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Judge May Not Dismiss Charges in KPMG Case

Nov 26

Posted by admin in Real Estate, Taxes

The federal judge overseeing a criminal tax shelter case indicated Monday that he might not dismiss charges after all against a dozen indicted defendants from KPMG, The New York Times reported.

In a significant shift, Judge Lewis A. Kaplan, of Federal District Court in Manhattan, indicated that he would reconsider a landmark ruling he made last year in which he raised the possibility of dismissing all or part of the high-profile case on the ground of prosecutorial misconduct, the paper reported.

In that closely watched ruling, known as Stein I, Kaplan said that federal prosecutors had violated the rights of certain KPMG defendants by pressuring KPMG not to pay their legal fees as a condition of not indicting the firm over its own tax shelter work. For that reason, he wrote in the ruling, he might have to throw the case out, the paper reported.

But Kaplan changed course Monday, telling a packed courtroom that “the ground has shifted” regarding the question of dismissal. He added later that “I see a very clear distinction between violation and remedy” — indicating, for the first time, that he was now open to finding a way to resolve the legal fees issue without dismissing the case, the paper reported.

According to the paper, on the question of dismissal, he later told the courtroom, “I don’t know where I am.”-New York State Society of Certified Public Accountants

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Chief Counsel Seeking Comment on Gift Tax Consequences of Trusts Employing Distribution Committee

Nov 26

Posted by admin in Real Estate, Taxes

The Internal Revenue Service announced on July 9 that it is reconsidering a series of private letter rulings (PLRs) issued by the Office of the Associate Chief Counsel, Passthroughs & Special Industries.
The PLRs address, in part, the gift tax consequences under sections 2511 and 2514 of the Internal Revenue Code of trusts that utilize a distribution committee consisting of trust beneficiaries who direct distributions of trust income and corpus. It has come to the Office of Chief Counsel’s attention that the conclusions in the PLRs regarding the application of section 2514 may not be consistent with Rev. Rul. 76-503, 1976-2 C.B. 275, and Rev. Rul. 77-158, 1977-1 C.B. 285. Accordingly, the Office of Chief Counsel is requesting comments as to whether the conclusions in these PLRs regarding section 2514 can be reconciled with the revenue rulings.

These PLRs involve a situation where trust distributions are made at the unanimous consent of a distribution committee that consists of trust beneficiaries, or at the discretion of an individual committee member with the consent of the grantor. If a distribution committee member resigns or dies, the committee member is replaced with another person. The PLRs conclude that the distribution committee members have substantial adverse interests to each other for purposes of section 2514. Therefore, they do not possess general powers of appointment over the trust. Accordingly, distributions from the trust will not be subject to gift tax with respect to the distribution committee members.

However, the holdings in Rev. Rul. 76-503 and Rev. Rul. 77-158 indicate that because the committee members are replaced if they resign or die, they would be treated as possessing general powers of appointment over the trust corpus. It has been suggested that the facts presented in the PLRs are distinguishable from the revenue rulings because in the PLRs, the grantor’s gift to the trust is incomplete since the grantor retains a testamentary special power of appointment. See, however, section 25.2514-1(e), Example (1) of the Gift Tax Regulations, and Rev. Rul. 67-370, 1967-2 C.B. 324.

Before the Office of Chief Counsel takes any action with respect to the PLRs, the Office of the Associate Chief Counsel, Passthroughs & Special Industries is requesting comments regarding the question of whether the distribution committee members possess general powers of appointment under section 2514. The comments could also include suggestions for a substantially similar trust structures that would achieve the intended income, gift, and estate tax objectives of the transactions described in the PLRs.

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Bank Settles Claims Over Lost Tax Papers

Nov 25

Posted by admin in Taxes

Mellon Bank has agreed to pay $16.5 million to the federal government to settle claims that it allowed overwhelmed employees to destroy thousands of federal tax returns and payments in 2001, The Associated Press reported.
In turn, the government will not pursue any civil or administrative monetary claims against Mellon, the United States district attorney’s office and Mellon Bank said Thursday, the AP reported.

The bank, a subsidiary of the Mellon Financial Corporation, had a contract with the Internal Revenue Service to process income tax returns and tax-payment checks. Mellon employees, feeling overworked and unable to meet deadlines imposed by the contract, destroyed more than 77,000 returns and checks totaling $1.3 billion at a company service center in Pittsburgh in April 2001, the AP reported.

Mellon lost its IRS contract in Pittsburgh and has paid more than $18 million to cover the interest the government would have received from the delayed payments, as well as the costs of moving the IRS processing center to another company’s site in suburban Philadelphia.

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Self Employed mortgage Getting a Mortgage when you are Self Employed

Nov 7

Posted by admin in Loans, Taxes

When you’re self-employed, you can write off all your reductions on your taxes. But, these are some things to understand that will help you make the mortgage process run smoothly when you’re self employed.

When verifying earnings – usually, lenders would like to see at least two years of self work history, infrequently they need to see three years. They are going to want to see this history determined in tax returns, sometimes. Occasionally the lenders will figure your earnings as being the average revenue you announced on your earnings taxes as profit, not your gross business revenue. Sometimes the bank will figure your earnings as the lowest of the 2 years and infrequently as the highest of the 2 years. Occasionally lenders will figure a little of your write-offs or deductions into your earnings. There are ideas of alternative routes a bank may be in a position to confirm your earnings and if you are self employed it will help you to be in a position to show a more of your revenue. Use bank records as evidence of earnings Find a bank who will accept 1-2 years of bank records as evidence of earnings. This way generally works better in establishing revenue than going off your tax returns, as you can mostly prove a load more money flow than tax returns will show. On your tax returns you sometimes take away each business cost before you claim any profit. Do a stated revenue or no doc loan These kinds of loans are done all the time, where you want no explanation of revenue, you only state on a form what your revenue is, and you don’t need to confirm it. These are some things to recollect when moving forward in the application process to get your house loan.

Many banks will tell you that you aren’t going to get licensed anywhere and that if they can not help you, no-one can. All home-loan brokers have access to absolutely different mortgage programs and some brokers are way more creative in their financing methodologies than others. Look for creative methods to get financing and contact as many brokers as possible. Day trading coaching. Her internet site has articles and an inventory of commended mortgage banks for many different sorts of mortgage loans.

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Still Waiting For Your Tax Refund?

Nov 1

Posted by admin in Taxes

I am constantly amazed when I speak with people and they tell me they are still waiting for tax refund checks after six or twelve months. If you are in this position, you may be in for a surprise.

Still Waiting For Your Tax Refund?

Preparing and filing taxes is one of those things almost nobody likes to do. Much like spring cleaning, it is something to be done and then forgotten about. If you are due a tax refund, however, this can result in some problems. This is particularly true with the IRS.

Every year, the Internal Revenue Service reports that it cannot get refund checks to a large number of taxpayers. No, it does not try to hide this fact. It actually will publish news releases and contact media outlets to get the world out. This year, the IRS is trying to find almost 100,000 people that it has refund checks for. The total dollar figure for outstanding refunds is over $92 million dollars. That is almost a grand per person the IRS cannot find.

Why can’t the IRS find you? Well, there can be a variety of reasons. The most common is you have moved since filing your tax return, but did not tell the IRS. As a result, the IRS sent the refund check to your old address. Another situation that can arise occurs when a marriage happens and the IRS is not notified of any new address or name change. Contrary to what you may have heard, the IRS does not keep tabs on you every day. If you move, you have to let the agency know.

If you are still waiting for a tax refund check, you should get proactive. You can go to the IRS web site and use the ?Where is my Refund?? link on the home page to find out the status of your refund. You can also pick up the phone and call the agency at 800-829-1954.

Listen, we all hate preparing and filing our taxes. If you have suffered through the process and generated a refund, don’t lose it. Take action and contact the IRS to get your money today.

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Take Expenses Now To Limit Your 2006 Business Taxes

Nov 1

Posted by admin in Taxes

As we roll towards the end of 2006, you are probably thinking about the holidays and gifts you need to buy. Well, it is also time to give yourself a tax gift.

Take Expenses Now To Limit Your 2006 Business Taxes

Take a moment to think back to last April. Do you remember the anguish of writing a check to the Internal Revenue Service? Did it seem a bit more than it should have been? Did you have to scramble to put together the funds? If you do not recall, go check the ledger in your check book or your accounting system. Bring back bad memories? If you want to avoid this situation again, you need to start following the simplest of tax strategies.

A time-tested and incredibly effective tax strategy is expensing everything you possible can before the end of the year. Now, the expenses need to be legitimate, but you can do some serious positive damage to your tax bill next year if you take this step. Remember, legitimate business expenses reduce your gross profit, which results in a reduction of your tax bill.

Most small businesses have a very interesting balance sheet around the end of December each year. If you took a look at it, you would think the company was nearly bankrupt. Why? A business that plans ahead will use all available cash to pay for expenses in an effort to ?buy down? their profit. A company that otherwise might show a $100,000 profit for the year suddenly shows a $10,000 profit. Of course, it may also have a bevy of new equipment, office supplies and so on.

So, what areas should you focus on? Well, every business is different, so you need to consider the nature of yours. Try to focus on expenses you know will come up in January and February of next year. This can be the most basic of things such as office supplies to more complex expenditures like new office equipment. Make a list of these items and determine what you can buy now instead of next year. Importantly, make sure you understand how much cash you will need in January so you don’t have cash flow problems if you over expense.

If you want to limit the damage of your tax bill in April, the time to act is now. Taking such action is like giving yourself a nice gift, but you have to wait till April to open it.

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Get Your Taxes In Order As The Year Comes To A Close

Nov 1

Posted by admin in Taxes

If you complain about paying taxes, and who doesn’t, then you need to take steps to limit the pain next April. Yep, you should always make adjustments to your finances at the end of each year.

People are unique and so are their financial situations. Whipping your finances together at the end of the year is really a matter of deducing what type of year you had. If you are a salaried employee of a business, you taxes are going to be fairly simple as are the financial moves you need to make. A business owner, on the other hand, is going to be dealing with a much more complex situation. Let’s take a closer look.

As a salaried tax payer, you are both fortunate and unfortunate when it comes to taxes. On the fortunate side, you really do not have to do much to address your tax situation. On the unfortunate side, this is because you are really restricted in regard to the steps you can take to limit your tax bill. Foremost among these steps is to maximize your contributions to pre-tax retirement vehicles such as a 401(k) account. If you have yearly bonuses coming up, try to jam them into your 401(k) so you don’t end up owing in April. In addition to this step, you should go through all your finances and deduce whether you can create any tax deductible expenses to offset your income.

If you own a small business, you already know things are a bit more complicated. In this case, you want to try to limit the profit of the business to minimize both your income tax and your self-employment tax. If you are on a cash basis accounting, are there any expenses you can take now instead of January. For instance, can you buy new computers or whatever you are going to need? So long as the expenses are legitimate, you can use this tactic to minimize your taxable income.

If your small business is complex or you own a larger business, you should really take a common sense step. That step is to sit down with a certified public account and discuss your situation. He or she can give look at your finances and offer specific steps that can be taken to reduce your tax bill for the year. The key to this approach, however, is to make the time to sit down with the accountant NOW! If you try to show up on December 30th or in January, you are limiting your options and hurting yourself.

I have a general rule when it comes to taxes. If you want to complain about the amount you pay in April, you can only do so if you take every step to limit them. If you do no planning, you can only blame yourself for the huge tax bill you end up with in April.

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