SEC LAUNCHES INVESTOR.GOV

Agency's First-Ever Web Site Devoted Exclusively to Investor Education

Washington, D.C., Oct. 22, 2009 – The Securities and Exchange Commission today launched its first-ever Web site devoted exclusively to investor education, providing investors with in-depth information and “top tips” on how to invest wisely, plan for the future, and avoid being scammed.

 

By visiting www.investor.gov < http://www.investor.gov/ > , investors can access information in a user-friendly format that is specifically tailored to their needs.   The site includes sections specifically for those just getting started investing, for those saving for a child's education, and for those planning for retirement.  It also has a detailed “Seniors Care Package” section for senior citizens and caretakers.  

 

In a welcome video on the new site, SEC Chairman Mary Schapiro says, “Investing information is available from thousands of online resources – some good, some not so good.  Through Investor.gov, we are adding our own online voice to provide investors with unbiased and factual investing information.”

 

Chairman Schapiro adds,

See the rest of the story SEC Investors Website

Although the income cap on converting an IRA to a Roth ends after 2009

High incomes still can't Roth IRA payins. Contributions are barred for couples with AGI of $176,000 or more and singles with AGI of $120,000 and up.

But there's a loophole: See the story at Traders Accounting Tax Loopholes for IRA to Roth

Random Audits of S corporations have borne fruit

Uncovering several areas of broad noncompliance that are targeted for future scrutiny: travel costs, meals, and entertainment car and truck expenses, expensing of tools and supplies and taking profits as dividends instead of as salary to avoid paying payroll taxes.

See more tax tips and wealth strategies at Traders Accounting

Meet Traders Accounting in St. Louis

Traders Accounting will be presenting a seminar on October 23 and 24, 2009 in St Louis at the Options Monster Expo. The live seminar presented by Traders Accounting will cover the topic:


Five Reasons 94% of Traders Fail, A Guide to Managing Your Cash Flow.

Traders of all skill levels will benefit from this informative event. Validate your trading approach and learn new techniques as top market pros teach you to become a more successful trader.

Are you up this year? What is your plan for 2010?


Choose workshops that narrow in on key trends, strategies, and asset classes


What are renowned market pros doing to beat the market? Ask them yourself


Click here for more information on Options Trader.

IRS Features Recovery Tax Credits on YouTube, iTunes

The Internal Revenue Service today announced the availability of video and audio products to help taxpayers take full advantage of the 2009 tax provisions in the American Recovery and Reinvestment Act.
The IRS has launched a YouTube video site and an iTunes podcast site to better serve taxpayers.
People can visit the video site at www.youtube.com/irsvideos to view information about the Recovery, tax tips and how-to videos. These videos will be in English, Spanish, American Sign Language and other languages.
The YouTube focus will be on the provisions of the American Recovery and Reinvestment Act. Videos will highlight the $8,000 first-time homebuyer’s credit for those who purchase a house this year, the sales or excise tax deduction on new car purchases and the expanded credits for education and energy conservation.
The IRS YouTube channel will debut with seven Recovery videos in English and ASL and eight in Spanish. Also, included will be a video on using the IRS Withholding Calculator. Many workers received the Making Work Pay tax credit in April through their tax withholding at work. However, people who have more than one job or working spouses should especially check their withholding to ensure neither too much nor too little is being withheld. People can use the calculator to help determine if they should make adjustments.
People can visit the audio site at iTunes to listen to IRS podcasts about ARRA tax credits. People without an iTunes account can hear those same podcasts, in English and Spanish, on IRS.gov’s Multimedia Center.

Six Facts About the American Opportunity Tax Credit

Many parents and college students will be able to offset the cost of college over the next two years under the new American Opportunity Tax Credit. This tax credit is part of the American Recovery and Reinvestment Act of 2009.
Here are six important facts the IRS wants you to know about the new American Opportunity Tax Credit:
1. This credit, which expands and renames the existing Hope Credit, can be claimed for qualified tuition and related expenses that you pay for higher education in 2009 and 2010. Qualified tuition and related expenses include tuition, related fees, books and other required course Materials.
2. The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000 per student each year. Therefore, the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualifying expenses for an eligible student.
3. The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return. The credit is gradually reduced, however, for taxpayers with incomes above these levels.
4. Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.
5. The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education.
6. You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction, which ever is more beneficial for you.

IRS is doing fewer no-change exams on filers

Now that IRS audit formulas have been updated to incorporate data from a recent set of random audits they will be doing fewer no-change exams on filers. For tax year 2006 returns, the no change rate is 13% down from 18% five years ago. And the average additional tax recommended per examination also went up 16%.

See rest of the story here

Ten Facts about the First-Time Homebuyer Credit

Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit.

Here are ten things the IRS wants you to know about the first-time homebuyer credit:

•  To be considered a first-time homebuyer, you – and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.

•  You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.

•  To qualify for the credit, the completed purchase must occur before December 1, 2009.

•  The home must be located in the United States.

Click here to get the rest of the Homebuyer Tax Credit

The odds of tax rate hikes are likely. What should you do?

You may want to reconsider the form of your business. The top rate on both individuals and corporations is 35%, smoothing the income tax differences among proprietorships, partnerships, regular corporations, S companies and LLCs.

The top rate on individuals will likely top 40%. Congress is almost certain to let the Bush tax rate cuts lapse after 2010, which would make the top rate 39.6%. It could climb to 45% if a surtax being talked about by House Democrats is approved.

Higher rates provide a big a big tax incentive to operate as a regular corporation, despite the two layers of tax. With such a big spread between the maximum tax rate on corporations and individuals, many people would avoid operating businesses as S firms, partnerships or sole proprietorships. The reverse happened in 1986, when the top rate on individuals was lower than the maximum corporate tax rate.

Learn more about business formation and the many tax advantages.

IRS to send millions of tax payers letters and notices.

Every year, the IRS sends millions of letters and notices to taxpayers. Many taxpayers will receive this correspondence during the late summer and fall. Here are eight things every taxpayer should know about IRS notices – just in case one shows up in your mailbox.

Eight Things to Know If You Receive an IRS Notice
•  Don't panic. Many of these letters can be dealt with simply and painlessly.

See the rest of the IRS Notices to Taxpayers

Hanky panky with your IRA will cost you the bankruptcy exemption.

Although creditors typically cannot grab IRA funds, that rule does not apply when the debtor engages in prohibited transactions with the account. In this case, the owner of a self-directed IRA borrowed money from it and used the account to pay off a mortgage on property he wanted to acquire. His self-dealing with the IRA allowed his creditors to tap it (Willis, D.C., Fla.). Oddly enough, although his IRA lost its tax exemption due to his shenanigans, making the entire account taxable to him, IRS never came after him for back taxes.

A New Tax Savings Begins January 1, 2010

Claiming new add-ons to the standard deductions? IRS wants details.

Starting with returns for 2009, filers who add real estate taxes, sales tax on vehicles or disaster losses to their standard deduction must file new Schedule L and list the extra amounts. For 2009, married nonitemizers can add up to $1,000 of property taxes paid to their standard deduction. The cap for single filers is $500. Those who purchasing a vehicle after February 16th, 2009 and before 2010 can add sales tax paid on the first $49,500 of cost to their standard deductions. And nonitemizers who live in federal disaster areas can boost their standard deductions by any casualty loses.

Tips For Reducing Stress Ahead of Tax Time

Although most people won't be filing their tax returns for several months, the dog days of summer are actually a great time to start planning for the tax filing season by ensuring your records are organized.  Whether you are an individual taxpayer or a business owner, you can avoid headaches at tax time with good records because they will help you remember transactions you made during the year.

Here are a few things the IRS wants you to know about recordkeeping.

Keeping well-organized records also ensures you can answer questions if your return is selected for examination or prepare a response if you are billed for additional tax. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, you should keep any and all documents that may have an impact on your federal tax return.

More Information Available: Call Sara at


1-800-938-9513 ask for ext. 108.

Or see the rest of the story; Tips for reducing tax time stress.

What software should Traders use for recordkeeping?

Wealth Building Strategy

Double your cash for trading or investing.

Ten Tips for Taxpayers Making Charitable Donations

Every year, millions of taxpayers itemize their deductions on their federal tax return. One of the most common itemized deductions is a donation made to a charitable organization.

Here are the top ten things the IRS wants every taxpayer to know before deducting charitable donations.

•  Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization and most will be able to tell you. You can also check IRS Publication 78, which lists most qualified organizations. IRS Publication 78 is available at IRS.gov.

•  Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.

•  You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.

•  If your contribution entitles you to receive merchandise, goods, or services in return – such as admission to a charity banquet or sporting event – you can deduct only the amount that exceeds the fair market value of the benefit received.

See the rest: Ten Tips For Making Charitable Donation

Eight Tips For Taxpayers Who Owe The IRS Money

The vast majority of Americans get a tax refund from the IRS each spring, but what do you do if you are one of those who received a tax bill? Here are eight tips for taxpayers who owe money to the IRS.

1. If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any additional penalties and interest.  If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS.

2. You can also pay the bill with your credit card. To pay by credit card contact either Official Payments Corporation at 800-2PAYTAX (also www.officialpayments.com ) or Link2Gov at 888-PAY-1040 (also www.pay1040.com ).

3. The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Code.

4. You can also pay the balance owed by electronic funds transfer, check, money order, cashier's check or cash.  To pay using electronic funds transfer you can take advantage of the Electronic Federal Tax Payment System by calling 800-555-4477 or 800-945-8400 or online at www.eftps.gov .

See the rest of the Eight Tips for Taxpayers Who Owe Money to the IRS.

Five Facts about the Home Office Deduction

With technology making it easier than ever for people to operate a business out of their house, many taxpayers may be able to take a home office deduction when filing their 2009 federal tax return next year.

Here are five important things the IRS wants you to know about claiming the home office deduction.

1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:

• As your principal place of business, or


• As a place to meet or deal with patients, clients or customers in the normal course of your business, or


• In the case of a separate structure which is not attached to your home, it must be used in connection with your trade or business

Get the rest of the article here

The IRS Service can seize funds in a health savings account for unpaid taxes.

In a private ruling, the agency says that even though HAS funds are held in a trust, the broad powers granted IRS to grab assets for tax debts allow it to tap the account.

Worse, there is a double whammy if IRS taps the account: Payouts are taxed as income to the owner of the HAS. And there’s a 10% penalty on the distribution unless the HAS owner is age 65 or older or is disabled when the Service takes the money.

The rule is different for seizures from IRAs and 402(k)s. There, no penalty is owed, even if the employee is under the age of 591/2. Congress specifically barred any penalty in those cases, figuring that punishing an involuntary payout adds insult to injury. Unfortunately, there’s no such expectation for involuntary withdrawals from HSAs.

IRS will put more suspected under-reporters on the honor system next year.

It will send notices to another 30,000 filers to tell them about discrepancies between 1099 forms and what was shown on their 2009 returns. IRS will suggest that these taxpayers either amend their returns or have 1099 issuers fix any errors. It will check the 2010 tax returns of these filers to see if the underreporting stopped. If they report the money on their 2010 returns, IRS will give them a pass for 2009. It's already monitoring 30,000 taxpayers who got notices about their 2008 returns.

Gifts made via powers of attorney continue to create tax woes.

The problem arises when the document is silent about making gifts, as this case shows. An elderly father in poor health gave his son power of attorney over his assets. Just before the father died, the son wrote checks for $11,000 (the maximum amount of the annual gift tax exclusion then) to 17 family members. The gifts must be added back to the estate for federal estate tax purposes, as a district court says, rejecting the son's deathbed estate planning. The gifts he made weren't specifically authorized by the power of attorney are unauthorized (Barnett, D>C>, Pa.) The problem could have been avoided had the document said gifts were OK.

TAX SECRETS FOR TRADERS – STOCK AND OPTIONS SERIES (NEW)

If your firm sponsors a simple plan and is short on cash, take note:

Your cost saving options are limited by IRS rules. Plans can't be shut down until the end of the year. Plus, employers that promised a nonelective contribution or a matching pay-in for 2009 can't reneg on that commitment. But a delay is OK: Deposits can be deferred till the extended due date of the firm's business tax return.

The rules are less strict for 401(k) plan sponsors. Those that contribute 3% or more of pay to participant accounts to avoid nondiscrimination testing are allowed to reduce or suspend pay-ins. They must give employees prior notice of the change and permit them to modify their own plan contributions to make up for the loss.

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Real estate agents can claim a special tax break on their rental loses.

Their losses are exempt from the passive loss rules, the Tax Court says. The exemption applies only to agents who spend more than half of their time and at least 750 hours per year materially involved in real estate…the same rule that applies to landlords, developers and brokers. The IRS said that agents were not covered, but the Tax Court disagreed (Agarwal, TC Summ. Op. 2009-29). In this case, the agent who was audited was not licensed as a real estate broker.

Find all the tax breaks to save you money at Traders Accounting.

Regulation of unlicensed tax return preparers is moving closer to reality.

The IRS is establishing a task force to review problems with preparers and offer options by year-end. Among the likely recommendations: Registration of any preparers who aren’t CPAs, Lawyers, or enrolled agents. Minimum education and training requirements. Tougher IRS punishment of misconduct by preparers. If IRS needs authority to implement its plans, the commissioner will push Congress to give it to her so the agency can get going. IRS officials won’t need much time. They’ve studied Oregon’s program, which is seen as a model for preparer regulation.

IRS takes a pro-taxpayer view on the sales tax deduction on new vehicles.

Buyers can deduct the sales tax paid on more than one vehicle this year, according to IRS officials. Although this break applies only to the tax on the first $49,500 of the cost for the vehicle purchased after February 16, 2009 and before January 1, 2010, IRS will apply the cap to each individual car purchased. So if you buy two cars for $30,000 apiece, total sales tax paid on the vehicles qualify for the break.

Buyers living in states with no sales tax can claim this break, says IRS. They can deduct other related fees imposed by states and municipalities if the levies are assessed on purchasing a vehicle and are based upon the vehicle’s sales price.

The 2010 Mediacre Part B premium is projected to rise to $104.20 a month.

This will mainly affect upper incomes ( married with AGI's above $170,000 and singles over $85,000) who pay a stiff surtax on top of the basic Part B premium. Lower income folk who are already on the rolls will continue to pay $96.40 a month. They avoid the price hike, thanks to a rule that bars a cut in Social Security benefits solely on account of a PArt B premium increase. the rule comes into play in 2010 because the Social Security tustees project that benefits will not go up next year.

Court of Federal Claims Finds LLC and LLP Interests Are Not Limited Partnership

Court of Federal Claims Finds LLC and LLP Interests Are Not Limited Partnership Interests Under Passive Loss Rules (Thompson, FedCl)

A limited liability company (LLC) member's interest in his LLC was not a limited partnership interest for purposes of applying the more stringent test for material participation under the passive activity rules because the IRS lacks the authority to apply that rule to anyone who is not, strictly speaking, a limited partner. Accordingly, material participation of an LLC member is evaluated using the more generous criteria that normally applies to anyone who is not a limited partner. This decision by the Court of Federal Claims follows within days the Tax Court's similar decision against the IRS in P.D. Garnett, 132 TC No. 19, Dec. 57,875 (TAXDAY, 2009/07/01, J.1).

More Information from the Traders Tax Experts

Forex Transformer - Forex Transformer Honest Review

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What immediately attracted me to Forex Transformer was its futuristic design and layout. The color combination of black and silver makes for an attractive yet modern color combination. Yet to make the text stand out clearly from the black background, it is placed in a white box. Important points in the text are bolded and larger in size then the rest of the text present on this page, in addition main points are written in a red font. The website provides colored photos of the graphs and bank statements one should expect once they endorse this product. In addition Forex Transformer is extremely easy to browse even for people who have little experience using the internet as all the information that one requires is all present on the homepage alone. Thus there is no need to click on several links to direct one to separate sections as all the information is on the site. Forex Transformer uses intelligent methods to attract the customer to its product by writing words such as rich, wealthy in a large font in addition to being written in capital letters. To emphasize their appeal these words are repeated several times all over the homepage.

One of the most amazing features of Forex Transformer is its utmost attention to detail. Important details about the product are presented in a separate box at the end of it hence essentially giving a short summary of all the details present. This allows the customer to recall important points written as reminder that one might be prone to forget. The Forex Transformer over entrusting ones money to greedy stock brokers. This is because the Forex Transformer is free of making all the mistakes a human may make. The robot functions with pinpoint accuracy and it has the capability to predict trends with in the market. As a result of buying this software an individual will not have to take part in the tedious activity of daily observing market trends as the robot makes the important decisions for the customer. Best of all are the customer reviews provided by satisfied customers which are present on the report. What one should take note of is the fact that these customers are not from one specific country but they are from several different countries. This shows that Forex Transformer is accessible to people of all nationalities and does not serve to satisfy the needs of people of a specific country only and truly establishes the forex transformer as a global phenomenon.

With today’s financial climate one should be very overprotective about their finances, and should only trust very few people with it. The product advertised on Forex Transformer is one of the few products that can be trusted with ones assets and finances. If you want a future with ample amount of money in it to support or perhaps even uplift your lifestyle then I would recommend that you entrust your money to the Forex Transformer, the robot that promises sky high profits

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President Signs "Cash for Clunkers" Bill

President Obama on June 24 signed legislation aimed at boosting the sale of vehicles at financially struggling U.S. automobile dealerships. The so-called "cash for clunkers" program provides $1 billion in tax-free vouchers to automobile dealers who participate in the new program. The program vouchers, worth $3,500 or $4,500, will be given to dealers when consumers trade in old vehicles for ones with higher fuel efficiency. The vouchers will not be considered taxable income for the car buyer.

The new law limits the number of vouchers to one per customer, including joint registered owners of a single eligible trade-in vehicle. The car voucher measure is included in the 2009 Supplemental Appropriations Bill for Iraq, Afghanistan, Pakistan and Pandemic Flu (HR 2346).

06-19-2009 - Lawmakers Ask IRS to Temporarily Halt Small Business Penalties

Lawmakers from the Senate Finance Committee and House Committee on Ways and Means have asked IRS Commissioner Douglas H. Shulman to suspend certain penalties assessed on small businesses while Congress works on legislation to address what they term an inequitable and unintended consequence in the tax code. The lawmakers argue that small businesses with investments in listed tax shelter transactions that are generating modest tax benefits have received tax penalties significantly larger than the tax benefits received.

In a letter dated June 12, the lawmakers requested that Shulman "use the discretion provided to the IRS with its effective tax administration authority to suspend efforts to collect IRC [Internal Revenue Code] section 6707A liabilities ... while Congress acts to remedy this situation." Code Sec. 6707A was enacted in the American Jobs Creation Act of 2004 (P.L. 108-357) as part of a package of provisions intended to help the IRS detect, deter and shut down tax shelters.

"When I advanced the legislation to shut down tax shelters, I did not intend to bankrupt small businesses that had no ill intent. I was focused on the big corporations that were actively seeking to hide their participation in tax shelters," said Senate Finance Committee ranking member Charles E. Grassley, R-Iowa.

Treasury regulations require taxpayers to tell the IRS if they invest in "listed" tax shelter transactions, and Code Sec. 6707A imposes large, strict liability penalties on taxpayers who fail to disclose this information to the IRS. For listed transactions, the penalties are $100,000 for natural persons and $200,000 for others, including Subchapter C and Subchapter S corporations. The impacted companies have reported that they were never informed that their transactions were considered abusive tax shelters by the IRS

Grassley, along with Senate Finance Committee Chairman Max Baucus, D-Mont., Ways and Means Oversight Subcommittee Chairman John Lewis, D-Ga., and ranking member Charles Boustany, R-La., pointed out that the inequitable consequences were unexpected at the time the penalty was enacted, and they plan to introduce legislation that would result in penalty amounts in more reasonable proportion to the tax benefits. They further claimed that while the penalty has helped the IRS end many abusive deals, many of the shelters being examined by the Service involve significantly smaller dollar amounts, and current penalty levels may be excessive in some circumstances.

"I don't condone investments in tax shelters, but I also want to make sure our small businesses survive and thrive," said Baucus. "It's important we get this done as soon as possible and I urge and expect the IRS to comply with our request." Grassley was even more succinct. "The penalty should be commensurate with the transgression," he said. None of the lawmakers offered a timetable as to when they might advance legislation to change tax code.

05-29-2009 - IRS Announces No Interest Rate Change for 3rd Quarter

The Internal Revenue Service today announced that interest rates for the calendar quarter beginning July 1, 2009, will remain the same. The rates will be:

• four (4) percent for overpayments [three (3) percent in the case of a corporation];
• four (4) percent for underpayments;
• six (6) percent for large corporate underpayments; and
• one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.
  

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate during April 2009 to take effect May 1, 2009, based on daily compounding.

Revenue Ruling 2009-17, announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin No. 2009-26, dated June 29, 2009.

05-28-2009 - Law Offers Special Tax Breaks for Small Business; Act Now and Save, IRS Says

Small Business Week is May 17 to 23, and the Internal Revenue Service urges small businesses to act now and take advantage of tax-saving opportunities included in the recovery law.

The American Recovery and Reinvestment Act (ARRA), enacted in February, created, extended or expanded a variety of business tax deductions and credits. Because some of these changes—the bonus depreciation and increased section 179 deduction, for example—are only available this year, eligible businesses only have a few months to take action and save on their taxes. Here is a quick rundown of some of the key provisions.

Faster Write-Offs for Certain Capital Expenditures

Many small businesses that invest in new property and equipment will be able to write off most or all of these purchases on their 2009 returns. The new law extends through 2009 the special 50 percent depreciation allowance, also known as bonus depreciation, and increased limits on the section 179 deduction, named for the relevant section of the Internal Revenue Code. Normally, businesses recover these capital investments through annual depreciation deductions spread over several years. Both of these provisions encourage these investments by enabling businesses to write them off more quickly.

The bonus depreciation provision generally enables businesses to deduct half the cost of qualifying property in the year it is placed in service.

The section 179 deduction enables small businesses to deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture and other qualifying property placed in service during 2009. Without the new law, the limit would have dropped to $133,000. The existing $25,000 limit still applies to sport utility vehicles. A special phase-out provision effectively targets the section 179 deduction to small businesses and generally eliminates it for most larger businesses.

Bonus depreciation and the section 179 deduction are claimed on Form 4562. Further details are in the instructions for this form.

Expanded Net Operating Loss Carryback

Many small businesses that had expenses exceeding their incomes for 2008 can choose to carry those losses back for up to five years, instead of the usual two. For small businesses that were profitable in the past but lost money in 2008, this could mean a special tax refund. The option is available for a small business that has no more than an average of $15 million in gross receipts over a three-year period.

This option is still available for most eligible taxpayers, but only for a limited time. A corporation that operates on a calendar-year basis, for example, must file a claim by Sept. 15, 2009. For eligible individuals, the deadline is Oct. 15, 2009.

Eligible individuals should file a claim using Form 1045, and corporations should use Form 1139. Details can be found in the instructions for each of these forms, and answers to frequently-asked questions are posted on IRS.gov.

Exclusion of Gain on the Sale of Certain Small Business Stock

The new law provides an extra incentive for individuals who invest in small businesses. Investors in qualified small business stock can exclude 75 percent of the gain upon sale of the stock. This increased exclusion applies only if the qualified small business stock is acquired after Feb. 17, 2009 and before Jan. 1, 2011, and held for more than five years. For previously-acquired stock, the exclusion rate remains at 50 percent in most cases.

Estimated Tax Requirement Modified

Many individual small business taxpayers may be able to defer, until the end of the year, paying a larger part of their 2009 tax obligations. For 2009, eligible individuals can make quarterly estimated tax payments equal to 90 percent of their 2009 tax or 90 percent of their 2008 tax, whichever is less. Individuals qualify if they received more than half of their gross income from their small businesses in 2008 and meet other requirements. For details, see Publication 505.

COBRA Credit

Employers that provide the 65 percent COBRA premium subsidy under ARRA to eligible former employees claim credit for this subsidy on their quarterly or annual employment tax returns. To help avoid imposing an unnecessary cash-flow burden, affected employers can reduce their employment tax deposits by the amount of the credit. For details, see Form 941. Answers to frequently-asked questions are posted on IRS.gov.

Other ARRA business provisions relate to discharges of certain business indebtedness, the holding period for S corporation built-in gains and acceleration of certain business credits for corporations. Also see Fact Sheet FS-2009-11.

05-15-2008 - FHA plans to allow use of tax credit for down payments.

FHA plans to allow use of tax credit for down payments.

By AUBREY COHEN
SEATTLEPI.COM STAFF

Home buyers will be able to use the federal $8,000 first-time home buyer tax credit for down payments on Federal Housing Administration loans, U.S. Housing and Urban Development Secretary Shaun Donovan announced Tuesday.

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," Donovan said at the National Association of Realtors' Midyear Legislative Meetings & Trade Expo in Washington, according to a printed copy of the remarks released by HUD.

FHA will allow approved lenders and nonprofits, and state and local government agencies to issue short-term bridge loans buyers can use for down payments, Donovan said. Buyers would repay the loans after getting their tax refunds.

Donovan said FHA would soon release details on the new program.

Last month, the Legislature approved a program to provide the credit as a temporary loan, although that has since run up against an IRS rule barring taxpayers from designating someone else to get their refunds.

"A lot of people are working on the IRS issue, including the National Association of Realtors, and my understanding is we're pretty close on getting that put into place," said Erik Hand, president of Response Mortgage Services, which is real estate company John L. Scott's mortgage branch.

FHA loans fell out of favor during the housing boom, with the explosion of privately funded subprime mortgages. But the subprime market has all but disappeared over the past two years, and FHA's nationwide market share surged from 1.9 percent in the fourth quarter of 2006 to 23.7 percent at the end of last year, according to HUD.

Don Riley, executive vice president of Windermere Services, said 60 to 65 percent of first-time buyers in the Seattle area use FHA loans, which allow people to buy with as little as 3.5 percent down.

Allowing use of the tax credit for down payments essentially turns the credit into a form of down payment assistance. The FHA allows government agencies and nonprofits to give buyers down payment assistance, although it recently barred such assistance from home sellers.

HUD officials said mortgages with seller-funded assistance had higher default rates, largely because sellers often built the assistance into the price, meaning buyers were essentially financing the entire purchase. Hand noted that the same was not true of loans with government and nonprofit assistance.

05-05-2009 State of Arizona Offering Amnesty

If you have failed to file prior Arizona tax returns, there is no time like the present. The State of Arizona is offering an amnesty program for late filers who file their past years returns between May 1, 2009 and June 1, 2009. The state is offering to allow filers to pay back taxes owed to the state without penalty or criminal prosecutions, and at a reduced interest rate for those who qualify. The taxes that are eligible for the amnesty program cover not only income tax but also other taxes such as transaction privilege tax.

For taxes filed on an annual basis, such as income tax, amnesty is available for years beginning on or after January 1, 2002 and ending before January 1, 2008. Taxpayers who file taxes, such as transaction privilege or withholding, on a monthly or quarterly basis are eligible for tax periods beginning on or after January 1, 2003 and ending before January 1, 2008.

The Amnesty Tax Returns must be accompanied by the Amnesty Application form, and must be filed or postmarked by June 1st in order to qualify for the Amnesty Program. Also, the tax due must be paid in full by the June 1st due date.
To obtain the amnesty forms or more information regarding the amnesty program please visit the state’s website at http://www.revenue.state.az.us/Taxamnesty/

04-01-2009 - IRS Ramping Up Offshore Tax-Avoidance Efforts

The Internal Revenue Service is stepping up efforts to recoup an estimated $50 billion in lost tax revenue per year through offshore tax havens and the Obama Administration is dedicating more resources to back new programs and initiatives to bolster the Service's endeavors. Most of the work, however, lies in implementing policies that would expand the obligations of foreign banks to provide information regarding transactions by U.S. citizens.

Testifying on March 31 before the Subcommittee on Select Revenue Measures of the House Committee on Ways and Means, IRS Commissioner Douglas Shulman told lawmakers that offshore issues are a high priority of the administration, noting that the president's budget proposal committed to identifying $212 billion in savings over the next decade from international enforcement, reforming deferral and other tax reform policies.

A main tool to accomplish the administration's directives will come from revamping the Service's qualified intermediary (QI) program, which provides the IRS with information on the activities of foreign banks and other financial institutions. More data is needed said Shulman, and the IRS is considering expansion of the reporting requirements to include more sources of income for U.S. account holders, strengthening the documentation rules, and requiring withholding for accounts with documentation that is considered insufficient.

Shulman said in addition that he has increased the number of audits in the offshore banking arena over the past five months and prioritized stepped-up hiring of international tax experts and investigators. Also, the Service has offered an amnesty program for offshore account holders who reveal their unreported assets. Those who volunteer the information will pay back taxes and interest for six years, and pay either an accuracy-related or delinquency penalty on all six years. They will also pay a penalty of 20 percent of the amount in the foreign bank accounts in the year with the highest aggregate account or asset value. The program will run another six months and then be reevaluated, said Shulman.

Stephen E. Shay, former international tax counsel for the U.S. Department of Treasury and now a tax partner at Boston-based Ropes & Gray, agreed with Shulman that improvements are needed in the QI program and he urged the Service to require information from QI banks on U.S. customers regardless of whether they hold assets in a QI bank account. He also recommended increasing IRS enforcement resources devoted to cross-border enforcement, including resources to allow QI banks to submit information electronically. Shay also suggested that the IRS consider eliminating the foreign-targeted bearer obligation exception to beneficial owner documentation, or QI reporting.

03-30-2009 - IRS Announces New Voluntary Disclosure Terms for Offshore Account Holders, Sets Six-Month Deadlines

IRS Announces New Voluntary Disclosure Terms for Offshore Account Holders, Sets Six-Month Deadlines

The IRS has announced new steps to coax U.S. taxpayers with undisclosed foreign bank accounts to come forward. In return for paying back taxes for the past six years, plus interest and a set of stiff penalties, the IRS will promise not to bring criminal charges or the 75-percent fraud penalty. IRS Commissioner Douglas H. Shulman announced this policy shift and clarification at a press briefing from his Washington, D.C. offices on March 26, at which he also released internal IRS documents that put the plan into motion.

"We believe the guidance represents a firm, but fair, resolution of these cases and will provide consistent treatment for taxpayers," Shulman explained. "The goal is to have a predictable set of outcomes to encourage people to come forward and take advantage of our voluntary disclosure practice while they still can." He set a deadline of six months for disclosures under the terms of the guidance, at which time the program will be re-evaluated.

The IRS has issued a series of three memoranda, and has revised the Internal Revenue Manual (IRM), to reflect updated policies concerning voluntary disclosure, primarily in connection with offshore transactions. Voluntary disclosure occurs when a taxpayer timely discloses information necessary to determine or correct the taxpayer's liability. The IRM continues to provide that its voluntary disclosure practices do not create any substantive or procedural rights for taxpayers, but are a matter of internal IRS practice.

Voluntary Disclosure Terms

Shulman emphasized that the terms being offered for the disclosure of offshore accounts are an outgrowth of current policy and carry penalties at a level consistent with voluntary disclosure programs in the past. Within this framework, Shulman enumerated the amounts that would need to be paid by taxpayers with heretofore undisclosed offshore accounts who "come clean" under the program:

--Back taxes due on newly disclosed assets for the last six years;
--Interest due on these back taxes for the last six years;
--A 20-percent accuracy-related under Code Sec. 6662 or a 25-percent delinquency penalty under Code Sec. 6651 for each tax year at issue; and
Looking to the past six years, a 20-percent penalty on the total balance of all the taxpayer's foreign bank accounts or assets during the year among the past six in which the accounts had their highest aggregate value.
CCH Comment. This latter penalty is reduced to 5 percent for passive investors in certain transactions.

While Shulman observed that the penalties demanded under the program are not insubstantial, he pointed to several advantages to participating taxpayers regarding what the IRS will not do:

--The IRS will not pursue charges of criminal tax evasion against taxpayers who voluntarily disclose their offshore assets under this new policy; and
--The IRS will not pursue other penalties against participating taxpayers, such as the Code Sec. 6663 fraud penalties (75-percent of the unpaid tax) or the statutory penalty for willful failure to file a TD F 90-22.1, Report of Foreign Bank and Financial Accounts Report, (FBAR) (the greater of $100,000 or 50-percent of the foreign account balance) that both annually apply to undisclosed accounts and assets during the relevant tax years.

Shulman also touted the advantage to offshore account holders of "getting the matter behind them" and giving them certainty as to their tax liability.
In a follow-up comment, an IRS spokesman emphasized that "it is too late for any taxpayer who is under criminal investigation to make a voluntary disclosure. The IRS cannot discuss specific situations, but the voluntary disclosure process does not apply when the IRS has information related to a specific taxpayer from a criminal enforcement action."

CCH Comment. The issue apparently remains unclear as to whether taxpayers recently disclosed by the Swiss Bank, UBS, as holding undisclosed bank accounts in Switzerland may successfully participate in this initiative. The IRS provided reporters during the March 26 briefing a copy of Section 9.5.11.9 of the Internal Revenue Manual that holds taxpayers to have timely participated in the voluntary disclosure program if they disclose before the IRS has initiated a civil or criminal examination or notified the taxpayer of such an investigation. Their failure to disclose their accounts/assets before the IRS received notice under the UBS deferred prosecution agreement may, therefore, be irrelevant.

03-25-2009 - Be careful when borrowing tax refund amount upfront

BY PATRICIA KITCHEN | patricia.kitchen@newsday.com

Getting back what the government owes you in a day or two may sound appealing, especially this year when money is tight and consumers are strapped.

But, if you're thinking of getting a tax refund loan - in which you borrow the amount of your tax refund upfront - you'll want to ask plenty of questions about how much it will truly cost in fees.

"Even under the best of circumstance this is expensive credit for such a short period of time," said Jean Ann Fox, director of financial services for the Consumer Federation of America, which together with the National Consumer Law Center prepares reports on refund anticipation loans and services.

A seven-to-14-day loan for $3,000 can cost $62 to $110 in fees, according to this year's report, "Big Business, Big Bucks: Quickie Tax Loans Generate Profits for Banks and Tax Preparers While Putting Low-Income Taxpayers at Risk."

Yet, filing the return electronically and having the IRS deposit it directly to your bank account can get you your return in about 10 days at no extra charge, Fox said.

Cary Carbonaro, a certified financial planner in Huntington Village, said she could see the need for access to quick cash back when it took six to eight weeks to get a refund.

But now, she said she would advise taking out such a loan only in "life or death situations" or "if you have no money and need to feed your kids."

Otherwise, "I don't see any reason to do it - ever."

Of course, some tax preparers "don't always make clear" how quickly the IRS is processing electronically filed returns, said Chi Chi Wu, staff attorney with the National Consumer Law Center.

She pointed to shopper research that found only one in 17 preparers telling the customer they could get a return in eight to 15 days by e-filing.

In 2007, 8.7 million American taxpayers forked over about $833 million in tax refund loan fees, according to the report.

Some also paid more than $68 million in related "add on fees" called "application," "administrative," "e-filing," "service bureau," "transmission," or "processing" fees, which can cost from $25 to several hundred dollars.

Not all tax preparers charge such add on fees, Wu said, so it's wise to comparison shop ahead of time if you must go the tax refund loan route.

s C03-32-2009 - Net Operating Losarryback Guidance Provided for Eligible Small Businesses

The IRS announced that small businesses with deductions exceeding their income in can use a new net operating loss (NOL) tax provision to get a refund of taxes paid in prior years. The IRS has updated the instructions for Form 1045, Application for Tentative Refund, and 1139, Corporation Application for Tentative Refund, so that eligible small businesses can make use of the special carryback provision under Code Sec. 172(b)(1)(H) for 2008. The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), enables small businesses with a net operating loss in 2008 to elect to offset this loss against income earned in up to five prior years. Some taxpayers must make the election to use this special carryback by April 17, 2009.

CCH Comment. With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this period.


CCH Comment. The IRS has clarified that the $15 million in gross receipts test is to be applied over the three-year tax period ending with the tax year of the NOL. Although this is consistent with the CCH's interpretation of the rule in CCH'sAmerican Recovery and Reinvestment Act of 2009: Law, Explanation and Analysis, there was confusion regarding the application of the test, which is based on the gross receipts test in Code Sec. 448(c). In particular, some interpreted the test to be applied over the three-year tax period preceding the NOL year. Including the NOL year as one of the test years could allow more taxpayers to meet the requirements for the expanded NOL period because a loss year arguably means a taxpayer will have lower gross receipts for the year.

For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.
To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009. Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. Further, the current year's tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer's return is filed, as listed on the return instructions.

In addition, Frequently Asked Questions (FAQs) have been posted on the IRS.gov website. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.

Rev. Proc. 2009-19, 2009FED ¶46,292

IR-2009-26,

2009FED ¶46,293

Other References
Code Sec. 172

03-20-2009 ID thieves targeting tax returns

WBBH-TV
updated 7:12 a.m. MT, Sat., March. 14, 2009

LEE COUNTY: Identity thieves are now targeting tax returns to make money at your expense. In fact, the problem has become so bad, the Internal Revenue Service opened a special office to handle identity theft cases.

Like millions of Americans, Dan Jacobs filed his tax return with a tax preparer, but instead of getting his money from the IRS, he got a phone call.

"We had been rejected by the IRS. My social security number had already been used by another individual," said Jacobs.

Someone had stolen Jacobs' social security number, gotten a job, and filed a tax return using his identity.

"You hear about it all the time, but until it hits you, it hits home. You wonder, you get scared, upset," said Jacobs.

Shalimar Price of the IRS says the problem has become so widespread, the agency has opened a special identity theft unit.

In fact, the Federal Trade Commission just issued a new report showing identity theft went up 20-percent from 2007 to 2008.

"We see now when they file their tax returns, they may see their tax return has already been filed. That happens, and so people come into our office," said Price.

The IRS has issued an alert telling people if you get a letter from the IRS saying a tax return has already been filed for you - pay attention, chances are its legit.

"Any type of correspondence from the IRS if you question it-- contact us. Come in, call. If you get an email - we don't email you," said Price.

Another sign you may be the target of identity theft is an IRS letter indicating you received wages from an employer unknown to you.

The IRS says the best way to avoid identity theft in the first place is to protect your personal information, especially things like W-2s.

"You want to make sure information such as your tax return is safe. Don't leave it in your car. You want to make sure it's safe," said Price.

"It was disturbing," said Jacobs.

Jacobs filed a police report and notified credit agencies, things the IRS tells you to do, but says he still doesn't have his identity back.

"Frustrating. Extremely frustrating," said Jacobs.

He wants others to know it can happen to you, too.

You can reach the IRS Identity Theft Hotline at 1-800-908-4490 or the Federal Trade Commission at 877-ID-THEFT.

Baucus Outlines Offshore Tax Haven Legislation

Senate Finance Committee Chairman Max Baucus, D-Mont., on March 12 began circulating among the IRS, the Financial Crimes Enforcement Network (FinCEN) and the business community a preliminary draft of legislation aimed at curbing offshore tax evasion. Baucus intends to introduce a final bill within weeks and has scheduled a hearing on the subject for March 17.

Baucus outlined a three-pronged approach to the problem that would detect, deter and discourage offshore tax evasion by giving the IRS increased time and tools to spot and shut down offshore noncompliance, requiring certain reports to be filed with tax returns, increasing penalties and closing a loophole that results in employers in offshore tax havens avoiding payment of Social Security taxes on workers.

The information reporting would require entities transferring funds offshore, other than on behalf of publicly traded companies, to report to the IRS the amount and destination of funds transferred. In order to give the IRS more time to detect and examine offshore activity, the measure would extend the statute of limitations from three years to six years for tax returns that reported, or should have reported, certain international transactions. The bill would also require the Foreign Bank Account Reports (FBAR) form to be filed with the income tax return. Currently, the FBAR is filed only with the Treasury’s FinCEN. In addition, it requires preparers to ask a series of due diligence questions to determine whether an FBAR should be filed. This is similar to the existing earned income tax credit due diligence regime.

Deterrence also comes through provisions that would: (1) enhance the foreign trust “failure to file” penalty by establishing a $10,000 minimum penalty, (2) expand the types of property considered to be a distribution, such as artwork and jewelry, and (3) double applicable fines and penalties on tax underpayments attributable to certain offshore transactions Companies would also be discouraged from establishing offshore entities through modification of a provision in the Heroes Earnings Assistance and Relief Tax Act of 2008 (P.L.110-245) and requiring offshore entities that hire workers to perform services pursuant to a government contract to treat those workers as American employees subject to Social Security tax.

Believe me, as a Trader you DON’T want to do your own taxes!

Every year at this time, many Americans sit down with a strong cup of coffee, a yellow No. 2 pencil and a legal pad and try to make sense of that giant jigsaw puzzle known as the federal income tax return.

Tax time is a little like the anti-holidays, where tax forms with forgettable names and numbers suddenly replace those visions of sugar plums that were dancing in our heads just a few weeks ago.

Below are some of the significant tax forms in a typical trader’s federal tax return. We suggest that you look at them, become familiar with what they do – and then forget them.

Why? Because you’re a trader, not an accountant.

You can’t read the results of your blood test, can you? Or diagnose engine trouble? Or figure out what the heck dry cleaning is, right?

So why would you attempt to do your own taxes – or let just any accountant attempt to, given the unique rules and regulation that govern trader taxation?

That’s our job. As traders and accountants, Traders Accounting’s tax professionals specialize in helping you prepare an audit-proof tax return that trims your taxes to the absolute minimum.

What’s more, our tax experts keep on saving you money by staying current on every tax law change – especially those that could pose a threat to your trader tax status or offer opportunities for even greater tax savings.

Here are the trader’s most important tax forms. Call Traders Accounting today to keep them from dancing in your head!

Mark-to-Market Statement of Intent

For most traders, switching to the mark-to-market (MTM) accounting method is the single most tax-efficient move they will ever make.

Why? Because it changes the tax status of your earnings from capital gains/losses to ordinary income/losses, thereby avoiding the $3,000 capital loss limitation and the wash sale rule.

To elect mark-to-market, you must enclose a statement of intent with your tax return (or extension request) by April 15th the year prior to beginning MTM. That means that to use MTM on this year’s return, you would have to have elected it April 15th of last year.

The IRS makes one exception: If you file as a new business entity (partnership, limited liability company or C corporation), you have two months from opening to note your accounting preference in your meeting minutes. You need not notify the IRS until you file Form 3115 (below).

Form 3115: Application for Change in Accounting Methods

Your first year using MTM, you must submit IRS Form 3115 (Application for Change in Accounting Methods) with your tax return. This form contains a one-time adjustment, Section 481(a), which captures duplications and omissions resulting from the change in accounting methods.

If the adjustment is $25,000 or less, you may deduct the full amount on your return; if it exceeds $25,000, you may deduct 25% each year for the next four years.

Schedule C: Profit or Loss from Business

If you file as a sole proprietor and do not elect mark-to-market accounting, you will report your expenses on Schedule C (Profit or Loss from Business) and your trades on Schedule D (Capital Gains and Losses), a disconnect the IRS considers suspect.

One way to avoid flagging the taxman is to trade under a formal business entity (limited partnership, LLC or C corporation). Tax treatment of business entities is both more favorable and more predictable than that afforded sole proprietors.

Schedule D: Capital Gains and Losses

Traders in stocks, options and single-stock futures who do not elect mark-to-market accounting must report their trading activity on Schedule D (Capital Gains and Losses).

Schedule D contains two parts: short-term capital gains/losses for holdings of less than one year, and long-term capital gains/losses for holdings of more than one year. This also is the form on which wash sale adjustments are recorded.

Because trading frequently involves the buying and selling of unequal shares, calculations of gain or loss must be broken down into the smallest number of shares on either the buy or sell side. This can be a time-consuming and tedious process.

If you’re an active trader, filling out Schedule D can be an arduous task without the assistance of an experienced trader tax professional. Traders Accounting can help simplify your record keeping and streamline your Schedule D preparation.

Form 6781: Gains and Losses from Section 1256 Contracts and Straddles

If you trade in commodities – including such Section 1256 contracts as futures, foreign exchange and nonequity options – you must report your trading activity on Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles). You enter the gross amount of your Section 1256 proceeds from your 1099 on Part 1, Line 2 (Net Gain or Loss) of Section 1 (Contracts Marked to Market).

The IRS generously allows commodities traders to split their Schedule D gains and losses, 60% long-term and 40% short-term. This is such an attractive deal that many commodities traders choose not to elect mark-to-market accounting, thereby retaining their profitable 60/40 split on gains. An added plus: losses on Form 6781 may be carried back three years against gains.

Form 4797: Sales of Business Property

Traders in stocks, options and single-stock futures who elect mark-to-market accounting report their trading activity on Form 4797 (Sales of Business Property (Also Involuntary Conversions and Recapture Amounts Under Sections 179 and 280F(b)(2)).

Under the mark-to-market accounting method, all securities that you hold at the end of the year are treated as if they were sold and repurchased on the last day of the year; they are “marked to market” for tax purposes. All trading activity should be entered under Section II of Form 4797 (Ordinary Gains and Losses).

Note: long-term investments that are not part of your trading business should be entered on Schedule D and not marked to market on Form 4797.

Form 4868: Application for Automatic Extension of Time

Tax time can be confusing, especially for beginners. Which brings us to Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return).

When filed by April 15, the extension automatically moves your tax deadline forward three months to Aug. 15. If needed, you can then file a second extension, to Oct. 15, giving you a full six months to file.

However, the second extension is not automatic, and won’t be official until you receive the form marked “granted” back from the IRS.

And beware: An extension only buys you time to file, not pay. If you don’t remit more than 90% of your estimated tax due by the original April 15 deadline, your extension will be deemed invalid.

Don’t suffer through another tax season alone. Get Traders Accounting on your team today. As both traders and accountants, we can help design a tax-effective trading plan that is right for you. It’s a gift that will keep on giving for years to come.

Text of H.R. 1068: To amend the Internal Revenue Code of 1986 to impose a tax on certain securities transactions

111th CONGRESS

1st Session

H. R. 1068

To amend the Internal Revenue Code of 1986 to impose a tax on certain securities transactions to the extent required to recoup the net cost of the Troubled Asset Relief Program.

IN THE HOUSE OF REPRESENTATIVES

February 13, 2009

Mr. DEFAZIO (for himself, Mr. WELCH, Ms. SUTTON, Mr. CAPUANO, Mr. WU, Mr. STARK, Ms. DELAURO, and Ms. EDWARDS of Maryland) introduced the following bill; which was referred to the Committee on Ways and Means

---

A BILL

To amend the Internal Revenue Code of 1986 to impose a tax on certain securities transactions to the extent required to recoup the net cost of the Troubled Asset Relief Program.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘Let Wall Street Pay for Wall Street’s Bailout Act of 2009’.

SEC. 2. FINDINGS.

Congress finds the following:

(1) The Bush Administration allocated the first $350 billion of TARP funds in a manner that has outraged the Nation by failing to provide the most basic oversight of the funds.

(2) Congress has declined to block the remaining $350 billion of TARP funds despite the lack of oversight and the record fiscal year 2009 budget deficit estimated at $1.2 trillion.

(3) The Board of Governors of the Federal Reserve System has committed more than a trillion dollars to stabilize the economy by bailing out various banks deemed ‘too big to fail’.

(4) The $700 billion TARP fund and the new Federal Reserve lending facilities were created to protect Wall Street investors; therefore, the same Wall Street investors should pay for this infusion of taxpayer money.

(5) The easiest method to raise the money from Wall Street is a securities transfer tax, a tax that has a negligible impact on the average investor.

(6) This transfer tax would be on the sale and purchase of financial instruments such as stock, options, and futures. A quarter percent (0.25 percent) tax on financial transactions could raise approximately $150 billion a year.

(7) The United States had a transfer tax from 1914 to 1966. The Revenue Act of 1914 (Act of Oct. 22, 1914 (ch. 331, 38 Stat. 745)) levied a 0.2 percent tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help overcome the budgetary challenges during the Great Depression.

(8) All revenue generated by this transfer tax should be deposited in the general fund of the Treasury of the United States, scaled to meet the net cost of these bailouts, and phase out when the cost of the bailouts are repaid.

SEC. 3. RECOUPMENT OF DEFICIT ARISING FROM FEDERAL BAILOUT.

(a) In General- Chapter 36 of the Internal Revenue Code of 1986 is amended by inserting after subchapter B the following new subchapter:

‘Subchapter C--Tax on Securities Transactions

‘Sec. 4475. Tax on securities transactions.

‘SEC. 4475. TAX ON SECURITIES TRANSACTIONS.

‘(a) Imposition of Tax- There is hereby imposed a tax on each covered securities transaction an amount equal to the applicable percentage of the value of the security involved in such transaction.

‘(b) By Whom Paid- The tax imposed by this section shall be paid by the trading facility on which the transaction occurs.

‘(c) Applicable Percentage- For purposes of this section--

‘(1) IN GENERAL- The term ‘applicable percentage’ means the lesser of--

‘(A) the specified percentage, or

‘(B) 0.25 percent.

‘(2) SPECIFIED PERCENTAGE-

‘(A) IN GENERAL- The term ‘specified percentage’ means, with respect to any taxable year beginning in a calendar year, the percentage that the Secretary estimates would result in the aggregate revenue to the Treasury under this section for such taxable year and all prior taxable years to equal the Secretary’s estimate of the net cost (if any) to the Federal Government of--

‘(i) carrying out the Troubled Asset Relief Program established under title 1 of the Emergency Economic Stabilization Act of 2008, and

‘(ii) the exercise of authority by the Board of Governors of the Federal Reserve System under the third undesignated paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343).

‘(B) DETERMINATION OF PERCENTAGE- Such percentage shall be determined by the Secretary not later than 30 days after the date of the enactment of this section, and redetermined for taxable years beginning in each calendar year thereafter. Such percentage shall take into account the Secretary’s most recent estimation of such net cost. Any specified percentage determined under this paragraph which is not a multiple of 1/100th of a percentage point shall be rounded to the nearest 1/100th of a percentage point.

‘(d) Covered Securities Transaction- The term ‘covered securities transaction’ means--

‘(1) any transaction to which subsection (b), (c), or (d) of section 31 of the Securities Exchange Act of 1934 applies, and

‘(2) any transaction subject to the exclusive jurisdiction of the Commodity Futures Trading Commission.

‘(e) Administration- The Secretary shall carry out this section in consultation with the Securities and Exchange Commission and the Commodity Futures Trading Commission.’.

(b) Clerical Amendment- The table of subchapters for chapter 36 of such Code is amended by inserting after the item relating to subchapter B the following new item:

‘subchapter c. tax on securities transactions’.

(c) Effective Date- The amendments made by this section shall apply to sales occurring more than 30 days after the date of the enactment of this Act.

Believe me, you DON’T want to do your own taxes!

Jim Crimmins on why his trader/accountants are your best bet

Every year at this time, many Americans sit down with a strong cup of coffee, a yellow No. 2 pencil and a legal pad and try to make sense of that giant jigsaw puzzle known as the federal income tax return.

Tax time is a little like the anti-holidays, where tax forms with forgettable names and numbers suddenly replace those visions of sugar plums that were dancing in our heads just a few weeks ago.

Below are some of the significant tax forms in a typical trader’s federal tax return. We suggest that you look at them, become familiar with what they do – and then forget them.

Why? Because you’re a trader, not an accountant.

You can’t read the results of your blood test, can you? Or diagnose engine trouble? Or figure out what the heck dry cleaning is, right?

So why would you attempt to do your own taxes – or let just any accountant attempt to, given the unique rules and regulation that govern trader taxation?

That’s our job. As traders and accountants, Traders Accounting’s tax professionals specialize in helping you prepare an audit-proof tax return that trims your taxes to the absolute minimum.

What’s more, our tax experts keep on saving you money by staying current on every tax law change – especially those that could pose a threat to your trader tax status or offer opportunities for even greater tax savings.

Here are the trader’s most important tax forms. Call Traders Accounting today to keep them from dancing in your head!

Mark-to-Market Statement of Intent

For most traders, switching to the mark-to-market (MTM) accounting method is the single most tax-efficient move they will ever make.

Why? Because it changes the tax status of your earnings from capital gains/losses to ordinary income/losses, thereby avoiding the $3,000 capital loss limitation and the wash sale rule.

To elect mark-to-market, you must enclose a statement of intent with your tax return (or extension request) by April 15th the year prior to beginning MTM. That means that to use MTM on this year’s return, you would have to have elected it April 15th of last year.

The IRS makes one exception: If you file as a new business entity (partnership, limited liability company or C corporation), you have two months from opening to note your accounting preference in your meeting minutes. You need not notify the IRS until you file Form 3115 (below).

Form 3115: Application for Change in Accounting Methods

Your first year using MTM, you must submit IRS Form 3115 (Application for Change in Accounting Methods) with your tax return. This form contains a one-time adjustment, Section 481(a), which captures duplications and omissions resulting from the change in accounting methods.

If the adjustment is $25,000 or less, you may deduct the full amount on your return; if it exceeds $25,000, you may deduct 25% each year for the next four years.

Schedule C: Profit or Loss from Business

If you file as a sole proprietor and do not elect mark-to-market accounting, you will report your expenses on Schedule C (Profit or Loss from Business) and your trades on Schedule D (Capital Gains and Losses), a disconnect the IRS considers suspect.

One way to avoid flagging the taxman is to trade under a formal business entity (limited partnership, LLC or C corporation). Tax treatment of business entities is both more favorable and more predictable than that afforded sole proprietors.

Schedule D: Capital Gains and Losses

Traders in stocks, options and single-stock futures who do not elect mark-to-market accounting must report their trading activity on Schedule D (Capital Gains and Losses).

Schedule D contains two parts: short-term capital gains/losses for holdings of less than one year, and long-term capital gains/losses for holdings of more than one year. This also is the form on which wash sale adjustments are recorded.

Because trading frequently involves the buying and selling of unequal shares, calculations of gain or loss must be broken down into the smallest number of shares on either the buy or sell side. This can be a time-consuming and tedious process.

If you’re an active trader, filling out Schedule D can be an arduous task without the assistance of an experienced trader tax professional. Traders Accounting can help simplify your record keeping and streamline your Schedule D preparation.

Form 6781: Gains and Losses from Section 1256 Contracts and Straddles

If you trade in commodities – including such Section 1256 contracts as futures, foreign exchange and nonequity options – you must report your trading activity on Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles). You enter the gross amount of your Section 1256 proceeds from your 1099 on Part 1, Line 2 (Net Gain or Loss) of Section 1 (Contracts Marked to Market).

The IRS generously allows commodities traders to split their Schedule D gains and losses, 60% long-term and 40% short-term. This is such an attractive deal that many commodities traders choose not to elect mark-to-market accounting, thereby retaining their profitable 60/40 split on gains. An added plus: losses on Form 6781 may be carried back three years against gains.

Form 4797: Sales of Business Property

Traders in stocks, options and single-stock futures who elect mark-to-market accounting report their trading activity on Form 4797 (Sales of Business Property (Also Involuntary Conversions and Recapture Amounts Under Sections 179 and 280F(b)(2)).

Under the mark-to-market accounting method, all securities that you hold at the end of the year are treated as if they were sold and repurchased on the last day of the year; they are “marked to market” for tax purposes. All trading activity should be entered under Section II of Form 4797 (Ordinary Gains and Losses).

Note: long-term investments that are not part of your trading business should be entered on Schedule D and not marked to market on Form 4797.

Form 4868: Application for Automatic Extension of Time

Tax time can be confusing, especially for beginners. Which brings us to Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return).

When filed by April 15, the extension automatically moves your tax deadline forward three months to Aug. 15. If needed, you can then file a second extension, to Oct. 15, giving you a full six months to file.

However, the second extension is not automatic, and won’t be official until you receive the form marked “granted” back from the IRS.

And beware: An extension only buys you time to file, not pay. If you don’t remit more than 90% of your estimated tax due by the original April 15 deadline, your extension will be deemed invalid.

Don’t suffer through another tax season alone. Get Traders Accounting on your team today. As both traders and accountants, we can help design a tax-effective trading plan that is right for you. It’s a gift that will keep on giving for years to come.

Cheers,

Jim Crimmins

Tax Evaders Refuse to Recognize New Charges

CONCORD, N.H. — A couple convicted of tax evasion said Thursday that the federal government has no right to bring 11 new charges against them, including gun violations and obstruction of justice.

Ed and Elaine Brown and at least four co-conspirators stockpiled explosives and firearms at the couple's home for possible use against law enforcement, according to the indictment.

Officials entered not guilty pleas on the Browns' behalf at a hearing Thursday in U.S. District Court in Concord.

They were convicted in January 2007 of failing to pay taxes on $1.9 million of income over eight years. The couple claims the federal income tax is not legitimate. Their argument — repeatedly rejected by courts — is that no law authorizes the federal income tax and that the 1913 constitutional amendment permitting it was never properly ratified.

The Browns fled to their Plainfield home before the trial ended, and Ed Brown threatened to kill any officers who attempted to arrest them. U.S. marshals posing as supporters apprehended them in October 2007. The new charges stem from that incident.

They appeared separately Thursday, shackled at the ankles. Elaine Brown, who was arraigned first, said she would not attend the new trial. Her husband said the couple lived under a different form of law.

"I thought today was here to release us," he said, adding that authorities have kept him in solitary confinement for more than a year. "I have not been able to find out anything about anything."

U.S. Marshal Stephen Monier and U.S. Attorney Tom Colantuono declined to comment on Brown's accusation. Monier added that authorities would grant the couple a brief meeting in a holding cell after the hearing — the couple's first time together since October 2007.

The Browns say they will represent themselves, but Judge James Muirhead appointed standby lawyers for the couple. Those attorneys — Bjorn Lange and Michael Iacopino — declined to comment.

The couple also waived their right to bail hearings.

Judge George Singal of Maine will preside over the trial scheduled for April 13. Federal judges in New Hampshire recused themselves after the Browns threatened to harm New Hampshire Judge Steven McAuliffe in 2007. Both McAuliffe and Judge Paul Barbadaro said they would be worried that their impartiality would be questioned because of the threats.

The Brown's home — now under the control of federal authorities — became a rallying place for the couple's anti-government, anti-tax supporters in 2007, some of whom pledged to use violence to defend them. Four have since been convicted and sent to prison.

The Browns, both in their late 60s, are currently serving five-year prison sentences.

Four supporters of the Browns have been sent to prison for helping the couple resist efforts to arrest. Some of the explosive devices prosecutors say were seized from the Browns' property included nine homemade antipersonnel mines intended to fire shotgun shells from trees when approaching marshals hit tripwires.

(Source)