deep down, they all eagerly anticipate that rare moment when the court loosens the shackles and allows them to have a little fun.

And when it happens, as it did last week in  Willson v. Commissioner, the results can be both entertaining and educational. Because when formality is sacrificed for simplicity  — as Judge Holmes did in authoring his decision — the takeaway lessons of the case are often easier to absorb.

First, some background: the taxpayer (Willson) chose “S case” status, which allowed him to introduce evidence that would otherwise not be admissible, but more germane to this blog post, also permitted the Tax Court to conduct the trial as informally as possible. Which it most certainly did.

Willson was a bit of an entrepreneur, though not necessarily by choice. He built a bar in 1986 after a gunshot wound prematurely ended his career as an auto mechanic. Willson made considerable improvements to the bar and the surrounding parking lot, only to see the majority of the property burn down courtesy of some faulty hair-band pyrotechnics.

But perhaps we’re best served letting Judge Holmes explain the events leading up to the fire, as he does it quite eloquently; throwing in a brief history of the evolution of late 80’s rock for good measure. His words resemble those not of a reputable adjudicator, but rather those of a disillusioned codger ruminating on all that’s wrong with the world from the sanctity of his front porch, pausing just long enough to implore the neighborhood kids to get a haircut.

His words are, however, awesomely refreshing in their informality:  

With these new stages, the bar became a local mecca for a type of “rock and roll” called “glam metal.” We also took judicial notice that “hairbands” had lost much of their popularity with the coming of something called “grunge rock” (another type of “rock and roll” music) in the early nineties. This was important to Willson’s business because “hair bands,” with such unlikely names as Head East, Great White, and Saturn Cats could still draw large crowds to a bar on the outskirts of Des Moines but had become affordable providers of live entertainment. Willson even invited one of these “hair bands” to be a sort of artist-in-residence. One night in 1994, a few band members did something to a smoke machine that sparked an enormous fire. This fire engulfed everything except the parking lots, the shed, and the property’s original house.

And with that I give you the first — and almost certainly the last– mention of Great White you’ll ever find in a Tax Court decision.

Undeterred by his bad fortune, Willson rebuilt the bar and rented out a portion of it to a new business; one that employed the type of women who was once a  staple in the videos of the very 80’s music that caused the demise of the bar in the first place. Circle of life, I guess.

As Judge Holmes put it:

Willson rented out the old space to a tenant who installed minor improvements and opened an establishment felicitously–and paronomastically–called the “Landing Strip,” in which young lady ecdysiasts engaged in the deciduous calisthenics of perhaps unwitting First Amendment expression.

Now, we here at Double Taxation fancy ourselves as fairly bright individuals, but we’re not ashamed to admit that we only recognized about four words in that sentence. For those of you without a Word of The Day Calendar handy, here’s the best translation we could muster: Willson opened a strip bar with the clever name: The Landing Strip.

In 1999, the city of Des Moines began condemnation proceedings against Willson. Unfortunately for Willson, he wasn’t around to oversee the dealings with the city, as he was about to begin serving a federal prison term for, as Judge Holmes put it, “…something to do with money and drugs and possibly the bar.”

Willson eventually received $203,427 from the city in exchange for his property, leaving the Tax Court to determine the amount — if any — of the gain resulting from the condemnation.

Now typically, the Tax Court has a way of needlessly complicating even the most seemingly straight-forward of concepts through the required references to the statute, regulations, administrative procedures and a near-century of case law, all delivered in the standard legal mumbo jumbo.

And therein lies the beauty of an “S” case: Judge Holmes was permitted to explain the concepts of “amount realized” and “adjusted basis” for purposes of computing Willson’s gain or loss in layman’s terms, which can be a tremendous benefit to young CPAs struggling to grasp these intangible concepts.

 Someone who sells property is taxed on the gain, not the sale price. This gain basically depends on two other numbers: the amount the seller receives and what is called “adjusted basis.”

The amount the seller receives is not just how much cash he pockets. It also includes, for example, money that goes to pay off other debts tied to the property.  The amount that Willson received in this sense (called the“amount realized”) is $203,427.

That leaves us with the “adjusted basis.” To figure out Willson’s gain, we have to subtract the adjusted basis from the amount realized. Basis is pretty much what a property owner paid for the property plus what he later spent to improve it.

A taxpayer can’t generally deduct these payments right away because they provide a benefit that lasts longer than just one taxable year. But before calculating the capital gain the basis must be adjusted under section 1016. And depreciation is one of those adjustments we need to figure out in this case.

Most property doesn’t just fall apart one day, it suffers wear and tear over time. That’s why the Code allows a taxpayer yearly deductions for depreciation over the estimated useful life or recovery period of the property used in a trade or business.

When it was all said and done, the Tax Court held that Willson actually generated a loss on the condemnation, but not before also working through the implications of an involuntary conversion under § 1033 on Willson basis (upon recovering insurance proceeds after the hair-band fire.)

Read Full Post »