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Posts Tagged ‘humor’

I don’t just sit around all day writing about hobby loss rules and S corporation reasonable compensation, you know. There’s more to my life than taxes. I’m also the proud father of a three-year old boy and a four-month old daughter, and at the risk of coming off as arrogant, I’m one kick-ass dad. I happily change the nastiest of diapers.  I’ll willingly put The Backyardigans on the TV even when there’s football to be watched.  I patiently feed my daughter pears and sweet potatoes and the occasional Slim Jim.  Cliff Huxtable ain’t got s**t on me.

Sure, sometimes I’m not as “attentive” as I could be or as “nurturing” as I should be, and yes, from time to time I may “go missing from the house for days on end with no explanation,” but the numbers don’t lie: Three years + zero toes chewed off by rodents + only one near drowning = STELLAR PARENTING.

The truth is, raising a kid isn’t all that hard. Of course, most of the complaining you hear traditionally comes from the martyr’s mother’s side, so perhaps it’s just easier for us dads.

Either way, if you want to be a kick-ass dad like me, you’re going to need a little help. And because the handy FAQ format has been so well received as a means to understanding challenging concepts such as carried interests and Section 83(b) elections, I figure it’s also the best way to communicate my particular brand of parenting advice.

Take the appropriate notes, and perhaps your kids will end up half as cool as mine.

Q: Your son Ryan seems like a down to earth, low maintenance, likeable kid. Why is that?

A: Because we named him Ryan.

There’s long been a theory that if you name your daughter Candy or Bambi she’ll be destined for a career on the stripper pole. Well, the underlying concept holds equally true for a boy. Your son’s name is more than just the collection of letters you’ll sign when you liquidate his college savings to pay off your gambling debts; it sets the tone for his entire life.

We chose Ryan because it’s simply solid; a name that will beget a steady, drama-free life filled with moderate levels of hard-earned achievement. As parents, that’s really all you can hope for.

To give you an example of our thought process, Lauren and I briefly flirted with the idea of naming the boy A.J., until we realized that this would sentence him to a life defined by high school lacrosse, pledging a college fraternity, and a raging coke habit in his early twenties. And nobody wants that.

So if you’re having a son, choose the name wisely. Try to avoid today’s sissified “flavor of the month” choices, unless of course, you’d like your son to grow up and front a mildly popular boy band. Instead, go with something that will stand the test of time and set your kid up for a lifetime of success. While I recommend Ryan, the following would also be suitable:

Michael
Kevin
Eric
Hunk Golden
Sir Hotbod Handsomeface
Dr. Lawyer InvestmentBanker

Q: I’ve heard having a baby will destroy your social life, and this is making me a bit leery to start a family. Is this accurate?

A: Depends. If poker night, happy hour, and Sunday morning tailgates are still staples of your weekly routine, then yes, prepare for a rude awakening.

This is precisely why I encourage people in their twenties to hold off on having kids for a while. At that age, you’re supposed to be doing this type of silly stuff. Bring a baby into this world, and if you’ve got even a minimal sense of responsibility, you’ll be shutting your youthful hijinks down prematurely. Inevitably, you’ll wind up resenting your kid, your spouse, or both when you’re stuck reading Curious George while your buddies are six bars deep into the St. Paddy’s Day pub crawl. That can’t end well.

Q: If you knew before your kids were born what you know now, what would you have done differently?

A: This one’s easy. I wouldn’t have waited so long to start watching Nick Jr. Children’s’ programming is highly underrated. The lessons to be learned are not solely for the benefit of the young.

Thanks to Dora the Explorer, I can now understand seven words on Telemundo’s soccer highlights. Dino Dan reminds us that while an encyclopedic knowledge of dinosaurs may make you a hero in grade school, wear that vest and carry that field journal to junior high, and you’re just asking to be shoved inside a locker. And the Fresh Beat Band has taught me the appropriate way to deal with the adversity of getting my tap shoes stuck in a tree hours before my big performance. These are real life solutions to real life problems.

Q: Have you set any life goals for your kids?

A: You mean aside from these? Yes, I have, and they start and end with this: Don’t be an a**hole. I stole this from my brother Dave, who once told me, “I couldn’t care less if some day my son tells me he’s gay. I just really, really hope he doesn’t grow up to be an a**shole.” This is brilliant.

It’s tempting to gauge our success as parents by whether our child meets any number of predetermined — and in the grand scheme of things, meaningless — standards we establish, most of which are reflections of our own shortcomings. We get so wrapped up in whether little Johnny becomes a baseball star, or a high-priced attorney, or a city-wide karate champion, we tend to forget that none of these things matter much if in the process, he also becomes a world-class a**hole.

As my wife puts it, we just really hope our son and daughter are good kids. Nice, generous, and above all, respectful.

Don’t get me wrong, everyone is insufferable at some point in their life; whether it manifests itself in how we handle a tough day at work or an incorrect order at McDonalds. We all have it in us. Our hope for our kids is that they exhibit this personality trait only upon isolated moments of weakness or frustration, and not let it become their defining characteristic.

You might see this goal as rather unquantifiable, but you’d be wrong. A**holes abound in our society and are easily identifiable to the trained eye.

As a guideline, the following people are a**holes:

  • Steff McKee
  • Kobe Bryant
  • Dick Chaney
  • Kobra Kai
  • Duke graduates 1892-present

So long as my kids don’t end up wedged between two of these names on some list thirty years from now, I’ll consider their lives a complete success.

Q: Your daughter is impossibly beautiful. Why haven’t you pursued a modeling career for her?

A: Strangely, she doesn’t seem particularly interested in it. For some reason, she appears to be perfectly content to just lie around the house all day, eating, sleeping and pooping her pants to her heart’s content. I guess she’s just not as driven by the prospect of 15 minutes of fame as other parents babies.

Q: They say any guy can make a baby, but it takes a real man to raise a child. Is this true?

A: Absolutely not. The easy way out is to stick around and help raise the child you’ve made. I know a guy who ran off with a 23-year old co-worker while his wife was pregnant with their second kid. Now, that takes guts.

There you have it; everything you need to know about being a kick-ass dad. If you have any additional questions regarding child rearing, feel free to email me please consult your local library.

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Do you love flowcharts?

Or endless citations?

How about reading through various actions involving P and S?

/says the last part fast and giggles like a school girl

If that sounds like you, then you may enjoy this article I recently had published in the September issue of Taxes Magazine, titled “Identifying Reverse Acquisitions and the Resulting Tax Consequences”.

The reverse acquisition rules of Treas. Reg. 1.1502-75(d)(3) are among the most complicated rules within THE most complicated area of tax law: the consolidated return regulations. Unfortunately, many tax advisors don’t realize a reverse acquisition has occurred until it’s too late, and as a result, the wrong tax returns are filed for the wrong periods, creating a mess that can take significant time and effort to unwind.

In this article, I establish five tests tax advisors can employ to determine whether a reverse acquisition has occurred, and then go on to discuss the resulting tax consequences of a reverse acquisition. I hope you enjoy; it’s got all the P and S you can handle.

/can’t stop giggling

Click here for a PDF of the article:  Identifying Reverse Acquisitions and the Resulting Tax Consequences

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If I’m ever going to develop into the kind of dad who feels comfortable verbally abusing elementary school teachers or hurling whiskey bottles at youth soccer referees, it’s vital I get an early start on letting the world know just how uniquely special and gifted my three-month-old Emily is. You can call it bragging, but I like to think of it as merely being a proud parent. And if Emily’s many accomplishments cause you to realize just how special your child isn’t, well, that’s just your insecurity getting the better of you. Learn to deal with it.

While she was lying in her basinet, I put one of Emily’s toys next to her and she reached over, grabbed, it, and picked it up over her head. Three-month old infants aren’t supposed to have the spatial awareness, manual dexterity, or brute strength necessary to do that sort of thing! What an athlete she’s going to be. Is your three-month old daughter playing with her toys? No? Well don’t panic just yet, I’m sure she’s just a late bloomer. Just don’t be upset if Emily doesn’t pick her for kickball during grade school. It’s nothing personal, I just want my daughter associated with winners.

As part of my goal to expose Emily to the 100 greatest novels ever written before she starts kindergarten (we knocked off 27 while she was in utero!) I recently put her on my lap and read aloud the complete works of Fyodor Dostoyevsky. While she slept through much of “The Brothers Karamazov,” she was really bright eyed and alert for “Crime and Punishment.” I think she really empathized with the protagonist’s ethical dilemma and struggle for moral redemption. She’s so sensitive like that. What’s that you say? You read “Hop on Pop” to your infant? How sweet. Don’t worry, I’m sure Dairy Queen will still be taking applications in eighteen years.

Yesterday we asked Emily “Where’s Maci?” and she looked right at our dog. I don’t know if you know this, but it’s really, really rare for a three-month-old to be able to associate names with faces like that. I was so proud, I tried to get her to do it again for some of our dinner guest, but she wouldn’t. She gets so shy in front of strangers sometimes.

Just the other day I was working on the New York Times Sunday crossword and was struggling with a five letter word for “Yiddish food warmer” when Emily let out a loud “BLECH!!” I’m not sure where a three-month-old baby would pick up an understanding of the Jewish prohibition on cooking on the Sabbath, but that just goes to show how smart she is. What’s that, your son just turned four and he’s still struggling with the crocodile maze at Applebee’s? Don’t worry, I’m told the Army still has a nice little college tuition payment program.

A woman on the street walked up to us this morning and told us Emily looks JUST like the Gerber baby and that she should totally do some modeling! I was all like, “I know!! I say the SAME THING ALL THE TIME.” Then we laughed and laughed and laughed and I gave the woman my business card. My wife didn’t think she had any actual connections to the modeling industry, and was just being nice to our daughter, but I’m sure we’ll hear from her soon. What a great day.

You should see how big and strong Emily’s legs are! I know the doctor said they’re within the normal range, but I suspect he was just trying to limit his legal liability should Emily somehow not become a professional athlete. Do you believe the local youth leagues won’t let her start playing until she’s five? I spent the better part of the weekend researching which parts of the country play soccer in the fall and lacrosse in the spring, so we don’t limit her options. We’ve never really considered moving to Florida before, but there are some really fantastic athletic programs there. What can I say…the things we do to make our kids happy!

In closing,

New parents are the worst.

Tony

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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.

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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.

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Weekend Roundup

A few things you may have missed while taking in the NHL All-Star Game Pro Bowl SAG Awards Road House? Man, this was not a banner weekend for TV, was it?

No pressure or anything, but if Exxon Mobil can get started on their tax return early this year, why can’t you?  

With filing season in full swing, here’s a list of 10 common tax mistakes. Not listed: paying your federal liability with an envelope stuffed with Danish krone and expired Arby’s coupons.

It’s always a good idea to double check that the capital gain being reported to you on your brokerage statements is correct, but self-review will be even more important this year with the change in reporting requirements to require stock basis for certain purchases.

New Jersey ranks dead last among the 50 states in the Tax Foundation’s Business Tax Climate Index, in part because of its oppressive sales tax, which ranks fifth-worst in the nation. In defense of the high rate, however, while other states have been struggling to stay afloat (I’m looking at you, California) New Jersey has been able to fully fund its budget solely from the sales tax collected on in-state purchases of  Tag Body Spray and Ed Hardy t-shirts.

And in perhaps the most impactful breaking news story of the weekend, one intrepid blogger used his remote control, the interwebs, and presumably, several dozen bong rips to determine that the exact date of the day described in Ice Cube’s timeless hit “It Was A Good Day” was January 20, 1992. Well done, good sir. Well done indeed.

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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.)

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