Archive for the ‘Taxable Talk’ Category

Efiling Opens, But…

Tuesday, January 19th, 2016

…It’s likely you can’t file yet.

Today the IRS sent out a “QuickAlert for Tax Professionals.” They stated, “Authorized IRS e-file Providers must not submit electronic returns to the IRS prior to the receipt of all Forms W-2, W-2G, and 1099-R from the taxpayers.” Additionally, most brokerage 1099s are not distributed until mid-February. Those of us who have interests in partnerships or S-Corporations may not receive that paperwork for months.

Tax professionals need all the paperwork: It’s far better to extend than amend. That means we’re in hurry up and wait mode; for many taxpayers it will be weeks to months before we can file.

Wasting Away in HPVille

Monday, January 11th, 2016

Today was the day my new computer was to have been encrypted. But some things aren’t meant to be:

So what happened? When my IT person started the encryption process using HP software, my computer decided to take a siesta — the operating system crashed. When he called HP support, he discovered that the problem was known, impacting a “minority” of computers. My IT person had tested the encryption on a test computer but all worked well.

Little did we know that the HP encyrption software fails on that “minority” of computers. Well, at worst it’s a failure rate of 50%: it failed on mine and worked on his.

I lost half a day, but no data. A key lesson I had learned years ago (and that my IT person had learned) is to have backups. We made three backups prior to the process, and they were useful in getting me back up and running.

So I’m back on my old computer while my IT person will get my new computer up and running…again. We’re going to use different encryption software—software that does not destroy the operating system.

Right now you could not pay me to buy a product manufactured by Hewlett-Packard. I’m that annoyed with them.

Last Chance for Nominees for 2015 Tax Offender of the Year

Sunday, December 27th, 2015

In just four days (December 31st) I’ll be announcing this year’s winner of the prestigious “Tax Offender of the Year” award. Remember, To be considered for the Tax Offender of the Year award, the individual (or organization) must do more than cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions. Here are the past lucky recipients:

2014: Mauricio Warner
2013: U.S. Department of Justice
2012: Steven Martinez
2011: United States Congress
2010: Tony and Micaela Dutson
2009: Mark Anderson
2008: Robert Beale
2007: Gene Haas
2005: Sharon Lee Caulder

Harvesting Capital Losses: Act Quickly on Shorts!

Sunday, December 27th, 2015

One of the common techniques at year-end to reduce taxes is to harvest capital losses. Let’s say you own 100 share of some stock that hasn’t done well. If you sell it on or before December 31st, you can use the capital loss to offset capital gains (and take up to $3,000 of capital gains in excess of losses). You do have to remember not to repurchase the stock until the 31st day after the sale (including in any other brokerage account, even an IRA).

But what about a short position? You short a stock by selling the stock at first, and then you buy to cover the short. Where a normal stock sale is considered to occur on the date of sale, a short sale is considered to be consummated on the settlement date. The settlement date is typically three days after the trade date.

What this means is that if you’re going to harvest capital loss(es) with short sales you likely need to act on Monday, December 28th. (Your broker should be able to confirm how long it will take for a trade to settle.) If you wait on your short position until Tuesday the 29th, you may be too late for that sale to have occurred in 2015.

Nominations Due for 2015 Tax Offender of the Year

Monday, November 30th, 2015

With just about one month left in 2015, it’s time for a reminder to submit nominations for the 2015 Tax Offender of the Year. To be considered for the Tax Offender of the Year award, the individual (or organization) must do more than cheat on his or her taxes. It has to be special; it really needs to be a Bozo-like action or actions. Here are the past lucky recipients:

2014: Mauricio Warner
2013: U.S. Department of Justice
2012: Steven Martinez
2011: United States Congress
2010: Tony and Micaela Dutson
2009: Mark Anderson
2008: Robert Beale
2007: Gene Haas
2005: Sharon Lee Caulder

That Was the Year that Was

Sunday, October 18th, 2015

Last November I wrote about “The Horrible, No Good, Very Bad Upcoming Tax Season.” This definitely wasn’t the best tax season but it also wasn’t the worst (but it was close to the bottom). The four issues that I identified as problems were tax extenders, the IRS budget, the Affordable Care Act (aka ObamaCare), and the IRS Property/Capitalization regulations.

Tax extenders were passed late, but there weren’t any surprises. Thus, the impact to the 2015 Tax Season was minimal.

The same can’t be true for the IRS budget cuts. This probably impacted me more than any of the other issues I faced. Calling the IRS was almost a joke. The “Practitioner Priority Service” hold times were so bad that I’d hate to think of what they were for regular numbers. Unfortunately, I see no improvement possible with the IRS budget until the IRS scandal is resolved. That’s not going to happen until we have a new President, so we have probably two more years of misery in dealing with the IRS.

(The Obama Administration promised to be the most transparent in history. Its record is one of obfuscation and deceit, not of being open and honest.)

For the most part ObamaCare did not impact many of my clients. Of course, for 2014 tax returns a client could self-certify they had health insurance. Coming for 2015 returns will be IRS Forms 1095-B and 1095-C. Almost everyone will need to provide tax professionals with a health insurance form.

The property regulations almost had a huge impact. A literal reading of the regulations was that everyone impacted needed to file a Form 3115. The IRS realized that they didn’t have the personnel to handle the incoming tsunami of paperwork and, at the last moment, issued procedures that basically mitigated the impact of the new regulations.

While I’ll post about the upcoming season in another month, it looks like deja vu all over again. Once more, tax extenders haven’t passed, we have another year of impacts of ObamaCare, and the IRS budget constraints will continue. Unfortunately, this year I’m not taking a vacation to New Zealand and Australia in December. In any case, tax professional will likely be grouchy next tax season, too.

Speaking: Ethics in the Digital World

Monday, August 10th, 2015

I’ll be back in my old stomping grounds of Orange County next Tuesday; I’ll be speaking to the Orange County Chapter of the California Society of Enrolled Agents on “Ethics in the Digital World.” I’ll be noting all the bad things that can happen and methods of avoiding trouble. Hopefully it will be a presentation that will keep Mr. Murphy away from you. You can register at the OCEA’s website.


Saturday, July 25th, 2015

It’s time for my annual vacation. If something earth-shattering in the tax world happens while I’m relaxing, I’ll take time out to post on it. Otherwise, enjoy the fine bloggers listed in the blogroll on the right.

I’ll be back on Tuesday, August 4th.

Of Deadlines and Taxes

Tuesday, April 21st, 2015

As I look back at April 15th I can draw some conclusions. First, thank goodness the IRS relented on the property regulations. There is no way tax professionals would have been able to prepare all of the required Change in Accounting Methods.

Second, this was the year of the impossible to reach IRS. I saw a statistic today that only 38.5% of callers received customer service from the IRS phone lines. That was true for tax professionals, too: I could not get through via the Practitioner Priority Service during the last three weeks of Tax Season. My usual trick, calling at 6:55pm PDT (right before they close), did not work.

Third, I don’t know what our deadlines will be for next year (that is, 2015 returns filed in 2016) but they will be earlier. I don’t know if I’ll go to March 1st, but it will be earlier than March 24th. I suspect it will be March 15th. We did get to every return where paperwork reached us by our deadline (March 24th), but we felt very pressured this year.

Fourth, I’m not happy with certain aspects of our tax software. Unlike Robert Flach who thinks that tax software is flawed and shouldn’t be used, I look at it as a tool that helps me do my job. However, this year some parts of it hindered my job and that’s not acceptable. Every three years I evaluate new software and this year is that year. I’ll absolutely be looking at other products for next year.

This definitely wasn’t the worst Tax Season I’ve gone through, but it was far from the best. For taxpayers, this likely was one of the worst. Unfortunately, I don’t see any improvements on the horizon. The light I see is the oncoming train not the end of the tunnel.

Annual Blog Hiatus

Monday, March 16th, 2015

It’s been a busy Tax Season already, and it shows no signs of letting up. That means it’s time for my annual blog hiatus. You needn’t worry if you’re waiting for my annual Bozo Tax Tips; they’ve already been written and will begin appearing on Tuesday, March 31st. If anything truly momentous in the world of tax happens, I’ll interrupt my hiatus and post on it; otherwise, I’ll be back on April 21st.