McCain, Obama offer competing tax plans

According to this article on income taxes, Presidential hopefuls John McCain and Barrack Obama are offering competing tax plans:

Sens. Barack Obama and John McCain offer voters a stark if orthodox choice on the economy. Democrat Obama would sharply skew tax cuts and spending toward lower-income people and social programs. Republican McCain would just as sharply tilt policy toward upper-income classes and business investment.

With gas prices, food prices and home foreclosures all headed skyward, the current economic slowdown is tailor-made for a presidential election, hitting middle-class pocketbooks in ways not seen since Jimmy Carter lost to Ronald Reagan in 1980. The economy has displaced the Iraq war as the central focus of the election.

The economic situation of the government, however, may leave orthodox economic remedies outdated. Intense new budget pressures, from the enormous cost of the Iraq war to escalating health care spending for an aging population, will pitch the next president into choices not nearly as palatable as either candidate's campaign promises imply.

Tax fights promise to engulf the next administration almost immediately. In 2010, President Bush's $3.6 trillion tax cuts expire, meaning the next president will have to propose new tax laws upon taking office in 2009.

As much as Obama blasts the Bush tax cuts, he would expand large portions of them, promising even more tax cuts for middle- and lower-income groups. Taxes would fall most sharply for lower-income groups while rising sharply for top earners, according to a new analysis by the Tax Policy Center, a joint think tank of the center-left Brookings Institution and Urban Institute. Obama's campaign contends that no one earning less than $250,000 a year would see any tax increase.

For those earning more than $250,000, however, taxes could rise to levels not seen in decades. If Obama imposes, as he has suggested, higher Social Security payroll taxes on top income earners, they could see an effective tax rate of more than 55 percent of their income, not counting state income taxes, the Tax Policy Center analysis showed.

McCain goes in the opposite direction.
Seeking to bolster his standing with the Republican right, he moved quickly to embrace the Bush tax cuts that he had voted against, aligning squarely with GOP tax orthodoxy.

He would make the Bush tax cuts permanent, leaving in place all the middle-and lower-income tax cuts Obama wants to expand, but keeping the lower Bush rates on top income earners and the reduction in capital gains and dividends taxes to 15 percent. McCain would also slash the corporate tax rate from 35 percent to 25 percent, and phase out the alternative minimum tax, which hits upper-income groups.

That skews the tax cuts heavily toward business income and high-earning groups. Most people would see little change in their taxes, but the top 0.1 percent of income earners would see taxes fall by more than $190,000, the Tax Center analysis showed.

The plan would reduce revenue by $600 billion over 10 years.

That ignores the government's voracious need for taxes to pay for government health care programs and the Iraq war. McCain's plans to cut spending by eliminating earmarks and "corporate welfare" would not come anywhere near to closing the budget gaps left by his tax cuts.

McCain also supports a continuation of the Iraq war, which last year cost $170 billion.
"I think it's just unrealistic to propose the kinds of things McCain is proposing, because I just think the fiscal pressure is just too great, and I think it's delusional to think you can not only keep all of the Bush tax cuts but expand them," said Bruce Bartlett, a former supply-side advocate and official in the Reagan and George H.W. Bush administrations. "Anyway, he's not going to be able to do that because he's going to have a Democratic Congress to deal with."

Is A Business Entity A Leagal Form Of A Business?

A business entity is the legal form of a business. Each of the major business entity choices available under U.S. law has advantages and disadvantages, including liability for business obligations, impact on taxes, required formalities, flexibility, cost of forming and operating the business, and more.

The choice of which entity to use is often driven by tax considerations as the entity classification that a business chooses may significantly affect its tax treatment under federal, state, local, and (in some cases) foreign laws. Therefore, it is crucial to understand the tax treatment of each entity in which a business may operate. But no single form of business entity is ideal for all businesses in all situations and the tax treatment should not be the sole factor considered in choosing the best entity for a particular business.

Oil's Historic Day Sends Dow Spiraling Downward

According to this article on oil and stock marketing trading at Foxbusiness.com, crude oil easily broke the record for the largest one-time gain and the all-time record close when it settled at $138.54 on Friday. That marks a gain of 8.4%, or $10.74.

The previous all-time record close of $133.17 was set on May 21 while the largest one-time gain was set on Thursday when oil surged $5.49.

Crude’s surge was so sharp that trading was temporarily halted Friday afternoon for all oil-related commodities after they hit their daily limit for trading on the New York Mercantile Exchange.

Crude oil peaked at $139.01 a barrel on Friday afternoon, an increase of $11.22 after opening the day at $127.79.

The price jump came as traders buzzed about an analyst predicting oil would hit $150 by next month, a drop in the U.S dollar and a threat of a potential air strike in Iran.

Ole Slorer, a Morgan Stanley analyst, forecasted crude could hit $150 by July 4, due to increasing demand in Asia. This combined with a weakening dollar may have encouraged overseas traders to seek a hedge against the falling dollar.

A day after the European Central Bank made comments that hurt the greenback, the dollar fell further on Friday as a result of weak labor data. The U.S. Department of Labor released a report showing the unemployment rate increased from 5.0% to 5.5% last month, the biggest monthly increase since 1986.

Phil Flynn, FOX Business contributor and energy analyst at Alaron Trading cited the data, the dollar, and geopolitical concerns.

“You put it all together it was a prefect storm to drive these prices,” Flynn said. “Traders down here never saw anything like it and they may never see anything like that again.”

Nigeria's Oil Minister Odein Ajumogobia told Reuters that OPEC is ready to jump in and help to slow rapidly rising oil prices, but it does not see any reason to immediately increase supply. Ajumogobia insists the weak dollar and fear of a supply gap were the driver in today’s spike, according to Reuters

Microsoft Unit Faces Accounting Probe

According to this accounting and finance article, Microsoft Corp.'s search-technology unit Fast Search & Transfer is facing a police investigation in Norway concerning possible financial-accounting irregularities.

Norway's financial supervisory organization, Kredittilsynet, said Fast Search's accounting may have broken the law in addition to violating accounting standards. It reported the matter April 24, 2008, to the Norwegian National Police's financial unit, according to a statement issued by Kredittilsynet.

That unit referred the matter last week to the Oslo District Police. It further described the matter as "grave" because of the way the accounting had been handled, and the size and impact of the figures involved. The National Police said it decided not to pursue the matter itself due to lack of capacity.

The investigation was reported on Portfolio magazine's Web site.

Microsoft said in a statement it takes "any matter of this nature very seriously, and we are fully committed to taking all appropriate actions to ensure consistency with the company's core values."

Microsoft acquired Fast Search in late April for $1.2 billion as part of its effort to gain momentum against Web-search leader Google Inc.

Traders Accounting Seminars Are Moving To The Web

Traders Accounting, the largest online resource for day trading and advice on tax planning, announced they are going to put their popular accounting seminars online. The first will be discussing the biggest mistakes investors made in 2007 and show individuals and company's how to correct them for next year.

For more information on the June webinar, visit the accounting seminar's page or contact Ryan Gibson at 1-800-938-9513.

It's Not Just Taxes, It's the Dollar

From an article on income taxes and the economy:

The proper level of taxation has predictably emerged as a major presidential campaign issue. The irony here is that stock market returns since the 1950s show that the dollar's stability and its direction trump taxes as the greatest indicator of our long-term economic prospects.

Sadly, the dollar's fall this decade has not generated any kind of campaign comment from either side. Oddly enough, both Senators McCain and Clinton support a federal gas-tax holiday for the summer. But it should be said that this gimmick perhaps is the primary campaign's ultimate non-sequitur. To endorse an 18-cent-per-gallon tax cut on gasoline is to miss the point. Pump prices aren't high due to federal taxes, but instead are reaching nosebleed levels thanks to a collapsing dollar.

If it's agreed that stock market returns at the very least indicate long-term economic optimism, the dollar's fall should be issue no. 1 for candidates on both sides. Just as high tax rates erode the value of paychecks and investments, so does inflation. And when stock market returns over the last 60 years are considered, it becomes apparent that all three presidential candidates do not have their eyes on the ball. In short, it's the dollar, stupid.

Today's Republicans want tax cuts, while Democrats want tax increases. Judging by equity returns, both sides ignore the dollar at their peril.

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IRS says up to 350,000 tax rebate checks wrong

According to this article on tax rebate checks:

Up to 350,000 households aren't getting the $300 per child owed them as part of their economic stimulus rebate payments, the Internal Revenue Service said Thursday.

The tax agency says taxpayer human error and computer glitches were responsible for the problem affecting a tiny percentage of the 130 million taxpayers expected to benefit from the refunds the government began sending out last month.

IRS spokesman Terry Lemons said the agency was confident it had identified all the people affected by the mistake. He said the IRS will send letters to those who missed out on the refund and that checks for the child credit will be mailed out in July. People need not contact the IRS or file additional paperwork, he said.

FBI Warns of Tax Rebate Check Scam

According to this article on the tax rebate checks, as the IRS began sending economic stimulus checks to eligible taxpayers, the FBI is warned recipients about a scam related to the money.

Fraudsters are sending out fake e-mails notifying individuals that direct deposit is the fastest and easiest way to receive their tax rebate checks from the IRS.

After clicking on a link that appears to be from the IRS, computer users are asked to enter personal and other information, including bank account records, which scammers use to withdraw the money — usually via wire transfer.

According to the complaints received by the FBI, the fake e-mails claim, "Our records indicate that you are qualified to receive the 2008 Economic Stimulus Refund. The fastest and easiest way to receive your refund is by direct deposit to your checking/savings account. Please follow the link and fill out the form and submit before May 10th, 2008 to ensure that your refund will be processed as soon as possible."

The fraudulent e-mail warns that "Submitting your form on May 10th, 2008 or later means that your refund will be delayed due to the volume of requests we anticipate for the Economic Stimulus Refund."

In a report on Internet crimes last month, the FBI estimated that people lost $240 million to such crimes in 2007.

According to FBI officials, there have been more than 1,000 different e-mail scams purporting to be from the IRS in the past several years.

The FBI warning to consumers and computer users from the Internet Crime Complaint Center notes, "Consumers are advised that the IRS does not initiate taxpayer communications via e-mail. In addition, the IRS does not request detailed personal information via e-mail or ask taxpayers for the pin numbers, passwords."

Furor after Italian gov't posts each taxpayer's income online

If you're not glad you're an American, you will be after reading this income-tax-related story from Italy that was all over the news this week:

How do you say privacy in Italian?

We find ourselves asking that question after reading reports that say Italian officials posted the income of every taxpayer on the Internet as part of efforts to increase transparency.

"The tax authority's website was inundated by people curious to know how much their neighbors, celebrities or sports stars were making," BBC News reports. "The Italian treasury suspended the website after a formal complaint from the country's privacy watchdog."

Members of the outgoing government expressed shock that people were upset by the surprise disclosure of individual income data from 2005.

"This is a matter of transparency, of democracy,'' outgoing Deputy Finance Minister Vincenzo Visco tells Bloomberg News. "I don't see any problem. The whole world does this. Just watch any American TV show and you'll see." (We have no idea what he's talking about. Do you?)

By the way, a quick search suggests that the Italian word for privacy is privacy or segretezza.

Tax rebates start showing up in bank accounts

WASHINGTON - The government began depositing tax rebate checks in thousands of bank accounts on Monday as the stimulus program aimed at giving the ailing economy a jump-start got under way early.

The Internal Revenue Service started making the direct deposits on Monday with the goal of completing 800,000 payments each day over the first three days of this week. No deposits will be made Thursday while the IRS prepares a big batch of 5 million direct deposits scheduled on Friday.

The IRS had expected to begin the program in May but was able to start a few days earlier by utilizing a computer system that can process payments on a daily basis. The government's paper checks will start going out on May 9, a week earlier than previously announced.

The rebates, which are expected to reach 130 million households, range up to $600 for an individual and $1,200 for married couples plus $300 for eligible children younger than 17.

Practice makes perfect: day trading simulator

Here's a free tool that day traders (or day trading wannabe's) might find useful. It's a day trading simulator. Says the creator: It's free for 30 days - and after 30 days, it's free too :). It will allow you to day trade foreign currencies online. You can day trade currencies with less than $25,000 (unlike stocks).

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McCain Proposes Summer Federal Gas Tax Breaks

Republican Presidential nominee John McCain wants a summer break, calling on the government to suspend all federal gasoline taxes from Memorial to Labor Day.

Senator John McCain, (R) Arizona: "The effect will be an immediate economic stimulus, taking a few dollars off the price of a tank of gas every time a family, a farmer, or trucker stops to fill up."

In a Tax-Day economic speech, McCain says he wants to reform the federal tax code, remove corporate tax loopholes, and cut taxes for businesses and middle income earners, including a "phaseout" of the "alternative minimum tax." McCain also criticized his Democratic rivals, claiming they would raise taxes.

Senator McCain: "All the tax increases are the fine print under the slogan of "hope." They're going to raise taxes by thousands of dollars per year, and they have the audacity to hope you don't mind."

Senator Barack Obama fired back.

Senator Barack Obama, (D) Illinois: "John McCain seems to think that the Bush years have been pretty good. In fact, he's running for a third Bush term. He is offering more of the same."

Clintons, Cheneys release tax returns

Clintons Made $109 Million Since 2000

Sen. Hillary Rodham Clinton and former President Clinton made nearly $109 million since they left the White House, capitalizing on the world's interest in the former first couple and lucrative business ventures.

The Clintons reported $20.4 million in income for 2007 as they gave the public the most detailed look at their finances in eight years. Almost half the former first couple's money came from Bill Clinton's speeches.

The Democratic presidential candidate and her husband paid $33.8 million in taxes from 2000 through 2007. They listed $10.25 million in charitable contributions during that period.

Clinton has been under pressure to release her tax returns, especially from rival Sen. Barack Obama, who posted his 2000 to 2006 returns on his campaign Web site last week. Neither Obama nor Republican Sen. John McCain has made their 2007 tax returns public, though both say they will this month.

The Clintons last made their returns public in 2000 when they reported an adjusted gross income of $416,039 for 1999. Since then, the former president has embarked on a number of business ventures and has made millions from speaking engagements and books.

In the tax returns, the former president describes his occupation as "Speaking & Writing."
Beside speeches and books, his biggest single business income is from his partnership with Yucaipa Global Opportunities Fund, a Los Angeles-based investment firm founded by longtime Clinton fundraiser Ron Burkle. Between 2003 and 2006, the returns show total Yucaipa partnership income of $12.5 million. The 2007 summary provided by the campaign lists $2.75 million in partnership income.

According to a summary of the seven years provided by the campaign, the former president's speech income since he left the White House totals $51.85 million and his income from his two books — "My Life " and "Giving" — totals $29.6 million, including a $15 million advance for "My Life." Bill Clinton has traveled the world, giving paid speeches to multinational corporations, investment banks and motivational groups.

The campaign has said Clinton typically donates millions of dollars worth of free speeches to charities

Hillary Clinton had $10.5 million in book income over the period from her book "Living History." She donated earnings from her other book, "It Takes a Village," to charity.

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Vice President Dick Cheney and Mrs. Cheney Release 2007 Income Tax Return

Vice President and Mrs. Cheney filed their federal income tax return for 2007 today.
The income tax return shows that the Cheneys owe federal taxes for 2007 of $602,651 on taxable income of $2,528,068. During the course of 2007 the Cheneys paid $466,165 in taxes through withholding and estimated tax payments, and will pay the remaining $136,486 upon filing their tax return.

The wage and salary income reported on the tax return includes the Vice President's $212,208 government salary. In addition, the tax return reports a pension benefit of $32,500, which the Vice President received as a former director of Union Pacific Corporation. The Vice President became eligible for this benefit in 2006 when he turned 65. The tax return also reports Mrs. Cheney's book royalty income, a salary from her continuing work at the American Enterprise Institute, and a pension benefit of $32,000, which she received as a former director of Reader's Digest. The amounts of the pension benefits received by the Vice President and by Mrs. Cheney are fixed and will not increase or decrease regardless of changes in the earnings or revenues of either company.

The Cheneys donated $166,547 to charity in 2007. This brings the Cheneys' total charitable contributions during his Vice Presidency to $ 7,966,566.

Daytrading Tip: Using Mental Stops

Using Mental Stops

from Daytradersbulletin.com

Many traders prefer mental stops for protection. Some traders feel that by having a stop order resting on the floor, they are vulnerable to a run on their stop, and in many cases, they are correct. If you want to use mental stops, you need to be aware of the amount of slippage that occurs from the time you decide to place an order until you receive your flash fill.

Check the time it takes to place a market order on a number of occasions and average the number. If it takes one minute to get your fill, then see what dollar range the current 1-minute bars are on your chart.

This dollar value will be your probable slippage. I say probable because in some market conditions, price can move very rapidly against your position and with no stop in the market, your trading account could suffer accordingly.

In any event, if the amount of slippage that occurs between the time you decide to make a trade, and the receipt of your flash fill is comfortable for you, then by all means use mental stops. However, if you are subject to interruptions during your trading, or if you are easily distracted, I advise against your using mental stops.

Obama Calls for Overhaul of Financial Regulations

According to an article on stocks and the economy, democrat Barack Obama said the government must overhaul the rules governing banks and other financial institutions in the wake of a collapse in the subprime mortgage market that has shaken confidence in the U.S. economy.

Saying the nation has lost a "sense of shared prosperity,'' the presidential candidate called for giving the Federal Reserve greater supervisory authority when it acts as a lender of last resort, strengthening the capital requirements for financial companies and streamlining the collection of overlapping regulatory agencies that oversee Wall Street.

"Our free market was never meant to be a free license to take whatever you can get, however you can get it,'' Obama said in an address at New York's Cooper Union for the Advancement of Science and Art. "The American economy does not stand still, and neither should the rules that govern it.''

A deepening slump in the housing market and declines in business investment, consumer spending and construction are prompting sparring among Obama, Hillary Clinton, his rival for the Democratic nomination, and Republican presidential candidate John McCain over how to pull the U.S. back from the brink of a recession and deal with the risks exposed by the credit crisis. All three have delivered speeches on the economy this week.

McCain spokesman Tucker Bounds said in a statement after Obama's speech that the Illinois senator is endorsing the "failed liberal policies of the past.'' In his own economic speech March 25, McCain, an Arizona senator, urged revisions focused "solely on preventing systemic risk'' and not assisting speculators.

Clinton, a New York senator, has called for spending more on job training and for a $30 billion program to help homeowners and communities hit by rising foreclosures to stimulate the economy. Neera Tanden, a Clinton spokeswoman, said Obama was offering "vague principles'' rather than "concrete solutions to provide Americans with greater confidence in the market or keep them in their homes.''

Campaigning today in North Carolina, Clinton added to her economic proposals with a plan for spending $12.5 billion over five years to help displaced workers with training programs and grants for education.

She and Obama criticized McCain, 71, saying he was offering an extension of the economic policies of Republican President George W. Bush.

"I don't think we can afford four more years of that kind of inaction,'' Clinton, 60, said in Raleigh.

To deal with the current slowdown in the economy, Obama urged passage of a second $30 billion stimulus plan, including $10 billion to help homeowners facing foreclosure either sell their homes or modify their loans, aid for state and local governments to prevent service cuts and expanding unemployment insurance to cover more workers. The plan is similar to one Clinton offered on March 20.

Addressing what he said was a flawed regulatory system, Obama blamed both Democratic and Republican administrations for peeling back rules put in place in reaction to the Depression of the 1930s without adapting to changes in the financial marketplace.

"The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both,'' Obama said.

He cited the repeal in 1999 of the Glass-Steagall Act, which separated commercial and investment banking and one of the hallmark laws of the late President Franklin Roosevelt's New Deal economic program. While that allowed banks and securities firms to compete more directly, the absence of a replacement reflecting changes in financial markets led to excesses.

"Instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused and even embraced an ethic of greed, corner cutting and inside dealing that has always threatened the long-term stability of our economic system,'' he said.

Obama proposed six areas to revamp regulations.

The Federal Reserve should have basic supervisory authority over any institution to which it may make credit available as a lender of last resort, Obama said. "Taxpayers have every right to expect that these institutions are not taking excessive risks,'' he said.

Second, requirements for capital, liquidity and disclosure should be strengthened for all financial institutions, especially for "complex financial instruments like some of the mortgage securities that led to our current crisis,'' he said.

Obama said the government needs to restructure the overlapping and competing regulatory agencies because today's financial institutions no longer fit within specific categories created decades ago.

Related to that, regulations need to change to apply to what institutions do, not their title, he said. Homeowners weren't protected in part because commercial banks and thrift institutions were subject to guidelines on subprime mortgages that did not apply to mortgage brokers and companies.

"It makes no sense for the Fed to tighten mortgage guidelines for banks when two-thirds of subprime mortgages don't originate from banks,'' Obama said. "When it comes to protecting the American people, it should make no difference what kind of institution they are dealing with.''

Obama said the Securities and Exchange Commission should crack down on trading activity that crosses the line to market manipulation. He cited reports that traders made market bets against Bear Stearns before its collapse this month, purposely spreading rumors that the institution was in financial distress. "The SEC should investigate and punish this kind of market manipulation,'' Obama said.

Lastly, Obama called for the creation of a financial market oversight commission to identify unanticipated systemic risks to the financial system. The commission, he said, would meet regularly with the president, Congress and regulators and brief them on the state of financial markets and risks.

Obama, 46, is offering a "credible approach,'' former Federal Reserve Chairman Paul Volcker, an Obama supporter who attended the speech, said in an interview. "You can't solve this problem overnight, but you've got to have a thoughtful review of it and accept the logic that regulatory authority has to be extended and strengthened.''

William Donaldson, former chairman of the U.S. Securities and Exchange Commission and an Obama supporter, said the economy needs "some 21st century reorganization'' to prevent future crises in housing and financial markets, "all of which were sort of driven through a hole in regulation.''

The Commerce Department reported today that the U.S. economy grew at an annual pace of 0.6 percent from October though December, another sign that the U.S. economy may be close to or already in a recession. Orders for durable goods unexpectedly fell in January as companies became more hesitant to invest, the Commerce Department said yesterday. Sales of new homes dropped to a 12-year low.

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Tax Advice For Day Traders

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IRS spends $42 million mailing letters re: rebate checks

At a cost of nearly $42 million, the IRS wants you to know: Your check is almost in the mail.
The Internal Revenue Service is spending the money on letters to alert taxpayers to expect rebate checks as part of the economic stimulus plan.

The notices are going out this month to an estimated 130 million households who filed returns for the 2006 tax year, at a cost $41.8 million, IRS spokesman John Lipold confirmed.

That works out to about 32 cents to print, process and mail each letter. It doesn't include the tab for another round of mailings planned for those who didn't file tax returns last year but may still qualify for a rebate.

Democrats accused the Bush administration of wasting time and postage.

"There are countless better uses for $42 million than a self-congratulatory mailer that gives the president a pat on the back for an idea that wasn't even his," Sen. Charles Schumer said Friday, arguing the IRS could more effectively spend the money to catch tax cheats.

Keith Hennessey, director of the president's National Economic Council, said the letters are being sent to explain how the tax rebates will work.

"Any time you do something as a government tens of millions of times, there is ample room for people to get confused. And so if you're going to have tens of millions of taxpayers getting checks, you want to get the information out so that you have as few people as possible confused about what's happening, they understand what's coming, and it reduces the number of incoming requests that IRS and Treasury have to figure out how to deal with it," said Hennessey.

"Dear Taxpayer," the letters will begin, going on to say the IRS is pleased to inform the recipient that Congress passed and President Bush signed into law a plan that will provide payments of up to $600 for individuals who qualify or $1,200 for married couples filing jointly. The rebates are the centerpiece of a $168 billion economic stimulus package.

The actual rebate checks are scheduled to go out starting in May, after the IRS has finished separately mailing out routine refunds for the 2007 tax year.

The letters will be a reminder that people need to file a 2007 tax return so they will receive the rebate if they are eligible for it.

Similar notices will go out later to some Social Security recipients and those who receive veterans benefits — groups that often do not file tax returns.

For those people to get a rebate check, they will need to file a tax return if they received at least $3,000 from a combination of certain Social Security benefits, veterans benefits and earned income. The minimum payment for this group will be $300 for an individual and $600 for a couple filing jointly.

Not everyone will be eligible. Singles with income of more than $75,000 and couples with more than $150,000 get only partial rebates, if any.

People who earn less than $3,000, illegal immigrants and anyone who does not file a tax return will miss out. Singles with incomes exceeding $87,000 and couples with incomes exceeding $174,000 also won't qualify, although those caps rise by $6,000 per child.

What will you do with your tax-rebate check?

Here’s a fun msnbc.com article detailing what Americans plan to do with the forthcoming rebate checks…

Answers from consumers vary from gas and credit-card bills to McDonald’s

Is an extra $800 in your pocket enough to change the course of the ailing economy?

President Bush, Treasury Secretary Henry Paulson and members of Congress seem to think so. Washington is talking about issuing tax rebate checks in hopes of staving off a recession. And people around the country, many of them struggling to pay bills, staggering under credit card debt or worried about their financial futures, aren't about to turn them down.

I would probably take that money and breathe a sigh of relief for one month," said Jennifer Simon, who works at a small communications firm in Long Valley, N.J., and spends $1,500 a month on child care.

"It's not a permanent fix," she said, "but I wouldn't send it back."

Taxpayers got smaller rebates, $300 per person, under a similar plan in 2001. There is debate in economic circles — as usual — about whether those checks warded off recession or went straight from the U.S. Treasury into Americans' savings accounts.

This time around, while some people may put the rebate toward a big-ticket item like a flat-screen TV, many echo Ginger Scott, a home-health physical therapy worker in Kansas City, Mo. She says she wouldn't buy anything exciting.

"I think I had too much exciting previously," said Scott, 52. "Exciting will kill your budget." Instead, she said she'd pay off a credit card bill and save what's left over.

President Bush on Friday embraced as much as $150 billion in tax relief, most of it for individuals, to jump-start the economy. He said the country would be "just fine" if Congress passes the stimulus.

While the administration is avoiding specifics, congressional aides said the White House was considering rebates of up to $800 for individuals and $1,600 for married couples. The checks could arrive by late spring.

In interviews, Americans gave a range of ideas for how they'd spend the money, some of them reflecting the pinch of a difficult economy in which the costs of food and gas are rising and jobs are harder to come by.

Take DaMel Nixon, 33, a mailhouse quality control supervisor in Lansing, Mich., who used to be an avid buyer of music but is unlikely to use his $800 to splurge on CDs because he needs money for gas.

"I'm going to need that $20 to put in the tank," he said.

In Fargo, N.D., Doug Benson said he would spend half of the $800 on bills and half on new beds for his children. In New York City, Landy Ung said she would plow the money into her startup Internet business as an incentive for her salespeople.

At a mall in Madison, Wis., Antonia Rivera said would love a new pair of snow boots, but said she'd save the cash anyway. She hopes to retire from her job as a supply clerk at the University of Wisconsin Hospital next year but fears she may not have enough money.

So she's cutting back on all her purchases. "If I need it, I look for the best price," said Rivera, who is 68. "If I don't really need it, I don't buy anything."

And in Kansas City, Jenise Lemmones said she'd let her 8-year-old granddaughter, who lives with her, call the shots: "She just likes to go to McDonald's and the movies."

When the 2001 rebates went out, two-thirds of the cash was spent within six months, according to one paper published by the National Bureau of Economic Research, a private research group that serves as the national arbiter on such matters.

Fans of the rebate say that spending was enough to keep the country out of a longer, more painful recession.

"The recession officially ended the month after the stimulus package checks were sent out," said David Wyss, chief economist at Standard & Poor's.

But a conflicting report, also published by the National Bureau of Economic Research, found the bump in spending went almost entirely to the auto sector, which was then offering zero-percent financing.

"The majority of consumers saved or paid off a debt rather than spending it," said Matthew Shapiro, professor of economics at University of Michigan, who co-wrote the second report.

Economists do agree on this much: A stimulus like this is a one-shot deal.

"Once people have spent it, they may ask, 'Who's going to cover next month's expenses?'" said economist Edward Yardeni, who runs his own research firm.

Still, if the stimulus package passes and it works, it could be worth every penny because the government will save a fortune in the long run, said Mark Zandi, chief economist at Moody's Economy.com.

A deep recession would mean lower tax receipts coupled with increased spending on unemployment insurance payments, welfare and food stamps.

"One hundred-fifty billion dollars, could, in the end, save us $500 billion if it saves us from a long, lengthy, severe recession," he said.

That's not enough for Scott, the Kansas City home-health worker. She wants a long-term fix including tax breaks for health insurance payments by the self-employed or more investment in small business.

She is suspicious of the tax rebate stimulus because "we like to gratify ourselves quickly in this country," she said. "We buy things we can't afford. We are a charge nation."

Useful day trading website

If you’re a day trader, here’s a great website called TradeJuice you can use as a resource for all things related to day trading. It features useful articles on day trading, a long list of books you can buy and courses you can take, a section called ‘free trading stuff’ and much more. Check it out here.

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Traders Accounting provides tax consulting, entity formation, tax preparation and 401(k) services that help you efficiently establish and maintain your trading business. Lower your taxes, save time, and maximize the benefits of your trading business. Visit our site for a FREE trader tax action plan.

Here's an excerpt from an article on taxes on day trading from Smart Money magazine:

DO YOU TRADE STOCKS more often than most people change their socks? Then you need to understand how Uncle Sam views your habit. Otherwise, come April 15, you'll be suddenly confronted with a mountain of paperwork. And those profits? Well, they'll seem a lot smaller once the Internal Revenue Service has taken its share.

There are, however, some strategies that active investors can use to reduce their tax bills — and make life much more pleasant come tax season. Here's what you need to know about them.

Trader vs. Investor

In the world of taxes, "trader" and "investor" each has a special meaning that carries with it some pluses and minuses. Most individuals — even those who trade a few times a week — are, by the IRS's definition, investors. But if you spend your days buying and selling stocks like a hedge fund manager, then you are probably a trader, a title that can save you big bucks at tax time. How? By allowing you to fully deduct all your investing expenses, such as newsletter subscriptions, your home office and your computer equipment.

So what are you, you ask, a trader or an investor? This is one of the fuzziest areas of our fuzzy tax code. "The question is clear; the answer is not," says an IRS spokesman. The only way to define your status is to go by the guidelines laid out in several court cases that have addressed the question.

The courts say you are a trader if:

· You spend lots of time trading. Preferably, you don't have a regular full-time job. (My reading is, you can also be a part-time trader, but you had better be buying and selling a handful of stocks just about every day.)
· You have established a regular and continuous pattern of making lots of trades (several almost every day the markets are open).
· Your goal is to profit from short-term market swings rather than from long-term gains or dividend income.

If you think you qualify and want to know the nitty-gritty of the rules, see More Tax Tips for Day Traders. If you're not so sure, here's how I think these court cases apply to the real world. Say you spend 10 hours a week trading and total about 200 sales a year, all within a few days of your purchase. In my book, you're an investor, not a trader. You are not spending enough time or trading often enough to satisfy the IRS. How about 20 hours a week and 1,000 short-term trades? I think that amount of time and trading gets you there. If you spend 30 hours a week, make 5,000 short-term trades a year and don't have a full-time job, even the IRS should agree without a fight. If you choose, you can actually be both a trader and an investor. You must segregate your long-term holdings by identifying them as such in your records on the day you buy in. Then they won't "taint" your trader status.

For advice that pertains to your particular situation, and many more services exclusively for day traders, trust the day trading tax experts at tradersaccounting.com.

McCain's 'No new taxes' redux

According to an article on income taxes on dallasnews.com, has made the same promise that George Bush 41 made in 1988: “No new taxes”…

As he received former President George H.W. Bush's endorsement in Houston, John McCain noted that they had two things in common: Both were naval pilots, and both were shot down.
A day earlier, however, the presumptive Republican nominee added a third similarity, when he echoed Mr. Bush's most ill-fated 1988 campaign promise: "No new taxes."

On ABC's This Week with George Stephanopoulos, Mr. McCain pledged that under "no" circumstances would he increase taxes. He reiterated his support to make permanent the 2001 Bush tax cuts he once opposed, adding that he'd also like to eliminate the Alternate Minimum Tax.

It's a multibillion-dollar promise that Mr. McCain could rue if he wins the White House – and one more example of how appeals to various groups in primary campaigns can create problems down the road for a winning candidate.

The problem is not confined to the Republicans. Barack Obama and Hillary Clinton have promised to increase federal programs beyond what they may be able to deliver. Mr. Obama also says he'd withdraw all U.S. combat troops from Iraq within 16 months.

According to the Center on Budget and Policy Priorities, a liberal think tank, making permanent both the Bush tax cuts and the AMT fix would cost the government $3.6 trillion in revenues over the next decade. Repealing the AMT would cost even more.

Upper-income taxpayers would be prime beneficiaries of both moves.

A recent NBC-Wall Street Journal poll showed those surveyed evenly split on the economic merit of tax cuts. In an Associated Press/Ipsos poll, respondents put tax cuts below pulling out of Iraq and increasing federal domestic spending when asked what would help fix the economy significantly.

Reciting the tax-cut mantra may help Mr. McCain overcome some GOP doubts about his fealty to conservative principles, but it could cause him grief if he wins.

Wouldn't it be nice if you could expense a fixed asset at one time?

That's exactly what a Section 179 deduction lets you do.

Back in the day, a Section 179 deduction was limited to $25,000. But changes in the tax law have increased how much you can write off. Lawmakers increased the Section 179 deduction amount to stimulate the economy

For purchases made in 2008, your small business can expense $250,000 in capital expenditures. As we move into 2009 and beyond, those numbers are increasing, due to some inflation indexing.

You have to opt-in to take a Section 179 deduction. It isn't automatic. You make the election on an item-by-item basis using Form 4562.

Unfortunately, you cannot apply the Section 179 deduction to purchases you've made in prior years. The Section 179 election has to be made in the tax year the property is first placed in service.

If you don't use your entire Section 179 deduction this year, you can't rollover the excess to next year. It's a use-it-or-lose-it small business tax deduction.

If you do hit the maximum Section 179 deduction amount, any overage for a purchase must be depreciated. In addition, you cannot deduct more than your income - in other words, you cannot use Section 179 to create a taxable loss.

Economic Stimulus Payments

The United States Treasury is gearing up to send economic stimulus payments to more than 130 million taxpayers starting in May of 2008. These payments are part of a congressional effort to bolster a sinking economy. In order to receive a check most taxpayers need only to file their 2007 tax returns.

The amount of the payment depends on the taxpayer’s general tax situation. In most cases the payment will equal the amount of tax liability shown on the 2007 Income Tax Return. The maximum amount of the payment will be $600 for individuals and $1200 for taxpayers filing joint returns. The minimum amount of the payment will be $300 for individuals and $600 for joint filers. Taxpayer’s who have children who are eligible for the child tax credit will receive an additional $300 for each qualifying child. These amounts will be phased out for high-income taxpayers.

Rebate, Redux, Reflux

Here’s an excerpt from a Forbes.com article on the recently approved tax rebates.

It sounds simple. The economic stimulus package President George W. Bush signed today requires the U.S. Treasury Department to send "tax rebates" of $300, $600, $1,200 (or more, if the recipient has kids) to 128 million American households.

The checks will start going out in May. The $100 billion-plus cost will be added to the deficit, and we (or our children) will pay for it later--with interest.

Except these checks aren't rebates, exactly. And nothing about them is simple. The rebate is technically a credit against your 2008 tax bill that is being paid (in most cases) as what we'll call a "prebate." This prebate is based on your 2007 income tax return. The actual credit is based on your 2008 tax return. Whichever year produces the bigger check for your family

To complicate matters further, there are not just two tax years, but three different types of credits involved. Plus, all three credits are denied to folks who earn too much--with the benefit starting to phase out at $75,000 adjusted gross income for an individual and $150,000 for a couple. The $75,000 threshold also applies to single parents filing as heads of household.

Given such complications, it's not surprising that tax advisers have been brainstorming how families can get the greatest possible stimulus benefits by managing their 2008 (or even, in some cases, 2007) taxable incomes.

Traders Accounting provides tax consulting, entity formation, tax preparation and 401(k) services that help you efficiently establish and maintain your trading business. Lower your taxes, save time, and maximize the benefits of your trading business. Visit our site for a FREE trader tax action plan.

Senate passes economic plan and sends to House

WASHINGTON (Reuters) - The U.S. Senate on Thursday passed an economic stimulus plan that would send government rebate checks to millions of Americans including retirees and disabled veterans to help lift the economy and stave off an election-year recession.

The Senate voted 81-16 in favor of the package, which will provide one-time rebates of up to $600 for individuals or $1,200 for couples plus $300 for each child. Low income people, including retirees on Social Security and disabled veterans who pay no income taxes, would receive checks of $300.

The checks could be in the mail within months.

The House of Representatives is expected to also vote on the package on Thursday and send it to President George W. Bush for his signature.

The Senate overwhelmingly agreed to the measure, which would inject more than $150 billion into the economy this year, after Republicans on Wednesday blocked a broader bill that would have provided more tax breaks for businesses and benefits for long-term unemployed people.

H.R. 3970: Change is in the Wind.

There is a new bill causing a stir in many circles. The bill is “H.R. 3970 Tax Reduction and Reform Act of 2007.” One change the bill calls for is the repeal of the Alternative Minimum Tax. To many individuals this is good news, which will result in a lower tax bill. However, as we have seen in the past congress doesn’t give without taking. In addition to the repeal of the AMT the bill is also calling for a 4% to 4.6% replacement tax for individuals earning over $500,000 ($250,000 for single taxpayers).

Repealing AMT is just one of the many facets of this bill. There are numerous other changes the bill proposes which will help and hurt depending on your tax situation.

McCain, Romney and the Bush Tax Cut

Arizona Sen. John McCain and former Massachusetts governor Mitt Romney’s debated their positions on the Bush tax cut Wednesday night in California, less than a week before the Super Tuesday contests that could decide the GOP nomination.

Here are the facts about their positions on the Bush tax cut, according to an article on USAToday.com:

The claim: Romney criticized McCain during the debate for voting against tax cuts backed by President Bush and passed by Congress in 2001 and 2003.

The facts: McCain did vote against both tax bills, saying Bush's plan cut taxes too much for the wealthy and not enough for everyone else. "I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us, at the expense of middle-class Americans who most need tax relief," McCain said in 2001.

During debate in 2004 on a different, smaller tax cut package that he supported, McCain said: "I support extending this tax relief to American families, but we have got to wake up and take a long, hard look at how we are going to pay for all of this." He has since voted to make the Bush tax cuts permanent.

As governor, Romney opposed broad-based tax hikes but signed legislation closing what he called corporate tax "loopholes" that resulted in some businesses paying more taxes. Romney also raised some fees for state services. During the debate, McCain said Romney had raised fees by $730 million, while Romney said the total was $240 million.

Rebate checks floated as way to boost economy

According to an article on CNNPolitics.com on income taxes and the economy:

Treasury Secretary Henry Paulson ended his third meeting of the day with House leaders Wednesday night with no indication of a deal on a $150 billion economic stimulus package.

But a GOP leader told reporters more public comments could be expected Thursday morning.

House Minority Leader John Boehner, R-Ohio -- who spent an hour and a half with Paulson and House Speaker Nancy Pelosi, D-California, on Capitol Hill on Wednesday night -- would not say if leaders were close to a deal.

"We're hopeful," he said. "We'll have more to say tomorrow morning."

Pelosi would not answer questions about any announcement of a deal. "We're moving toward that," she said. "We're not at that place yet."

The late-night negotiations are a sign of the urgency of the talks as the United States slogs through an economic slowdown.

While the final details are still being negotiated, officials in both parties said the current outlines of the package would give individuals a tax rebate check in the neighborhood of $800, while families could receive up to $1,600.

The main sticking point in the negotiations is who the rebate checks should target. Bush has said he wants rebates for those who pay income taxes.

But Democrats say such an approach would mean tens of millions of households would get only a partial rebate or none at all -- about 65 million, the liberal Center for Budget and Policy Priorities estimates.

That group includes those whose tax bill is so low that their rebate would be much less than $800 or $1,600, as well as low-income households with no income tax liability because of credits and other tax breaks. It would also include households that do not have to file a tax return.

The current strategy is for Pelosi and Boehner to iron out the details with Paulson as soon as next week and then get the package passed in the House by the first week of February, according to officials in Congress and in the Bush administration. That will then pressure the Senate to pass the same version by mid-February before lawmakers leave town for the Presidents Day recess.

Even if that goal is reached, however, Bush administration officials acknowledge it may take several more weeks before the Treasury Department can actually cut the rebate checks and get them in the mail for consumers -- a task that will be more difficult because the Internal Revenue Service is very busy now dealing with 2007 tax returns.

One senior official noted the president signed a similar 2001 round of tax rebates around Memorial Day, after the IRS's busy season.

"We're working with the IRS right now to figure this out," the official noted.

Individual Income Tax Extensions: A Necessary Evil?

Every year large numbers of individual income tax returns are put on extension. For many people extension is a dirty word. Unfortunately, in a busy tax preparation business extending individual income tax returns is unavoidable. The reason for this is due in large part to the timing of certain deadlines.

In order to calculate wash sales the schedule D cannot be completed until the end of January. Also, employers are not required to distribute W2’s until the end of January. Both of these factors reduce the amount of time to prepare the return from 3 months 15 days to 2 months 15 days.

Brokers are not required to distribute 1099’s until the end of February. If the form 1099 is incorrect the corrected version may not come out until March. This reduces the amount of time to prepare the return to 1 month 15 days or maybe even less.

The deadline for corporate income tax returns is March 15th as opposed to the individual deadline, which is April 15th. Therefore, the preparer is forced to deal with the corporate returns before the individual returns. This reduces the amount of time to prepare an individual return to less than one month.

If you are the member of a partnership the preparer will need to have the K1 from the partnership return before completing your return. The IRS does not require the partnership to provide the K1 until April or if an extension is granted October. This being the case it may be impossible for the preparer to complete your individual income tax return by the April 15th deadline.

The factors listed above illustrate tax-preparers have a small window of time between receiving all information needed and April 15th deadline. This window in many cases can be less than a month. For a tax-preparer with hundreds of clients it is impossible to complete everyone’s individual income tax return within this small window of time.

Schedule D Software: No Substitute for a Tax Professional

Hiring a tax professional to prepare your Schedule D can be a costly. Currently, there are many software packages on the market that advertise a “do it yourself” approach to Schedule D preparation. It is easy to be seduced by these claims, as the price of the software can be much lower than the cost of a tax professional.

Unfortunately, depending on your trading, generating a Schedule D is not as easy as it sounds. When it comes to calculating wash sales, stocks and stock options are substantially identical securities. Many of the software packages on the market will not calculate the wash sales on this type of trading correctly and manual adjustments need to be made. Without a thorough knowledge of the wash sale rule you will not be able to make the proper adjustments.

The wash sale rule is just one of many obstacles in the path of creating a proper Schedule D. Other events that many software programs can’t handle are stock splits, spin offs, and option assignments, just to name a few. If any of these events have taken place in your trading account, it is no longer a simple matter of downloading your trades into the software and then having it spit out a Schedule D. Instead you will need to know the tax code well enough to be able to adjust for these events.

CEO, Jim Crimmins Offering Tax Planning Advice in Irvine, CA

Jim Crimmins, CEO of Traders Accounting will be offering timely advice on tax planning to attendees of their upcoming day trading training seminar on January 24^th in Irvine, California at the Online Trading Academy. These seminars are great for individuals who are experts in day trading or thought looking to starting up a day trading business. For a future schedule of day trading training seminars visit Traders Accounting.

Supreme Court Limits Trusts' Tax Deductions

The Supreme Court upheld limits Wednesday on income tax deductions for trusts and estates, ruling against the family that created Pepperidge Farm.

The court said trusts ordinarily may not deduct the full cost of investment advice on their income tax returns. Those expenses are deductible only when they exceed 2 percent of adjusted gross income, the same limits faced by individual filers, Chief Justice John Roberts said for a unanimous court.

The case arose over a relatively small tax dispute, $4,448, involving the income tax return filed by the trust established by the will of Henry A. Rudkin, former chairman and founder of the Pepperidge Farm company.

The trust was funded with the proceeds of the sale of Pepperidge Farm to the Campbell Soup Co. The trust had $2.9 million in assets and $625,000 in income in 2000, the year of the disputed return.

The trust reported that it spent $22,241 on investment advice and deducted all of it on its tax return. The Internal Revenue Service said the expenses could be deducted only to the extent they exceeded the 2 percent floor. The discrepancy was $4,448.

The trust sued in U.S. Tax Court, which ruled for the government. The 2nd U.S. Circuit Court of Appeals affirmed the ruling.

The case is Knight v. Commissioner of Internal Revenue, 06-1286.

Advice on Tax Planning Seminar Coming to DC

On the 19th of January, the experts at Traders Accounting will be presenting at The Online Trading Academy in Vienna, Virginia. This one day seminar will offer the best advice on tax planning whether you are starting up a day trading business or already an expert. For more information or to register visit the Online Trading Academy.

The event will cover the following topics:

· Classification of Traders

· Starting up a day trading business

· Investors

· What is a Trader to do?

· Why Trade as a Formal Business?

· Mark to Market Accounting

· Taxation of Traders

· How Are Regulated Futures Contracts and other Section 1256 Contracts Taxed?

· Self-Directed 401k plans

For more information on Traders Accounting and their upcoming seminars please visit www.TradersAccounting.com.

ATTENTION: New York Residents With a Partnership or LLC.

Are you aware that there is a New York State form due by January 31, 2007 for all partnerships and LLC’s?

Here are a few helpful links to get these form filled out and filed BEFORE the deadline. Click here for the instructions and here for the actual form. If you are not sure what you need to do or have questions on the forms contact your accountant or tax firm for help.

Ordinary Income and Capital Gains

According to an article on ordinary income and capital gains taxes, profit you make from your stock investments can be taxed in one of two ways, depending on the type of profit:

• Dividends - When you receive dividends from your stock (either in cash or stock), these dividends get taxed as ordinary income. This is also true if those dividends are in a dividend reinvestment plan. If, however, those dividends occur in a tax-sheltered plan, such as an IRA or 401(k) plan, then they’re exempt from taxes for as long as they’re in the plan. In January, investors receive a 1099-DIV statement from the issuer of the dividends that includes information on the amount of dividends earned the previous year. Check with your tax advisor because the latest tax laws offer tax advantages for dividends.

• Short-term capital gains - If you sell stock for a gain and you’ve owned the stock for just one year or less, the gain is considered ordinary income. If you buy a stock on August 1 and sell it on July 31 of the following year, that’s less than one year. To calculate the time, you use the trade date (or date of execution). This date is the date that you executed the order instead of the settlement date. However, if these gains occur in a tax-sheltered plan, such as a 401(k) or an IRA, no tax is triggered.

Long-term capital gains
Long-term capital gains are usually much better for you as far as taxes are concerned. The tax laws reward patient investors. After you have held the stock for at least a year and a day (what a difference a day makes!), your tax rate will be reduced. Get more information on capital gains in IRS Publication 550 “Investment Income and Expenses”. Because the tax on capital gains is the most relevant tax for stock investors.

Managing the tax burden from your investment profits is something that you can control. Gains are taxable only if a sale actually takes place. (In other words, only if the gain is “realized.”) If your stock in GazillionBucks, Inc., goes from $5 per share to $87, that $82 appreciation isn’t subject to taxation unless you actually sell the stock. Until you sell, that gain is “unrealized.” Time your stock sales carefully hold on to them at least a year to minimize the amount of taxes you have to pay on them.

Why traders should not use a S Corp for trading.

S Corps are better than sole proprietorships, in that you do not have to pay self employment taxes, but with S corps you have to pay yourself a "reasonable salary", and take the balance of the income as either dividends or unearned income. The problem with the "reasonable salary" is that there is no clear rules’ regarding what is considered reasonable. You have to do a lot of research and document all the information that you find. Most Traders experience highs and lows during the year and having to pay a salary is just not feasible for most traders and why subject yourself to the 15.3% of additional taxes.

In some cases the best and logical solution would be to use a LLC (Limited Liability Company). You can take tax free distributions up to the amount of capital you contributed, and the income is passed on through a K1 and taxed at your personal tax rate. This is beneficial because any losses for expenses are passed on as an ordinary loss and is deductible from your ordinary income and you are able to pocket the additional 15.3%.

Here’s a link to a web page with some great, free tips, tricks and techniques for day traders.

Highlights include:

• Order placement


• Low risk ideas


• Using mental stops


• ‘The 5-minute rule’


• Knowing what indicators to monitor


• And more

*****

Traders Accounting provides tax consulting, entity formation, tax preparation and 401(k) services that help you efficiently establish and maintain your trading business. Lower your taxes, save time, and maximize the benefits of your trading business. Visit our site for a FREE trader tax action plan.

Home Office Expense- Have you moved during this year?

Home Office Expense- Have you moved during this year? If so, recalculate your home office and net home square footage. And remember hallways, entry ways, stairways and bathroom are common areas and not include in the home square footage. You are also able to deduct a second telephone line that you but in for your business, as well as a portion of the electric, gas, home owners insurance, home owners association fees, trash pickup, and your alarm system fees. Depending on what type of business you are running out of your home and what your tax status looks like you can even deduct a percentage of your mortgage interest and real estate taxes.

Other assets that you purchase for your home office are also either expenses or can be depreciated over the average life of the item.