www.fairmark.com
Custodial Accounts for Minors |> 10 Compensation in Stock and Options |> 11 Alternative Minimum Tax |> 12 Estimated Tax Payments |> 13 Tax Guide for Traders Fairmark Press |> 14 About Us |> 15 Fairmark News |> 16 Contact Us |> 17 Legal |> 18 Home Fairmark is here to help investors and others get the tax help they need. You can browse our free online guides, download IRS forms and publications, or post questions or comments on our message board. When you roll money from one IRA to another, you must complete the transaction within 60 days. Yet the IRS sometimes grants relief if you blow the deadline. The IRS denied relief, saying this would amount to an interest-free loan from the IRA to the taxpayer. Some people think it's a good idea, but our author, Kaye Thomas, says 21 think twice. If you can't file your federal income tax return on time, you can get an extension simply by dialing that number. If you're more comfortable with the traditional method of obtaining an extension, fill out 22 Form 4868 and get it postmarked by April 15. Remember, an extension to file isn't an extension to pay -- and don't forget your state income tax. Our author, Kaye Thomas, appeared on Dolores Kong's personal finance program on 23 WBIX radio, to discuss the 24 Top Ten Things that Cause AMT Liability. He said the AMT is the government's ATM because it generates so much revenue. According to recent Treasury projections, assuming the Bush tax cuts are made permanent, over 45 million taxpayers will pay AMT ten years from now -- and by that time it will actually cost more for the government to repeal the AMT than it would cost to repeal the regular income tax. Can you claim a theft loss deduction -- instead of a capital loss -- for your losses on WorldCom, Enron, and other scandal-plagued stocks? Our author, Kaye Thomas, addresses that question 25 here. April 15 isn't just the deadline for this year's tax return. It's also your last chance to recover tax you overpaid on your 2000 tax return. For most people the door slams shut on that day because of the three-year statute of limitations. If you overlooked a tax-saving opportunity that year, this is your last chance to amend your return and get a refund. One intriguing idea: consider seeking a refund of any tax you paid on 26 demutualization payments. The IRS has identified more abusive tax scams, this time involving the 27 use of S corporations to shift income to tax-exempt entities. These deals are now "listed transactions" that must be reported as tax shelters, and can result in liability for the exempt entity as well as the taxpayer using the arrangement to avoid taxes. As expected, the 28 Financial Accounting Standards Board (FASB) has proposed a new rule requiring companies to record an expense when they grant stock options as compensation. Some companies, particularly in the high tech sector, continue to fight the proposal, but most experts believe adoption of the rule is inevitable. People who owe taxes because of their stock options sometimes come up with creative arguments to reduce or eliminate their tax liability. A new 29 notice from the IRS warns against taking "frivolous" positions, and points out that pursuing these positions can lead to severe civil penalties and even criminal prosecution. One of these positions was mentioned in a recent article by a syndicated personal finance columnist that seemed to praise the individual who was promoting it. Participants on our 30 message board discussed the article and pointed out flaws in the arguments. How do you handle an AMT capital loss carryover on your tax return? Our author, Kaye Thomas, responds to that question 31 here. Warren Buffett's annual letter to shareholders always arrives as a breath of fresh air. Casual, frank and often humorous, the letter relates events of the past year at Berkshire Hathaway and offers comments -- sometimes scathing -- on the world of business and investing in general. We mention it here because this year it includes some choice remarks on federal income taxation. The interest rate individuals pay on underpayments goes up from 3% to 4% on April 1. The same rate will apply to underpayments of estimated tax beginning April 16. This is their main publication dealing with investment income and expenses. Presumably the delay in getting it out this year was due to the qualified dividend snafu (see below). This publication also includes the capital loss carryover worksheet that was omitted from the Schedule D instructions this year. The Treasury and IRS have acted to shut down another aggressive approach to executive compensation. It involves companies that loaned money to executives to exercise stock options and then reduced the amount of the debt when the stock price declined. Apparently some people were taking the position that the debt reduction does not have to be reported as income. That's clearly incorrect, and a new IRS ruling lays down the law. OK, we all know the deadline for 2000 returns passed long ago, way back in 2001. But if you didn't file, and you had a refund coming, your final deadline is April 15, 2004. If you could have filed for a refund on your return for 2000, this is your last chance! If REIT dividends don't qualify for the 15% rate that applies to other dividends, does that mean REITs are a bad investment? Regular corporations pay 35% tax on their earnings, then pass them on to you as dividends taxed at 15%. REITs pay dividends taxed at regular tax rates, but that's because they don't pay that 35% corporate tax. Overall, REIT earnings are taxed less than earnings of regular corporations, not more. What is the first day you can sell it for a long-term capital gain? Some people assume it's February 28, but that's not long enough. Technically your holding period began the day after you bought the stock, and that was March 1 last year. To have a long-term capital gain, you have to hold until the anniversary of the day after you acquired the stock. I don't suppose too many people will be tripped up by selling on February 29, as it falls on Sunday this year. The IRS has announced that it will treat the pending technical corrections for qualified dividends as if they were already part of the law. If you paid AMT when you exercised an incentive stock option in an earlier year, you may be able to claim the AMT credit in a later year even though you didn't sell the shares. Overlooking this credit can be a costly mistake, as explained 37 here. If you're looking for help with stock options (perhaps because the Wall Street Journal recommended this site in a February 10 article), we have three places you'll want to visit: our guide to 38 Compensation in Stock and Options, our guide to 39 Alternative Minimum Tax (if you have incentive stock options), and best of all, our 40 message board. Also, the 2004 edition of our book, 41 Consider Your Options, is in stock and ready to ship. When you hear that a someone caught in a corporate scandal entered a settlement to pay many millions of dollars, you would probably never guess that part of the settlement will be paid by -- you. Often these deals are structured to permit the wrongdoer to claim a tax deduction for much of the payment, and that means the American taxpayer subsidizes the settlement. The Senate is working on legislation to tighten the rules here so you and I don't get stuck with the bill when someone gets caught with his hand in the cookie jar. One of the aggravating complexities of the tax law is the profusion of special definitions. For example, the definition of "child" used to claim someone as a dependent isn't the same as the one used for the earned income credit or the dependent care credit. To their credit (no pun intended), lawmakers are now working on a way to give us a single definition of "child" to replace the five different ones that currently appear in the Internal Revenue Code. Hey, if they can do that, maybe they can find a way to untangle the capital gain rules. President Bush unveiled his budget for the next fiscal year. Under the proposal, for the next year our government will go into debt at the rate of about $1 million per minute, 24 h...
|
http://csua.com/feed/