When accounting goes unaccounted for
That’s what’s being claimed anyway:
Lawmakers Alin Popoviciu and Cristi Dugulescu of the ruling Democratic Liberal Party drafted a law where witches and fortune tellers would have to produce receipts, and would also be held liable for wrong predictions, a measure which was part of the government’s drive to increase revenue.
Romania’s Senate voted down the proposal Tuesday. Popoviciu claimed lawmakers were frightened of being cursed.
It’s unclear if Popoviciu and Dugulescu will try to redraft the law.
Maria Campina, a well-known Romanian witch, told Realitatea TV Thursday it is difficult to tax thousands of fortune tellers and witches partly because of the erratic sums of money they receive.
What’s unclear is how the God-fearing Romanian Tea Partiers feel about the situation since the Devil’s work is clearly being done without any appropriate sin tax.
[via TaxProf and Tax Docket]
Despite other pressing issues out there, such as, whether a Muslim community center is too closeto Ground Zero or if it’s just a religious revival of an old Burlington Coat factory, the matter of tax reform managed to creep back into the news late last week.
The President’s Economic Recovery Advisory Board plans on dropping some suggestions on fixing our tax system on August 27th. This comes after the getting suggestions from the American people but then stalling a little bit on the issue.
Now that some recommendations are scheduled to be made public the Journal suggests that the timing isn’t ideal for an election year but also mentions that while there’s going to be plenty of idea put out there, no real solutions are going to be recommended:
But the timing of the release just before the Labor Day weekend suggests that the administration might be trying to downplay it. Many Democrats say tax hikes are inevitable if the government is to bring down the federal deficit, expected to total about $1.5 trillion this year, but that option remains politically sensitive, given the high jobless rate and ahead of November’s mid-term elections.
According to the Treasury Department, the report will offer “an almanac of options from a broad range of viewpoints,” but won’t make specific policy recommendations. It will discuss ideas related to simplifying the tax code, strengthening enforcement and overhauling the corporate tax system, the department said.
An ‘almanac of ideas’ will no doubt incorporate all ideas on tax reform floated by anyone, anywhere so that it can appear that people are trying really hard to come up with a solution without making anything too politically awkward. In other words, business as usual.
White House Panel to Issue Tax-Overhaul Report Aug. 27 [WSJ]
If there’s one thing the economy offers to businesses nowadays, it’s opportunities to lose money. As unpleasant as that is, it at least will reduce your taxes, right?
Maybe.
Even tax loss parties have their poopers, and the “At-risk rules” of Code Sec. 465 are as poopy as can be. Drafted to fight the first generation of retail tax shelters in the 1970s, these rules have faded into obscurity, but remain available for annoyingly competent IRS agents to wield against your loss deductions. The rules are supposed to defer losses when it’s really the lender on the hook for them, rather than the nominal owner of the money-losing activity. The losses carry forward to offset future income on the activity, or gain on a sale someday.
These rules pooped all over the tax loss of CTI Leasing, an LLC owned by Kieth Roberts, an Indiana man, to lease trucks to his trucking company. He loanded the LLC $425,000 to buy a “Vantare H3-45 Super S2” RV. The Tax Court says “Vantare RVs are custom-built, fully furnished, luxury coach RVs known for their ‘yacht quality fit and finish.'”
The leasing business cranked out tax losses. The IRS disallowed $425,000 of them on the grounds that the $425,000 loan didn’t give the LLC owner “at-risk” basis in his leasing activity. The Tax Court said the taxpayer failed to show that the land yacht was used in the truck leasing business or was owned by it, so the $425,000 wasn’t “at-risk” in the leasing activity.
Not every business can afford a nice land yacht, but they all can lose money. Some pointers to help keep you from trippng over the at-risk rules:
• If your loan is “non-recourse” — if you don’t pay, all the lender can do is repossess the property — that’s an at-risk rule red flag.
• Limited partners and LLC members are likely to face at-risk issues; the whole point of a “limited liability company” is to limit owner liability, after all.
• Be careful of loans from related parties. If you borrow from the wrong person, the tax law will treat the loan as not “at-risk,” even if you borrow from a business partner who might leave you under an end-zone somewhere if you don’t pay up.
• If you are in the real-estate business, “qualified” non-recourse debt – generally third-party commercial loans – are O.K. under the at-risk rules.
If you trip over the at-risk rules, your losses may not be gone forever. Form 6198 tracks your deferred losses, and you can lose them if your activity generates income someday.
Joe Kristan is a shareholder of Roth & Company, P.C. in Des Moines, Iowa, author of the Tax Update Blog and Going Concern contributor. You can see all of his posts for GC here.