Categorized | Tax Talk

Here is this weeks show and transcript for Tax Talk. Jeff Pickering CPA and Rex Hogue talk about several ways to dramatically reduce your tax bill.

Patrick: The more you know, the more you get to keep. There really are two standards in this country for taxes. There’s the ones that pay little and know a lot, or the ones that pay a lot and know a little. Which side of that equation do you want to be on?
This is Patrick Dougher with Tax Talk. We’ve got Jeff Pickering CPA, Rex Hogue, Attorney in the North Texas area with estate taxes and business preparation.
The one thing that I really want to get to is we have got a great show. You need to look at ways that you can save money on your taxes. Most of us would rather not pay more. Would you guys agree with that? Yeah.
So, let’s do this. We’re going to talk about a couple of things. We’ve got deadlines that are quickly coming up and then, we’ve got Escape from New Jersey. We’ve also got the President Obama’s healthcare tax increases and the IRS, of all things, is asking for more money; and we’ve got tons more for you this hour on Tax Talk. Jeff, let’s talk about some deadlines.
Jeff: Sure. So, we’ve got some deadlines coming up. February 28th is W2s, W3s, 1099s, 1098s, 1096s and it’s the last day for 2009 Haitian donations. That’s actually today.
So, all that other stuff; all the forms are actually due the next day, next business day because whenever a deadline falls on a weekend, it’s due the next business day. But, today is the last day for your Haitian donations if you want to deduct them on your 2009 tax return.
We’ve got March 15th coming up; calendar year corporations extensions for returns. So, extensions for a lot of people. And March 31st deadline to buy a Ford Fusion or a Mercury Mariner hybrid and still get the tax credit.
And then, April 15th, of course, individuals, partnerships, trusts. If you do 1040-ES, your first payment is due on April 15th, property tax renditions if you’re a business owner.
And then, April 30th is the deadline for the home buyer credit. So, you should have a contract in place if you want to take advantage of the home buyer credit.
Patrick: So, all of those things that you’ve just rattled off, which I know everybody was taking notes, but if they wanted to get more information, they could call your office and get some of that information as well, couldn’t they?
Jeff: Sure, 972-378-5200. That’s our office.
Patrick: Very good. And I know that you’ve also got some things that you want to give away during the show. So, be listening because you want to get Jeff’s information that will help you save taxes this year.
As we move forward, the Escape from New Jersey. We touched on it last week. What’s happening in New Jersey?
Jeff: Okay. So, this is a study and people aren’t always doing studies on taxes. This is a study by Boston College Center on wealth and philanthropy. They did a study of New Jersey tax rates from, basically, the last decade.
They found that the first half of the decade, people were moving into New Jersey and the gross national product, the gross state product, if you want to call it that. The assets of New Jersey grew in that time period and in the last half of the decade, they shrank substantially.
And what caused the shrink is people moving out of New Jersey because the tax rates basically went up from, let’s see, about 6% and 9% basically. They call it 8.97%. So, people move out when you raise taxes and that’s definitely happened in New Jersey.
So, the real point is that New Jersey, if you look at New Jersey, you can project that to the United States because we’re playing in a global economy. If we raise taxes here, our investors, or money is going to flee the United States.
Patrick: That’s a huge concern, isn’t it?
Jeff: It is.
Patrick: I know that a lot of people want to ask questions of these two guys and I encourage you to do that. It’s 214-787-1570. Call and get your questions answered on taxes. Nothing’s really off base. We want to make sure that you get your answers to your questions. 214-787-1570.
We always bring some information up front just to really wet your appetite and show you that the IRS is not going away and Obama has really overspent his income, so he’s going to have to pay for that, isn’t he?
Jeff: Well, the money has got to come from somewhere to pay all this and we all know where it’s coming from really.
Patrick: What’s Obama want with healthcare now?
Jeff: Okay. So, the next thing; the healthcare has got to be paid for some way. So, one of the ways that our President’s budget, or his healthcare tax increases, are going to pay for this is by increasing the Medicare tax by 0.9%, so it’s a percent, and also, by applying the Medicare tax to investment income.
So, this is an antigrowth measure. When we talk about investment income, we’re talking about interest, capital gains, dividends. So, why should we make that stuff lower?
Well, the reason why is because – it’s an economics thing – people that want to invest in the United States, they want to have incentives to do stuff, they make those tax rates lower so that people go out and start businesses, and do jobs, and keep our income and jobs here.
Patrick: Very good. Well, I know one of the things that we also want to add to what you’re saying there is a FACTA training that’s coming up this week; this Thursday at the Prestonwood Country Club. It’s only $17.50. It’s kind of a luncheon learn.
One of the things that a lot of people don’t really understand is the FACT Act is really critical that business owners learn more about how to protect themselves from a ton of pain, is one way to say it. Rex, give me some more information on that.
Rex: That’s right. We’re talking about the Fair and Accurate Credit Transactions Act which applies to just a slew of small businesses if they keep customer information, employee information.
Really, this has to do with identify theft. If an identity is stolen and the most common way that identities are stolen is through business. Somebody can break into the business computers, they get the information from company records somehow.
Well, the problem is when it’s used to steal an identity, the business owner, under FACT, under the FACT Act, is liable for the actual damages that occur and up to $2,500 in fines per incident.
One of the questions we’re trying to get business owners to deal with is how do you protect yourself from that? We’re going to be talking about that at the luncheon this week.
So, if you are interested in attending the luncheon, call my office – 972-309-0104. Tell us you want to go to the luncheon. Leave a message in our general mailbox and, please, leave us a phone number or an email address where we can call you back, or email me at Rex@Bigtexlaw.com and tell me you want to come and let us get back to you.
We do have limited spaces available, but this is something that every business owner ought to know about. It’s critical that you take steps to avoid the problem.
I was talking to a corporate attorney here just a few days ago and we were talking about the fact that he has a lot of clients that are subject to this and I sent him some info on it. I’m supposed to get back to him this week. Folks, protect yourself. This is something that you can prepare for.
Patrick: Very good. Again, call 972-309-0104 for the FACTA training that’s happening this week, general mailbox. I would encourage you to leave your message, your phone number and email twice. Say it slow. Get it in there. Be present. We’ll be right back.
[commercial]
Patrick: And welcome back to Tax Talk with Patrick Dougher, Jeff Pickering CPA and Rex Hogue, Attorney in the North Texas area of Bolinger and Hogue.
We’re so thankful that you’re here and I really encourage you guys to call. Call now and talk to these two because Jeff’s got a Master’s in Taxation. He’s not just an average CPA. I’m not saying anything against that. Actually, it’s more tremendous value that’s on the table and he’s answering your questions today for free.
Rex, estate Attorney. These guys work with extremely – I will tell you, a lot of high end folks and they’re here to answer your questions.
Jeff: Actually, Pat, I want to mention one thing. I had never really told you this, but I actually to tax returns for some CPAs and three of those CPAs actually have a Master’s too, and I do their returns.
Patrick: Really?
Jeff: Yeah, that’s right.
Patrick: Well, there’s a lot of covering in that. That’s one of the things that even Geithner missed is that you’ve got somebody that has the ability and the knowledge to help you, and they’re not using it.
So, the biggest thing I want to say is call 214-787-1570 and talk to these two about what’s going on with your taxes and how you can save more money this year on your tax return.
Most of us, we don’t really enjoy filling out our stuff, but we’re still thankful for guys like you, Jeff and Rex, that can make a difference.
Jeff: Well, I always like to make it worth it for my clients. I’m not a call center. I’m a revenue generator. That’s the way I think of myself.
Patrick: I was blown away just sitting around talking to you and you started asking me questions about some of the things that I don’t use as a tax write-off. It was furniture and it was several other things that I just never thought of. So, believe me, you’ve got a real treat. 214-787-1570, Tax Talk, and call in now. Well, I know we wanted to get also to the fact that the IRs wants more money.
Jeff: Right. So, the IRS needs more money. They’re asking for more money. So, what they have is they have a call center. This is the government. The IRS is more of a premier branch of government because they’re the one that the revenue comes to.
So, they’re asking for money. They’re asking for the call center. The call center is setting priorities so that nearly three out of every ten calls won’t get through. That’s their target, their mark. If they meet their goal, then three out of every ten calls will not get through.
Patrick: Ow! How many of us, if we ran our businesses that way would get very far?
Jeff: It wouldn’t happen in the private sector.
Rex: And the sad thing is the IRS is in it only for the money.
Patrick: Well, what’s your statement?
Rex: THE + IRS = THEIRS. Have you all heard their new motto?
Jeff: No.
Rex: We’ve got what it takes to take what you’ve got.
Jeff: Right. There you go. So, we’ve got another little story. The IRS = ATM. We’re talking about acronyms. So, the IRS has sent over $100,000 in bogus tax refunds to 50 inmates in a South Florida jail. Let’s go to a call. I think we’ve got somebody.
Patrick: We do. They’re getting loaded up right now. One of the things that I just want to make sure though is that you also wanted to answer a question of a guy that called in last week – Bob.
Jeff: Right. So, Bob, what he did was he had an IRA which had a basis which means he can put after tax money into his IRA. He’s been filing 8606, which is a form that reports your basis, every year because he’s at the age where he’s required to take money out. They’re called required minimum distributions.
So, last year, 2009, they waved thee RMD rules, the required minimum distribution rules. He’s wondering, “Do I still have to file this 8606?” The answer is no.
Patrick: Wow. That’s interesting. Well, one of the things that I want to try to get to is the death of two heiresses because I know that is something a lot of people just don’t really know is how much money they actually could pay in taxes if they don’t take care of it right.
Now, call in – 214-787-1570 and we’ll get to your questions today on Tax Talk. So, tell me about the two heiresses.
Jeff: Okay. So, there are a couple of heiresses, Casey Johnson and Ruth Lilly. They’re both heiresses from Johnson & Johnson and Eli Lilly and Company. Casey Johnson was 30 and Miss Lilly died at 94. Casey Johnson was a party animal and Miss Lilly made her biggest contribution in charitable contributions.
Patrick: Oh, very nice.
Jeff: Yeah, she was a very charitable person. So, they both had massive personal wealth. It was all tied up in estates and trusts. The way they died was very sad. Miss Lilly died on December 31st and Miss Johnson, age 30, the party animal, we don’t know exactly when she died.
Rex: We don’t. Her last Twitter post was on December 29th. But, she was not found until January the 4th and under California law, the date of death is presumed to be the date that you found the body.
Well, what a problem because on January the 4th there was no estate tax, but on December 31st, the estate tax exemption was $3.5 million. So, Miss Lilly with an estate of over $800 million is going to pay a huge amount in estate tax while Casey Johnson, in theory, won’t pay any.
Patrick: Oh, really?
Rex: Yeah, because of the quirky thing of both California law and our estate tax law which disappeared for a year starting January the 1st of this year.
Patrick: Wow. That’s amazing. Well, let’s go to the next call. We’ve got Fernando and Mother’s Day childcare. Is that correct?
Fernando: Yes, Sir. My mother runs a child day care at her house and I have a question. I wanted to know what kind of expenses could she write off?
Jeff: Well, Fernando, the biggest expense for you is going to be the office and home, only it works a little different for daycares. You basically take the area of the home that’s used for daycare which, for most daycares, it’s almost all of it, and then you prorate that based on the number of hours the daycare is open. So the more hours she’s open then the bigger deduction you’re going to get.
Other typical things you would have for a daycare would be supplies, which would include wipes, food, cleaning. There’s an inventory of toys that’s always circulating in and out. She might have some advertising, but she may not. The typical stuff is basically your food and your supplies, and I don’t know how many baby wipes there must be, but there must be a lot.
Rex: And Jeff, let’s not forget the possibility of doing something like incorporating that could save her some taxes.
Jeff: Right. Incorporating would have to be a decision you’d have to make. Rex and I both agree that somewhere around 20,000 – 30,000 of the net income is about the point where it would make sense for you to incorporate.
Fernando: Let me see if I understand this. I wasn’t clear on the size of the house. Can you explain that to me again?
Jeff: Okay. So, any time you have an asset that’s used for business and personal, you have to come up with a way to allocate. So, for daycares, you do it based on square footage of the home. So, square footage of the home used for daycare divided by total square footage of the home. Then, you have to use the hours test because for daycares, they make daycares use the hours test in addition to that.
Fernando: Oh, I see. Okay. Well that’s a great help. Thank you so much, guys.
Jeff: You’re welcome.
Rex: Thank you so much Fernando.
Patrick: We’ve got another caller who’s getting lined up on the phone and why don’t we just go ahead. Next, we’ve got Joyce. You’ve got a question?
Jeff: Oops. Joyce, call us back.
Patrick: Yeah. Joyce, call us back. We were talking about the death of the tourist. Did you guys finish that one?
Jeff: Well, Rex was making the point that under California law, the date of death is when the body is actually found and there was a huge difference in the way the states are going to pan out.
Patrick: Oh, just because of the way we’re in transition right now? Is that what you’re saying?
Jeff: Right.
Rex: Yeah, and another thing that will be kind of interesting – if Congress passes an estate tax bill this year and they made it retroactive to the first, Casey Johnson’s family is going to be really ticked off because they’ll go back and reinstitute that exemption amount at $3.5 million or whatever they decided on.
Patrick: Wow. Well, that’s another reason that I think people need to be talking to you guys about how to save money on their taxes. It’s 214-787-1570. We’re going to be taking calls quickly here and then also, I just want to remind everybody about the FACTA Training that’s coming up this week.
Thursday is the FACTA Training at Preston Wood Country Club. It’s only $17.50 You’re going to get a wonderful lunch and then you’re going to get some great information that’s mandatory for business owners and it can save thousands and thousands of dollars in penalties and pain if you just begin the process of getting educated. You’ve got to understand what the FACTA Training is all about.
Then, the last thing is if you want to register you can either email Rex and rex@bigtexlaw.com or 972-309-0104. Leave your name and your phone number and maybe your email. Repeat it a couple of times so they get it. They’ll contact you and give you all the details. We are going to be taking questions shortly and we’ll be right back.
[commercial]
Patrick: And welcome back to Tax Talk. This is Patrick Dougher. We have a great show going today. We’ve been talking about everything from Ecape from New Jersey, which is really people fleeing to avoid the higher taxes there, Obama’s healthcare tax increases, the IRS is asking for more mone, and now, we just finished a talk about the death of two heiresses; how one of them had saved a ton of money and the other one is in a really scary position as far as where the law ends up landing on their side or the other.
So, one of the things that I want to make sure is that folks have a chance to get on the air and get their questions asked. It’s 214-787-1570. The phone lines are beginning to fill up, so get your call in. 214-787-1570. Jeff Pickering, Master’s in CPA
Jeff: Taxation
Patrick: Taxation. That’s right.
Jeff: And I’m a CPA.
Patrick: Okay. And then Rex, estate Attorney. Why don’t we go straight to our call? We’ve got Calvin. And Calvin, help me with your question here. What’s your question?
Calvin: Hey guys. How are you doing?
Patrick: Good.
Jeff: Good, Calvin. How are you?
Calvin: Good. Well, I think I made a rookie mistake this year. I incorporated four years ago and sent in my quarterly 941’s. As it got late in the year, I would just kind of copy and do my third and fourth quarter. As you guys know, there’s an extra pay period in the third and fourth quarter. So, I shorted some payment on the 941 statements. I’m doing my tax return now, so should I go ahead and fill that out and send it in, or just wait for the IRS to contact me, or just go ahead?
Jeff: I would go ahead. Usually, for 941’s, at least get the taxes in. You can wait for them to do the penalty and you might be able to get out of the penalty by doing an abatement letter, but definitely 941 taxes, get them in as soon as you can because you know how they are. They go fast and furious from zero to sixty on 941 taxes.
Calvin: Okay. So, just figure out the shortage and just make a payment; send it in?
Jeff: Right.
Calvin: Now, obviously, the last two 941 statements are going to be short. Do I need to just make a correction form or?
Jeff: Yeah, you can do a 941-X, which is sort of new, which is a nicer form than the 941-C. It’s a lot easier to follow.
Calvin: Okay. So, they’ll let me make those corrections and just add the additions and then I’m sure they’ll send me a nice little penalty fee.
Jeff: Well, if you have a good reason, if you have reasonable cause, you might be able to get out of the penalty.
Calvin: Okay, and one other quick question. In my business, I use a trailer. Obviously, we have a mileage deduction. Is there any mileage compensation for a trailer vehicle or does that just go under repairs and maintenance type stuff?
Jeff: You mean a trailer as one of those things you drag behind your car, right?
Calvin: Right, yeah.
Jeff: Yeah. No, there’s not a mileage thing for trailers. You just basically depreciate it.
Calvin: Okay. Alright, guys. Well, great show. Thanks a lot.
Patrick: Thanks so much, Calvin. Well, why don’t we move right along? Homer, you’ve got a question that is on buying rental property with an IRA? Is that right?
Homer: Yes, Sir.
Patrick: Go ahead. You’re on the air.
Homer: Thank you for taking my call. Good afternoon.
Jeff: Good afternoon.
Homer: I have a pretty good amount in my IRA. It’s all invested in stocks in an account with the bank. I’m thinking about buying some rental property and wondered if that was acceptable to do with IRA monies.
Jeff: It is. It can happen, but what you probably want to do is get in some buddies because many of the companies that do third party IRAs like this, they don’t want you to be the primary, the majority owner, of the rental property. So, it works out better if you get some other guys in on it and you all go in together on something.
Homer: Hmm. Okay.
Jeff: The other people not having IRA money.
Homer: So, I couldn’t be the 100% owner.
Jeff: You know, I’ve not seen – I think there’s actually a prohibition against it and I’m pretty sure that even if there weren’t, then these trust companies are very conservative because they don’t want to get in trouble, they don’t want to be sued, they don’t want to have their livelihood taken away by going against the IRS rules.
Homer: Yeah, I don’t either. Okay. Thank you very much.
Patrick: Thank you, Homer. Again, it’s 214-787-1570. If you’re outside the area, 800-583-1570 or if you have a Sprint phone, it’s #KLIF. With that, why don’t we go to Robert? Robert, 706 return. Go ahead.
Robert: Yes. My father’s multimillion dollar estates 706 return was filed almost 18 months ago. The preparer is concerned that he might be rocking the boat if he checks on the status and I was just wondering how accurate that would be.
Jeff: That’s a good question. Go ahead, Rex.
Rex: I don’t really know the answer to that, Robert. Sometimes, we do some 706s in our office. We have gotten closing letters back as early as two months, and it’s taken as long as two years and a month to hear anything back.
If you file the return, they’re going to get in touch at some point. I don’t know that I see an advantage to doing that sooner. I don’t know that it really hurts anything either, but honestly, I’d be inclined to just kind of sit and wait.
Patrick: Kind of let the statute run, Rex?
Rex: Well, the IRS isn’t going to let the statute run because they have three years to audit that return if they’re going to, so really the time pressure’s on them; not on you. I’d just sit tight and wait.
Robert: Alright. Thank you very much.
Patrick: Thank you so much, Robert. I want to give a couple of numbers out too. One, Jeff Pickering, PickeringCPA.com 972-378-5200 and you can get your tax organizer. Is there any other information they can get from you?
Jeff: If there’s something that if you’re shy, and you want an answer to a question, you can basically call us. Some people don’t want to discuss their stuff over the airwaves, so you can call our office and we’ll be happy to help you out with whatever we can.
Patrick: Very good. And they can set an appointment as well, to come in and just see what you guys can do, right?
Jeff: Right.
Patrick: Now Rex, I know yours is 972-309-0104. What are some of the other services that people get from you?
Rex: Well, we do estate planning, tax planning, business planning, asset protection planning. We handle probate cases, we do some guardianships, we do 706 estate tax returns, we even do some tax litigation against the IRS in gift and estate tax cases.
One thing that we are offering today, because we are focusing on business owners and the FACT Act, is a little handout from the Texas Workforce Commission that we’ll be glad to send anybody. It’s in a PDF format. We would have to send it by email, but we would be glad to send that out if they’ll call us or email us. The email is rex@bigtexlaw.com or call our office at 972-309-0104. Be sure you leave us a phone number where we can call you back and get your email address information.
Patrick: Sure. Well, or just email you. That’s the easiest way because then you know you’ve got your return, but it’s rex@bigtexlaw.com. Jeff, your email again is?
Jeff: jeff@pickeringcpa.com.
Patrick: jeff@pickeringcpa.com. So, you can get some questions offline there, so to speak. Now, I’m going to give the numbers again. You really don’t want to miss the opportunity to talk to these two. 214-787-1570. I know there are deadlines coming up. I know that the closer we get to that almighty March 15th.
Jeff: March 15th is for calendar year and then, April 15th for individuals, trusts, partnerships, property tax renditions for business owners, first payment for estimated payments if you’re an estimated payer. And April 30th for first time homebuyer – or not first time, just a tax credit – home buyer tax credits.
Patrick: Very good. I know that we’re going to talk about the tax credits here in just a second. One of the things I want to remind people is to go to the FACTA Training. If you’ve got a business, then you want to be at this FACTA Training this Thursday. FACT Act is actually the information. The training is called the Fair and…
Rex: Fair and Accurate Credit Transactions Act of 2003 which very few people know about.
Patrick: Very few. Well, the thing is, is that it actually, for business owners, is mandatory. So, this Thursday, Prestonwood Country Club. Call 972-309-0104 or email Rex at rex@bigtexlaw.com.
You need to be here at this event. You won’t want to miss it. It’s only $17.50. It’s a country club. They’ll feed you great, but the real food, the real information that you want to get is how to protect yourself from thousands and thousands of dollars in penalties and what I’d call pain.
[commercial]
Patrick: Welcome back to Tax Talk. This is Patrick Dougher, Jeff Pickering CPA, Rex Hogue Attorney in the North Texas area. We’ve got the answers to your tax questions. You need to call in. 214-787-1570 or 800-583-1570 if you’re outside of the DFW area or #KILF.
We’ve got a great show. We’ve covered a ton of information this time. You’ll want to actually get maybe even a download of this week’s show or a transcript which will be on PatrickDougher.com later this week on Thursday and you can get – actually, the transcript of all the shows that we’ve done up till now. So, with that, we’ve got a first time home buyer question from Henry. Henry, you are on the air.
Henry: Yes. I need to find out on the first time home buyer’s thing with the IRS. My son, he’s 19, has no credit. So, my question is, what I’m planning on doing is borrow money using some of my property as collateral and paying for his, letting him have the money. He’s making the loan back payments at the bank, although his name is not going to be on it because they’re using my collateral.
So, his house will be paid by cash. He will be on the tax and show that the house is his, insurance and everything and he will be paying the note back at the bank, but when it comes at the end of this next year, what is it? A 1098 the IRS will send back to me for interest received at the bank. It’s going to show that I’m buying it even though he’s buying it.
Jeff: Yeah. Henry, I’m going to let you know that interest is deductible by whom paid.
Henry: Right, but I know he has to own the house for three years and I think the number t10 rule on the IRS says you can’t a relative can’t give it to like a son. I’m not giving it to him, but it’s liable to show that I’m – you see what I’m saying? I’m actually paying for him.
Jeff: Is the title going to be in his name?
Henry: Correct. The title will be in his name.
Jeff: Okay. I don’t think you have a problem. Even if you were to buy it jointly, the IRS has come out and said that two people who are buying the property together can allocate the credit in any way they see fit, so you should be okay on that area. And the mortgage interest is deductible by whom paid, so you should be okay in that area.
Henry: Okay. That’s my question. I just wanted to make sure the end of the year when they show and they say, “Well, you gave it to him so he’s going to have to pay that back.”
Jeff: You kind of like have a wrap situation. You kind of like have a wrap note it sounds like, where you have the note and he’s paying you. That happens all the time in real estate.
Henry: Right. That’s how I do all my other properties, but I just want to make sure he was going to – since he couldn’t do it from a father, I wanted to make sure that I was clear on that with IRS so he doesn’t get stuck for the money back.
Jeff: No, you’re okay. No direct lineal descendants, but it doesn’t sound like that’s what’s happening here. I want to make one point on the home buyer tax credit and that’s something that’s seldom known; that a home can be a, which doesn’t apply to you Henry, but a home can be a trailer home, it can be a boat. Those fall under the definition of a home. So, I know somewhere somebody out there is going to buy a boat and get a home buyer tax credit for it.
Henry: Right. Okay. Well, thank you very much. I appreciate it.
Jeff: You’re welcome.
Patrick: A boat?
Jeff: A boat, yeah.
Patrick: I’m stunned. So, I can move out to the lake and buy a boathouse.
Jeff: It has to have a bathroom and an eating area.
Patrick: Well, most of them do.
Jeff: Some of them do, yeah.
Patrick: There’s a back deck for the speedster.
Jeff: And it’s also got to be used as a principle residence, so there’s the kicker.
Patrick: Well, that takes a whole other meaning to waterbed. Okay, we’ve got Catherine. Catherine, you have a question on capital gains. Go ahead.
Catherine: Yes. I have a mutual fund that’s held at Fidelity. It’s not a Fidelity fund. I had transferred it there when I bought some other Fidelity funds. I’m getting ready to sell that. I’ve had it since 1996, so there’s going to be a lot of capital gains as far as initial purchase and then all the reinvestment of dividends.
Jeff: Right, Cathy. That’s right.
Catherine: Am I just going to have to go back through each year and figure out how much my capital gains, or should that mutual fund company be able to tell me?
Jeff: The good mutual fund companies keep track of your basis, but it may be if it’s really old, they didn’t. There was a time that you had to manually go ahead and add in your dividends and that was a big pain for us in the tax business.
Catherine: Right, right. Okay.
Jeff: It really depends on the fund and how far you go back. You want to make sure, though –you might want to ask them or ask somebody at the fund how far they go back in tracking your cost basis.
Catherine: Okay. Alright. Thank you very much.
Jeff: You’re welcome, Catherine.
Patrick: Thank you, Catherine. One of the things I’m really surprised at is that I’ve heard, guys, that there’s a new baseball team that just showed up out there; something about the Tax Dodgers or something?
Rex: It’s the Tax Dodgers – the LA Tax Dodgers; very interesting story here. It appears that the owners are going through a divorce and in her divorce petition, Mrs. McCord explains that they have made – how much is this? It’s $108 million from 2004 to 2009 and paid not one dime in taxes.
Jeff: To California or the Federal Government.
Rex: California or the Federal Government. And interesting, something about this is they’ve avoided taxes on millions and avoiding taxes is legal. Tax evasion is illegal.
Patrick: How does the IRS tell the difference, by the way?
Rex: Well, the way you can tell the difference is five to ten years.
[laughter]
Patrick: Right. I get that. That’s very good. Well, it’s 214-787-1570, but I really want to cover a couple of things before we get off the air and that is, again, the FACTA Training. I don’t want you guys to miss this. This is something that when I first saw all this information, I was stunned that this law is mandatory for businesses which are incorporated, S Corp on up, right? Is that right, Rex?
Rex: Any business.
Patrick: Any business needs to understand that they are liable for any kind of loss due to identity theft, things of that nature. Is that correct?
Rex: Yeah. And one of the requirements of the law, for example, is when you get rid of information on clients or employees that you actually destroy it. You can’t just throw it away.
Patrick: Oh really?
Rex: It has to be destroyed in such a way that it can’t be put back together.
Patrick: So, you’ve got to burn it or something. The thing that I’m saying is you need to attend this. It’s this Thursday lunchtime. You can get all the details from rex@bigtexlaw.com. Just, literally, email Rex and he will give you the information or you can call and leave your name at 972-309-0104. Make sure your number is stated clearly so that they can get back to you and give you all of the rest of the information – Prestonwood Country Club.
One of the other things we want to make sure is you know that next week we are going to be covering some great topics and I know, Rex, you had a couple of things you wanted to cover next week and I want to prime the pump for that. You don’t want to miss this.
Rex: Next week, we’re going to talk about what your bank doesn’t want you to know about checks; even common mistakes people make writing checks and how those mistakes cost them money. You know, most people do not know how to write a check? We’re going to teach you about that next week.
Patrick: That’s awesome. I know one of the common questions that we get on the show has to do with Roth IRA’s and their conversion, how to set up your company or whether to set up a company in an incorporated position. That happens all the time. So, Jeff, how can people get a hold of you this week?
Jeff: 972-378-5200.
Patrick: Say that again.
Jeff: 972-378-5200.
Patrick: Very good. And Rex, one more time.
Rex: 972-309-0104 or rex@bigtexlaw.com
Patrick: Or jeff@pickeringcpa.com, correct?
Jeff: There you go.
Patrick: Well, one of the things we want to do is thank you guys for listening. Next week the show is going to be really awesome and I want to thank you guys for coming by PatrickDougher.com to see the transcript and catch the last few shows. We look forward to next week. We’ll talk to you then.

Tags | FACTA, Social Media Marketing, tax reduction, tax savings, Tax Talk, Taxes