========================================================================= (C) 1993 by GEnie. May be reprinted only with this notice intact. To sign up for GEnie service, call (with modem) 800-638-8369. Upon connection type HHH (RETURN after that). Wait for the U#= prompt.Type XTX99437,GENIE and press [RETURN]. The system will prompt you for your information. ========================================================================== 2 Home Office/Small Busines Category 7, Topic 2 Message 2 Thu Sep 03, 1992 B.COLLINS14 [Barb] at 20:06 EDT Ok I have a couple of questions: I am starting to do some sidework with my computer at home, DTP, Word Processing, etc. Will I need to pay quarterly tax payments if I also work a part time job with taxes withheld from my paycheck? Will I be penalized if I don't? If I am providing a service I don't charge sales tax right? If I don't charge any sales tax do I have to register with the Sales Tax division and file their forms? (Maryland) Thanks for any advice. Barb ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 3 Thu Sep 03, 1992 NASS [Joni] at 23:48 EDT Barb... I'm not an accountant... but Jack will be by here soon... just want to tell you that when I own and operate a secretarial service I was told that until I provided photocopies, printed copies, fax service, and any other taxable services like sellng wedding invitations and the like I am not taxable. So... basically I don't charge tax for typing letters or setting resumes, but when I make photocopies of the resumes - in case the customer wants only photocopies then I charge tax for that. I was told by the tax department (state) that they consider me a professional much like a doctor or lawyer. So, I am very careful and charge tax where applicable -- have always done it. = Joni = ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 4 Fri Sep 04, 1992 BRAD [Brad Solomon] at 04:33 EDT Barb, Your net income from your computer work will be subject to both income tax and self employment tax. The SE tax is equivalent to about double your social security tax. Depending on how much it comes to, you can pay the tax either with quarterly estimates, or you can have extra withheld from your regular job. If you have paid in at least as much as last years tax, and any of the following is true, you do not have to pay additional estimates: - You did not pay estimated tax for 1991, 90 or 89, and were not subject to an underpayment penalty for any of those years - Your 1992 Adjusted Gross Income is less than $75,000 - Your 1992 AGI is not more than $40,000 over 1992. Note - halve those numbers if you are married filing separately. Also, realize that the last two items CAN change unexpectedly - a lottery win, etc. I don't know anything about MD sales tax. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 5 Fri Sep 04, 1992 JSLICK [JACK] at 20:03 EDT Barb, Brad pretty much covered the personal tax issues. Md Sales tax would behandled the same way that Joni described. In other words if it's service like typing letters, resumes, etc. No tax is due. Copying, or selling a product would make the tax due. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 6 Sat Sep 05, 1992 J.ATTARD [Janet(sysop)] at 09:31 EDT Just a note: Sales tax laws differ from state to state and county to county even within a state. What is true for services in one state is not necessarily true in another state. You will always have to check state and local tax laws to find out whether your services are taxable or not. Just as a for instance, typesetting, which is not taxable in the county in NY state where Joni lives IS taxable in New York City. In NY that means that anyone who does typesetting for a NY city resident has to charge the NYC resident sales tax and remit it to the state. --Janet ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 11 Sun Sep 06, 1992 M.COUTURE2 [Mari] at 18:52 EDT Here in Ohio I had to get a special vendor's permit for doing DTP work - it falls under the same catagory as doing word processing which is taxable here. So I charge sales tax and pay it monthly. Mari ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 18 Wed Sep 09, 1992 PEACHIE [GEORGIA] at 20:39 EDT Brad and Jack, Have you guys heard about the newest tax form changes coming down the pike? Especially the newer, simplified Schedule C? * * * * * * * * * PEACHIE!! * * * * * * * * * * ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 19 Thu Sep 10, 1992 JSLICK [JACK] at 22:13 EDT Peachie, I've heard aout the new schedule C, but from what I've seen not many people will be able to utilize it. It's so basic that in most cases it just doesn't cover a business. Now for someone that has a 1099 and only the expenses on the form, it will probably save them time. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 20 Fri Sep 11, 1992 J.ATTARD [Janet(sysop)] at 21:37 EDT The form is aimed at businesses with gross receipts of less than $25,000 according to the IRS, but as Jack says, it is really for nonbusinesses .... According to an IRS representative, you can NOT use the form if - you kept any inventory - had a net loss - operate more than one business as a sole proprietor - have any employees - file a 4562 depreciation form - take the home office deduction - had prior year unallowed passive activity losses from the business The person I spoke to could not find any place on the form to declare any deductions, but said the form was for people with less than $2,000 in business expenses. The same individual also said - after reading me the part about no inventory - that this form was good for the "guy who has table at flea markets." Somehow I don't think that particular individual knew too much about businesses.......... Usually the people on the answer line are a LOT better informed, btw. --Janet ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 21 Sat Sep 12, 1992 PEACHIE [GEORGIA] at 20:25 EDT Jack, I knew that when it said 8 lines and less than $2000 in expenses, most people would be excluded. * * * * * * * * * PEACHIE!! * * * * * * * * * * ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 22 Tue Sep 22, 1992 G.CONNOR [George] at 20:13 EDT Can someone tell be the mileage rate for charitable work these days? I think it was 12 cents back in '89, but what about now? And, regular mileage for business purposes is 28 cents, right? Thanks... ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 23 Wed Sep 23, 1992 F.KEENEY1 [the needler] at 21:17 EDT Charitable mileage is still 12c/mile and for 1992, business mileage is 28c/mile for all business miles frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 24 Wed Sep 23, 1992 C.KAGY [Chris] at 22:04 EDT Here's an interesting senerio I'd like some input on: I'm getting married in late december, meaning that for 1992 my fiance and I will be filing jointly for the first time. My fiance, a law student, just got herself a part time job working for a local firm. She's being treated as a consultant, I understand, so she's self employed for tax purposes. She's going to be responsible for paying her own taxes (the firm is just writing her a check for her hours). Loving fiancee that I am, I get to (read: have to) do the tax work for us. How on earth do I figure out if she/we are going to owe estimated tax on Jan 15? Thanks for any suggestions/thoughts! -Chris ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 25 Wed Sep 23, 1992 BRAD [Brad Solomon] at 23:31 EDT Chris, You are probably in luck. You are supposed to figure out the amount of the tax for each quarter, and pay at least 90%. However, in many cases, as long as you have paid in as much as last years tax, you are covered. If you pay estimates, then you have to have made those payments quarterly, but if you are an employee, you can just have a little extra withheld (if you need it), you can be safe. Now for the disclaimer: If all the following apply, you cannot use the 100% of last years taxes to be safe: - Did either of you make estimated tax payments in the last 3 years, or were you subject to underpayment penalties (form 2210) during any of those years? - Is your 1992 Adjusted Gross Income (joint) over $75,000? - Is your 1992 modified AGI (without sale of your main home and certain other onetime items) more than $40,000 over 1991? That first item is one of the reasons that I recommend extra withholding over estimates, where it is possible. Otherwise, you could be in penalty trouble, or at least have complicated penalty calculation, if you should win the lottery. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 26 Sat Sep 26, 1992 C.KAGY [Chris] at 13:52 EDT Thanks for the quick reply, Brad. One thing you said still has me a little confused..."However, in many cases, as long as you have paid in as much as last years tax, you are covered." Does this mean as long as the two of us, combined, have paid in at least as much as last years tax, or as long as SHE (since her income is the stuff in question) has paid in as much as last year? For tax year '91 we were both single, see, but we're getting married in time to file jointly for '92...See where my question lies? (This is all about as clear as mud...) -chris ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 27 Sat Sep 26, 1992 JSLICK [JACK] at 21:53 EDT Chris, It would be the two of you combined. You need to have paid in at least what the two of you owed last year in taxes. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 28 Thu Oct 01, 1992 L.DEVRIES [Lloyd] at 20:28 EDT Regarding inheritance and estate taxes.... My father-in-law does not have a will; he is a Massachusetts resident. My wife is trying to convince him to draw one up. He has two children and a wife, owns a home (no mortgage), has other assets....and is VERY careful about money, to the extreme sometimes. So.... ....does anyone know the how much his heirs lose if he dies without a will? I imagine he assumes it will all go to his wife, or, if she predeceases, it'll be split between his two children...but how much does the Commonwealth of Mass take? Thanks. <<>> ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 29 Fri Oct 02, 1992 J.ATTARD [Janet(sysop)] at 15:45 EDT Lloyd, if nobody here has info on the Massachusetts laws, there IS a list of state tax offices in the HOSB library and in the business Resource directory. You can call them up in the Directory by searching for the state and the word tax. Call that number and ask how you can get information on the state's inheritance tax laws. --Janet ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 30 Fri Oct 02, 1992 JSLICK [JACK] at 19:49 EDT Lloyd, I don't have the info on Massachussetts laws but regardless of whether he has a will or not they will get their share. The only thing the will will accomplish is to allocate his estate in the manner he sees fit. In Maryland without a will the estate is disributed to wife first then children on down the line. The importance of the will is when you want to distribute assets by some other method or are concerned about federal taxation. If the estate would exceed 600000, then a will becomes a necessity in avoiding federal taxation as much as possible. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 31 Sun Oct 04, 1992 G.CONNOR [George] at 22:22 EDT I am considering donating a PC to a church, when I upgrade to a 486. This will be a fully functional 386SX, loaded. How do I determine the amount I can deduct, and where do I do it at? Thx. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 32 Mon Oct 05, 1992 BRAD [Brad Solomon] at 03:21 EDT George, The amount to deduct, assuming that you owned it personally and not through a business, is its current market value. If you were going to sell it to me (a stranger), how much would you be able to get for it? You report it on form 8283, which carries to Schedule A. BTW, if you were using it for business, and depreciated it, then your deduction can be no more than its book value - lowered by any depreciation that you either took, or should have taken. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 33 Mon Oct 05, 1992 G.CONNOR [George] at 19:49 EDT Brad: Yes, the PC is mine. When I use the 8283>Sched A, is it included with cash charity donations, or is it subject to the 2% reduction. Thx. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 34 Mon Oct 05, 1992 C.WERENKO1 [CHRISTINE] at 23:07 EDT Lloyd, I am not familar with Mass. law but in most states, if you die without a will, the wife gets LESS than the children--often wife gets 1/3 and children 2/3. This man needs to check this out immediately. I am sure this is not his intent. Christine ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 35 Tue Oct 06, 1992 BRAD [Brad Solomon] at 01:02 EDT George, There is another line for noncash contributions, but it is in the same section, not subject to the 2% for Misc. deductions. BTW, if it is less than $500, you may not need the 8283. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 38 Sun Oct 18, 1992 DIANNE.OLSEN [Dianne] at 21:14 EDT Lloyd, as a former MA resident, I vaguely recall them being one state that makes it more difficult if you die w/o a will. With his assets tell him to get one ASAP, for it's his loved ones that will be hurt even more and at that time, they don't need that kind of hassle. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 39 Tue Oct 27, 1992 G.CONNOR [George] at 21:30 EST Would conventions, trade shows, etc., be deducted on a Sched A ? Would they be subject to the 2% rule? (Trying to decide, whether to go.) ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 40 Wed Oct 28, 1992 F.KEENEY1 [the needler] at 00:30 EST If you are self employed, they are deducted on a C if you are an employee then it is schedule A subject to the 2% limitation. frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 41 Wed Oct 28, 1992 JSLICK [JACK] at 22:24 EST George, Conventions and trade shows in the Continental US are deductible on Schedule C if you are self-employed. Elsewise they are deducted on Schedule A and are subject to the 2% of Adjusted Gross Income threshhold. Expenses relating to your spouse unless she served an integral business purpose would not be deductible. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 42 Sat Nov 07, 1992 K.WALKER19 at 01:43 EST Hello, I am very new to this Round Table (this is a RT, isn't it?) and I have a question that I am looking for insight on. Having been laid off ,I have taken an opportunity for which I am now considered "self-employed. As a result a result, I'll have to use a 1099 Form, I'm told. Now, having never filled one out before, I'm not sure I know all the appropriate taxes that I'll have to pay. I mean that I'm unsure of the peercentages of each of the taxes. I live in Massachusetts. Also, since the income this will/is producing is very irregular, how does one figure any type of estimated tax? Right now I'm holding aside about 40% of this income for taxes. That should be enough... I'd appreciate any help you might provide. KW ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 43 Sat Nov 07, 1992 JSLICK [JACK] at 22:19 EST KW, The 40% you are withholding should be adequate. You don't need to file a 1099 your employer will give you that at the end of he year. It's similar to the W-2 you used to get accept no withholding is done on it. You are responsible for your federal and state income tax, and any self-employment tax. From your message I'm getting the impression that we aren't talking a lot of money so I'm assuming that you will be in the lower tax brackets. You will need to pay estimates if you will be doing this regularly. Your estimates are due April 15th, Jun 15th, Sep 15th and Jan 15th. Since the September one has just passed you might want to fill out a 1040 ES and send the amount you have saved so far in marked for September and again in January. I'd wait until you filed your state return to determine whether you owe anything there. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 44 Sun Nov 08, 1992 BRAD [Brad Solomon] at 00:54 EST KW, You will be responsible for taxes at your normal rate, plus self employment tax at 15.3% for up to $55,500 (less any wages subject to Social Security). You will have to include two more 1 page forms with your return when you file - Sehedules C and SE. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 45 Sun Nov 08, 1992 L.DEVRIES [Lloyd] at 07:53 EST >>> K.WALKER19 The more-qualified tax experts have probably already responded , but the form YOU have to fill out is a Schedule C of the full-length 1040. Your employers submit the 1099's, and provide you with a copy, which you submit with your return. You have to pay the estimated tax four times a year. You're wise to put aside the money; wish I'd known that in 1979. Keep good records. IMHO, I think it's worth at least one trip to an accountant to set up your books, learn what's deductible and what isn't, and otherwise get a solid base on handling your taxes. You may then decide to handle subsequent years yourself, or, as I did, stick with the accountant. A pro knows the latest rules and regs, and how to interpret them. I am not now nor have I ever been an accountant or tax preparer. <<>> ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 47 Sun Nov 29, 1992 V.ROWE1 [Val] at 22:02 EST I thought I posted a question here early today, but I can't find it now. Have I experience a GEnie/Aladdin hiccough? My quest%I DO realize that the ceiling for the Medicare portion of the 7.65% is muchhigher. Since I "lost" this message once, would whoever repies please e-mail the answer to me? Thanks in advance for your help. 3> Opps, sorry about the typos - I'm not used to GEnie Terminal Mode. I wanted to change line 3 to read, "...to pay FICA?" Val ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 48 Tue Dec 01, 1992 S.CHURCH2 [SLIE-1] at 01:04 EST A question that seems strange to me... My husband is getting a lump-sum dispersment of an employer pension fund that is being closed out due to the employers bankruptcy. Now the pension fund was also being held by an insurance company that has also went into bankruptcy, so the funds dispersed from the insurance company now amount to only a percentage on the dollar of what was originally in the account. Now here is the main question... according to all the paperwork we received from the employer and the new holding company, a local bank, the employer must deduct 20% of the remaining funds and send them to the IRS in lieu of income tax, now according to the paperwork, even if we roll this money over into a qualified IRA or other pension account, we will still be assest a tax on the 20% that was taken out of the account and sent to the IRS. Since we are also taking it as a lump- sum distribution we will have a 10% penalty attached because of the liquidation of the account. So far out of approximately 13k that had been in the account over 7 years my husband will only see under 5k after all the taxes and things are taken out. The company is saying now that he won't receive that in all cash either but a combination of cash and new issue stock in the company since they are now out of the bankruptcy. 1. Can they force him to take the stock? which my broker says is next to worthless. 2. Is there any way to avoid the extra taxation on the 20% that has already been earmarked to be sent to the IRS, if he will roll the 80% remainder into a qualified account. I just finished a tax course to refresh myself on the tax laws but I am stumped on this. Any help or comments are appreciated. Shelly p ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 49 Tue Dec 01, 1992 BRAD [Brad Solomon] at 03:32 EST Shelly, I can't answer the question about whether or not they can force him to take the stock. However, I can address the issue of the 20%. If the distribution is made this year, then they are not supposed to withhold that money. If it is not made until next year, then he is supposed to have an option: either have them give the money (assets) to him, and deduct the 20%, or have him direct where the money is being rolled over, and let them make the transfer on his behalf. In the second case, there should be no withholding. You can thank Congress for this, and all the other problems that it causes, as it tricks people into paying the withholding and being forced to pay a penalty because they do not have the money to roll over. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 50 Tue Dec 01, 1992 JSLICK [JACK] at 22:57 EST Val, The fica limit is 57,600 and the medicare is 135,000 for 1993. Was there anything else you wanted to know? jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 52 Thu Dec 03, 1992 V.ROWE1 [Val] at 21:47 EST Jack: Thanks for your response. The fica limit is what I was looking for as I wasn't sure whether it was $55,000 or $55,500. I call IRS at 8:00 a.m. Monday morning and confirmed that it's $55,500. The $57,600 that you mentioned is for 1993, but I needed to know it for '92. Thanks again, Val ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 53 Thu Dec 03, 1992 G.CANNON3 (Forwarded) Sales tax on the purchase of real estate as a home is deductable on a tax return. Is there a tax code which allows a schedule A deduction for the considerable sales tax on a motor home used purchased as a vacation home?*s ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 54 Fri Dec 04, 1992 BRAD [Brad Solomon] (Forwarded) You don't pay sales tax on the purchase of a home. Also, sales tax is not deductable, and hasn't been since 1986. Any sales tax paid on the purchase of a mobile home would be added to the basis, which would lower any capital gain when you sold it. Now, real estate taxes are deductable on your home. And you can treat the mobile home as a second home and deduct those taxes, too. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 56 Fri Dec 04, 1992 JSLICK [JACK] at 22:36 EST Also one other thing to consider is that some states impose a differnt type of tax on mobile homes. Some call it a mobile home tax, others a personal property tax. In either of those cases it is deductible also. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 57 Thu Dec 10, 1992 R.BARASCH [Dick] at 21:38 EST Jack, Is there such a thing as a 401 A retirement plan? If so, what is the difference between it and a 401 K plan? Thanks, Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 58 Sat Dec 12, 1992 JSLICK [JACK] at 23:14 EST Dick, 401(a) describes basic retirement plans like profit sharing and money purchase plans. It is what most people would recognize as a normal retirement plan where the company makes a contribution for its employees. The employees don't have the option to defer a portion of their earnings, and the funds aren't invested in the companies stock. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 59 Fri Dec 18, 1992 R.BARASCH [Dick] at 19:01 EST Jack, Thanks for the info re: 401(a). I did find out that it "was" an after-tax plan that the company contributed to. Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 60 Sun Dec 27, 1992 A.KARTALTEPE [ALTAN] at 02:22 EST I've bought and sold mortgages. At this time own none but as I considering purchasing a note, it came to my attention that: "lenders must file a form 1098 to the IRS each year." I've never done this for mortgages. Since I would hold and service the mortgages myself, must I then file form 1098's. Altan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 61 Sun Dec 27, 1992 BRAD [Brad Solomon] at 03:18 EST Altan, If you received at least $600 of mortgage interest on any one mortgage during a calendar year, in the course of a trade or business, then you must file form 1098 (and 1096). It doesn't matter whether this is a small side venture or your primary livelihood. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 63 Mon Dec 28, 1992 L.BULMER2 [Linda] at 19:38 EST Does anyone know what the per mile rate for cars used in business will be for 1993? Linda ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 64 Tue Dec 29, 1992 JEFFCHASALOW [Jeff] at 18:22 EST 28 cents per mile - no change from 1992 as per kiplingers tax letter. Jeff ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 68 Fri Jan 15, 1993 JSLICK [JACK] at 22:28 EST David, Rates are the same for 1992 and 1993, .28 a mile. And that's for the calendar years.:> Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 69 Wed Jan 20, 1993 W.BASSETT1 [BILL] at 21:22 EST Hello all, We (husband and I) have just started a small business as a sole proprietorship. Everything is set and running. My question is about self employment tax. I know we will file a schedule C for 1993, but will we also have to file the self employment SE (Social Security)? Also, at what income level is it required to pay taxes in quarterly installments, ie. estimated taxes? Linda ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 70 Wed Jan 20, 1993 S.ANDREWS6 [David A.] at 22:12 EST Unfortunately you will have to file SE. A real bummer. There are some changes in the Quarterly installment rules, but I do not recall any limit. .....................David A. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 71 Thu Jan 21, 1993 BRAD [Brad Solomon] at 05:37 EST If you expect to owe at least $500, and have not paid in at least 90% of your total tax (including SE). Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 72 Thu Jan 21, 1993 JSLICK [JACK] at 22:36 EST Linda, If your tax will be greater than $500, and you have no other withholdings then you would need to make estimated payments. You must have paid in at least 90% of the tax owed or in the alternative at least what you owed last year. If your income were more than $70,000 then there are special rules that apply. If you need those rules let me know. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 75 Sun Jan 24, 1993 D.MULVANY [Dana, MSW] at 00:45 EST I sold some land in 1991 (no buildings on it), for which I'm carrying a note. Did this require a form 1098? We've been going through an escrow company. Dana ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 76 Sun Jan 24, 1993 BRAD [Brad Solomon] at 05:13 EST Dana, Assuming that this mortgage was not a part of your business, then no 1098. That is only required if you receive the interest in the course of your trade or business. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 77 Sun Jan 24, 1993 S.STRAF [Star] at 22:00 EST Hello My mom died in December of 1991. I was listed as benificaty on one IRA and on annuity. Both of which I cashed in and got myself out of debt. I realize that I will have to pay taxes on this for 1992, and will not have to pay the 10% penalty because the distribution is due to death. My questions I saw mention about a 'Death Benefit Exclusion' for annuities for up to $5000. Does anybody have any more information on this, or could they direct me to where I could find out more. For state taxes (Illinois) there is subtractions for Federally taxed items for IRA's. Do I need to pay state tax on these items, or where can I find out more information. Thanks Star ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 79 Mon Jan 25, 1993 A.JOHN7 [Anil] at 21:38 EST I don't think that this is a basic tax question but I hope that someone out there can help. I got married in '92 but my wife is a non-resident alien (Canadian citizen working and living in Canada for '92). How do I file? I did get IRS publication 519 which is supposed to deal with this issue, but reading it gave me a headache:) Has anyone out there dealt with this issue before or do I actually have to do a line by line analysis of 519 ? Any help at all would be appreciated. Anil __Baltimore/MD__ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 80 Mon Jan 25, 1993 JSLICK [JACK] at 22:36 EST Star, The exclusion applies only to amounts paid by an employer to an employee, annuities which are part of an IRA arrangement would not qualify. I'm not familiar enough with Illinois law to comment on what the adjustment would be. Sorry Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 81 Mon Jan 25, 1993 JSLICK [JACK] at 22:59 EST Anil, If she lived in US at the end of the year and is willing to have all income taxed as if it was US income then a special election on your return can be made which will allow you to file a joint return. Otherwise you will have to file married filing separately unless you have other dependents in which case you may qualify to file as head of household. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 82 Mon Jan 25, 1993 JSLICK [JACK] at 23:09 EST Anil, An addendum to the previoous message. IOf she wasn't a US resident at the end of the year an election also could be made to file a joint return. Again all income must be reported to US, and she must agree to not use any treaty positions to avoid tax on income. If she does that a joint return can be filed in US also, otherwise the married separate or head of household applies. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 83 Tue Jan 26, 1993 A.JOHN7 [Anil] at 21:41 EST ======= To: JSLICK [JACK] ======= Jack, > An addendum to the previoous message. IOf she wasn't a US > resident at the end of the year an election also could be made She was not. > Again all income must be reported to US, and she must agree to > not use any treaty positions to avoid tax on income. If she > does that a joint return can be filed in US also, otherwise the But does that mean that she will be taxed twice on the same income ? What I mean is, taxes were withheld from her pay check in Canada in '92. Can she claim a credit for the taxes payed to Canada? What rate of exchange do I use to convert the Canadian currency to U.S ? Hope you can help.... Anil __Baltimore/MD__ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 84 Wed Jan 27, 1993 JSLICK [JACK] at 00:56 EST Anil, Yep it means that she is taxed twice, because I'm sure Canada will tax her on the income also, however I'm not an expert on Canadian tax law. Your best bet is to file married separate and both of you report your respective incomes where earned this year. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 89 Fri Jan 29, 1993 J.MARK3 [LaserBill] at 00:54 EST I just got my tax statement from an out of state (wisconsin) employer who refused to provide statements with pay, just a check. They have been witholding state income tax, and I have no idea how to get it back. Anybody have a number I could call for info in WI? Bill ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 92 Fri Jan 29, 1993 JSLICK [JACK] at 21:58 EST Bill, You will need to file a non-rtesident return with Wisconsin to get your money back. Unfortunately I don't have an address for Wisoconsin, perhaps someone else can help in that regard. David, Huh? Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 94 Fri Jan 29, 1993 J.MARK3 [LaserBill] at 23:05 EST Thanks for the help. I'm going to hire someone to handle it. The company involved is now telling me I have to pay tax in that state since I worked there, and I know that isn't right. They are also trying to pull a couple other things now, so I need to have it all just right. Is a company required to provide its employees with some sort of a statement with each check? Or even when you ask? or are they only required to provide it at the end of the year? Bill ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 96 Sat Jan 30, 1993 F.KEENEY1 [the needler] at 00:35 EST Laser Bill the only way to get back wisconsin tax is to file a return for the state. You didnt say where you lived, but you may have mutually taxed income and you may be in a state with a reciprocal agreement re the tax withhold. Check your state tax booklet. frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 98 Sat Jan 30, 1993 S.WILLIAMS11 [Steve/OWL] at 08:03 EST When taking a section 179 deduction (Form 4569) for an S Corporation, how do I figure the "taxable income" (line 11). Is it the Ordinary income from 1120S or the Total Income or something else? Thanks ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 99 Sat Jan 30, 1993 L.ROSENTHAL [LG] at 11:51 EST Chris - Frankly, you're better off with a break even. Remember that any refund you get means that the money was over-withheld; you don't get interest on it, even though you've lost the use of the funds for the whole year. In fact, owing a few bucks is the best scenario: try to escrow some of that would-be withholding yourself during the year in an interest-bearing account; you'll be ahead of the game! Lew =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Brad - Bush's strategy was targeted toward those people who habitually get _big_ refunds from over-withholding during the year, causing the fed to pay out a big nut following the close of its fiscal year, and keeping that money out of circulation during the fiscal year (which only serves to _harm_ the economy). If people would keep in touch with their actual tax liability projections, and monitor their withholding at least quarterly, the change in the tax tables wouldn't be a problem. Geez, you sound like a liberal! :) Lew =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Bill - It's called non-resident income tax. Some states (and localities) impose a flat percentage based on income, where others have a staged income tax (such as New York). Some states allow deductions against non-resident income; some do not. Contact Wisconsin's bureau of taxation and ask for a tax booklet; that should explain things. (I wish I could shed more light on the subject, but Wisconsin is one of the few states for which I've _never_ had to prepare a return!) Lew =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Steve - 179 expense from an S corp is a pass-through item. It flows through to schedule K, and to the individual's K-1(s); it doesn't affect (or effect) the ordinary income or loss. 179 limitations apply at the individual level, too. Lew ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 102 Sat Jan 30, 1993 S.RIVARD1 at 16:25 EST Hi...I'm trying to determine which business 4-digit code to usew3 on Schedule C of the Fed{_ Tax. I am just starting out (last year) as a qwriter...writing a fiction novel and {plan to use i]{it as a "home business" expence. None of {_the 4-digit codes for Schedule C "Business Acivity Code" seem to fit a writers business profile. Can anyone help??? {.....{.....q~rthanks{{...Buzz i]*s { { ~r ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 103 Sat Jan 30, 1993 L.ROSENTHAL [LG] at 17:32 EST S.RIVARD1 - Good bets for Professional Activity Codes for writers: 7880 - Other Business Services for commercial text writing, etc. 6882 - Other Personal Services for fiction, etc. Don't be _too_ concerned about how to classify what you do; instead, make sure that you _don't_ classify yourself as something you're not! Hope this helps.:) Lew PS - You might also want to consider _not_ acting as a self-employed writer; any royalty income received would then be subject to SE tax, whereas royalty income for non-professionals can be interpreted as Supplementary Income (Schedule E), which is not subject to FICA. Just a thought... ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 104 Sat Jan 30, 1993 BRAD [Brad Solomon] at 23:46 EST Steve/OWL, Form 4562 (not 4567) asks for the taxable income without the 179 deduction. This would be income less expenses, so, even though there is no taxable income, I would take the ordinary income. -=-=-=-=-=-=-=-=-=-=-=-=-=- Lew, WRT withholding, your best use of the money would be to owe as much as possible without being subject to penalty or interest charges. As far as income for 4562 for S-corps, I too thought that it was n/a for S- corps (I think it used to be). In any case, they do want an entry (see above). Bush's strategy was to get many people a little more money, with the reconning day not coming until after the election. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 105 Sun Jan 31, 1993 D.MCCORMACK at 16:31 EST LaserBill, You will need to file WiscoWsin form 1NPR. It is simple, get the form and do it yourself. If you must hire someone to do it . . . I don't believe your state has a recip. agreement with us. A Milwaukee based helpline is: (414) 227-4000 If you want me to send the forms, E-mail me your address. Dan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 106 Sun Jan 31, 1993 S.WILLIAMS11 [Steve/OWL] at 17:43 EST So the state wants to tax you even though you never lived there. I recall that when I got married, the state of NY wanted to tax my salary (from Maryland) even though I never lived or worked there. My wife had been a resident before we got married and had some earnings in NY. A NY accountant told us that there was no legal way of avoiding paying NY taxes on my salary. THE TAX LAWS AREN'T DESIGNED TO BE FAIR FOR OUT OF STATE RESIDENTS. After all they can't vote in the state. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 107 Sun Jan 31, 1993 L.ROSENTHAL [LG] at 18:32 EST Brad - The _only_ limitation on the 179 expense for an S corp would be if the corporation had any excess net passive income. ordinary income flows through to the shareholders who, in turn, may or may not be able to apply any 179 deduction AFTER AGGREGATING ALL THEIR BUSINESS ACTIVITY INCOME. Again, the only thing which would limit the amount of pass-through 179 expense would be TAXABLE INCOME OF THE CORPORATION, in this case, _excess net passive income_ (the ordinary income from an S corporation is not taxable income). The fact that the Service does not provide a specific 4562 for pass through entities does not change the regs. Lew ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 108 Sun Jan 31, 1993 L.ROSENTHAL [LG] at 20:29 EST Steve - New York _does_ provide a credit for taxes (on income) paid to another state. (In addition, you could possibly file separately in New York...) Believe me, I'm not defending the tax laws of my home state; frankly, they're lousy for _everybody_! Lew ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 109 Sun Jan 31, 1993 BRAD [Brad Solomon] at 22:26 EST Lew, I'm not sure if I understand your point. I never said that you limit the 179 for S-corps (in fact, the total on line 20 specifically says to leave out the 179 for S-corps). I just said that it seemed that they wanted an entry on line 12, according to the instructions. Not that it made any sense, or that it implied any actual limitation. -=-=-=-=-=-=-=-=-=-=-=-=-=- Steve/OWL, As far as I know, any state with an income taxes earnings from within that state for nonresidents. Except if there is a reciprocal agreement between the resident state and the state where the earnings came from. I think, though, that you could file separate returns, and not tax anything from the nonresident spouse. Besides, they don't tax income earned outside, although they may use it to set the tax rate. -=-=-=-=-=-=-=-=-=-=-=-=-=- Lew, again, The credit for taxes paid to other jurisdictions, the "resident credit" is only for residents. Nonresident taxpayers from any state only pay on income earned from that state, and they then can get a credit from their resident state, assuming, of course, that their resident state has an income tax. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 110 Sun Jan 31, 1993 JSLICK [JACK] at 23:57 EST Steve, As Lew said the business income portion of Form 4562 doesn't get filled out on a S-corp since the amount passes through to the shareholder. You just fill in down to that line. Lew, Any income earned from writing is subject to self-employment tax there isn't an exception for a little earned income. The royalties on Schedule E deal with oil, gas and other situations where the income being earned is not a result of the labor of the people receiving the royalty. The example would be an heir of a singer continuing to receive royalties would not be subject to the tax, but the singer would be subject to self-employment tax as long as the singer was receiving royalty payments. Jack Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 113 Mon Feb 01, 1993 D.MCCORMACK at 23:04 EST LaserBill, MaryLand _IS_ one of 5 states WI has Recip. agreement with... Go Figure. Dan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 115 Tue Feb 02, 1993 F.KEENEY1 [the needler] at 10:18 EST Brad, re credit for taxes paid to another state: Sometimes you have to claim the credit on the nonresident state return..you need to check the instructions..It depends on the reciprocal agreements. If you live in Oregon and have California income, you claim the credit on your CA return, etc. frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 116 Tue Feb 02, 1993 M.RHOADES1 [Mary] at 19:16 EST Can someone explain what causes a computer, for instance, when claiming depreciable items on the Schedule C, to be "listed" or not? Mary ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 117 Tue Feb 02, 1993 D.MULVANY [Dana, MSW] at 23:37 EST I was recently asked to do some consulting but was asked to provide a "tax number." The person requesting the number said the IRS has been cracking down on independent contractors. What's involved in getting a "tax number?" The concern seems somewhat excessive. I would be paid for giving a speech and bringing displays. I don't know that I'd ever set foot in the office. I'm wondering how much of a hassle it is to get this tax number---whether it would mean becoming incorporated---or whether I can persuade her that the IRS just would not consider me an employee. Any referrals? (Jack---good luck with your new business!) Dana ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 118 Wed Feb 03, 1993 BRAD [Brad Solomon] at 01:27 EST Frances, Maybe there's a special reciprocal agreement between OR and CA. Between NJ and PA. you do NOT pay tax on wages to the nonresident state. That might be what OR & CA are approximating. -=-=-=-=-=-=-=-=-=-=-=-=-=- Mary, A computer starts out as listed property. The only exception is if it is used exclusively at a regular business establishment and owned or leased by the person operating the establishment. -=-=-=-=-=-=-=-=-=-=-=-=-=- Dana, You get an "employer ID number" (EIN) by filing form SS-4. It is typically used by individuals when they have a keogh (retirement plan), or employees. It wouldn't really avoid the independent contractor status, by itself. I do think that it sounds excessive for one speech. I'm not sure if you can get it for no reason at all, which is what you would really be doing. It wouldn't exempt you from being classified an employee, if they would have classified you that way for what you were doing. There IS a form, SS-8, I believe, that you can file to have the IRS make a ruling on whether or not you would be an employee of this company. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 119 Wed Feb 03, 1993 HAL.DAY [DayCo] at 05:44 EST -=-=-=- To: D.MULVANY [Dana, MSW] -=-=-=- I was recently asked to do some consulting but was asked to provide a "tax number." Dana, A Social Security number would serve just as well....the "tax ID" is generally for employers. Hal "At the foot of Pike's Peak" ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 120 Wed Feb 03, 1993 S.ANDREWS6 [David A.] at 07:34 EST Dana, your tax ID number is your Social Security number period. No problem, just terminology for somebody else to wory about, not us. ............... David Andrews ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 121 Wed Feb 03, 1993 M.AGRI [The Doctor] at 19:21 EST Dana, as a single proprietor, your 'tax number' is your SSN. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 122 Wed Feb 03, 1993 D.BRACE [Enchanter] at 20:04 EST Hopefully this is a Basic Tax Question, and doesn't really belong somewhere else: Is it possible to file electronically myself? I know that something like this was discussed last month some time, but I never really spent much time in HOSB so I never looked. Thanks in advance. Enchanter ...Vanishing in a glance... ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 123 Wed Feb 03, 1993 JSLICK [JACK] at 23:16 EST Mary, The listed designation is certain assets identified by the IRS, basically cars, computers and cellular phones I believe. Anyway what makes an asset listed is the internal revenue code itself, nothing else. Dana, As others have said there isn't a need to get the additional employer ID number, just use your social security number. Thanks for the congratulations.:> D.Brace, You can file with a service bureau that will transmit your return to the IRS. Otherwise the answer would be no because you needed to be approved to file with the IRS prior to the tax season getting started. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 124 Wed Feb 03, 1993 F.HARDING [Flint] at 23:29 EST Dana, >provide a "tax number"... There is an article in Forbes, Taxing Matters section titled "How the Bar Girls Beat the IRS" which you might want to check out. It deals with IRS's treatment of independent contractors. There are some do's and dont's. One of the suggestions is to obtain an employer ID # by filing form SS-4. I also think using such a number on W-9 forms and such makes one sound more "official". Oh yea, The bar girls were dancers that PAID the bar to dance there and then made their money back on tips. The IRS claimed they were employees. Flint ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 126 Thu Feb 04, 1993 D.BRACE [Enchanter] at 05:49 EST <*>*<*>*<*>* Quoting JSLICK [JACK] *<*>*<*>*<*> > You can file with a service bureau that will transmit your > return to the IRS. Otherwise the answer would be no because > you needed to be approved to file with the IRS prior to the tax > season getting started. For the purposes of doing it that way next year, is it pretty simple to get approved? Where exactly should I go? I used to work for the State Revenue dept. do you think that will help? ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 127 Thu Feb 04, 1993 S.ANDREWS6 [David A.] at 06:08 EST I thought I read somewhere that anybody could file electronically this year with virtually any of the computer tax programs sold nationwide. In fact, I am sure I did. No approval needed, just an approved tax program like Turbo Tax and others. ......... David A. from WPB, Fl. . ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 128 Thu Feb 04, 1993 GW.TONY [GeoWorks RT] at 15:21 EST David A., You can file electronically with many of the tax programs - but not DIRECTLY with the IRS. You usually have to send your completed return file back to the software vendor or its agent for final processing. Tony ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 129 Thu Feb 04, 1993 D.BRACE [Enchanter] at 20:12 EST I'm calling the IRS right now to listen to recorded tax information. Last year, over 10.8 million people filed electronically. All forms may be filed electronically. You will get any expected refund within 3 weeks, or even faster if you have it deposited directly to your savings or checking account. You may prepare your own return and pay to have a professional to send it, or pay to have it both prepared and sent. Shopping arround is recommended. There is an additional "authorization" form you must fill out to have another person send it. Unfortunately, nothing was said in regards to an individual being authorized to file electronically, but it was quite clear that this proceeder requires special authorization from the IRS. I suppose I will just have to stop the offices someday soon so I can prepare myself to handle it this way in the future. Thinks for trying to help all of you. Enchanter ...Vanishing in a glance... ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 130 Thu Feb 04, 1993 L.ROSENTHAL [LG] at 23:10 EST Jack - I think we're caught up in semantics (boy are these some antics!). My point about royalties as Schedule E income was this: If an individual writes, though not necessarily professionally, but is only concerned about maximizing some benefits of a home office, etc., income from book royalties is not _necessarily_ business income. In other words, although I write, I don't publish. If however, I decided to publish my Master's thesis (after I get the dust blown off of it!), any royalty income received would not be business income from the business of writing, but rather royalty income in the nature of supplemental income. Again, the rules are rather grey, here. I tend to take the more aggressive approach, if I find it available. Obviously, an individual whose _only_ source (or hope) of creating income is from his or here writing endeavors _is_ a professional writer, and therefore, any income generated from such activities is business (Schedule C) income. Likewise, someone who is engaged part-time in writing _with the intent to publish for profit_ is also a professional writer, subject to the rules surrounding business income. My wording in the previous post was, admittedly, incomplete and somewhat vague. I was attempting to respond to a particular situation, albeit without full knowledge of the details, and I should have explained this more thoroughly. Lew =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Mary - Listed property is classified as such by the IRS. The "logic" (and I use that word loosely) behind listing certain types of property, is that some business assets have more of a propensity and/or availablity for personal use (as opposed to something like a printing press, which would probably _not_ be used outside of the business operation). Automobiles and computers are probably the two most common items of listed property. In fact, I'm handling an audit right now for a client and the auditor asked to see a log of computer use, to verify that the system isn't being used for personal activities. Believe it, or not... Lew =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Dana - Unless you employ someone else, the only tax number you need to be an independent contractor is your Social Security number; a tax number is an Employer Identification Number (EIN). If you _want_ to get one, you apply with a form SS-4; the IRS is now accepting telephone applications (followed by a mailed copy or fax of the completed form) in some locations. You'll have to call information to get the number for your area. Lew ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 131 Thu Feb 04, 1993 JSLICK [JACK] at 23:31 EST D.Brace, To get approval to file personally with the IRS a special form needs to be filled out. The form is 8633 and it needs to be filled out and sent in prior to November I believe. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 133 Fri Feb 05, 1993 JSLICK [JACK] at 18:45 EST Lew, My interpretation is that if you are the creator of the work any royalty income from that work is subject to self-employment tax. I don't think that where you are the creator you can qualify to treat it otherwise. Now I agree with you if your grandkids find that master's thesis and publish it and receive royalties from it. I just don't see enough gray to feel comfortable in recommending your position. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 134 Sat Feb 06, 1993 J.ATTARD [Janet(sysop)] at 12:01 EST Getting a tax number isn't that difficult, and often when people ask for a "tax number" they mean your sales tax number for the state. Neither the EIN or the state sales tax number is much of a hassle as long as you fill out the paperwork when you get it. I remember having to fill out something saying I didn't have any employees (for the federal govt and the EIN) and since I rarely provide taxable services, have been able to switch my sales tax reporting to once a year instead of quarterly. (This is NY state. Other states may not do that.) By the way: IF your home office meets the IRS tests for a home office, it becomes a "business establishment" which could take your computer out of the "listed property" classification and make it business property --Janet ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 136 Sat Feb 06, 1993 J.ATTARD [Janet(sysop)] at 18:48 EST Frankly, that interpretation of royalty income being "supplemental" seems a bit far-fetched - especially if the people are writers or are trying to use writing income as a way to claim a home office deduction and computer deductions. If the individual were a good enough writer to have a book published that gets royalties, they would need to be writing fairly regularly or to hire a ghost writer, perhaps.. at which point, even if their main business were something other than writing, they'd be running a sideline business.. or I could see the IRS making a case for things being interpretted that way. While I agree with taking all the deductions and breaks one is entitled to on returns, my philosophy is that stretching and bending the rules is a good way to bring on time-consuming audits. Which brings up another point..when one works with an accountant or tax preparer one should make very clear just how aggressive they want to be (or not be) in pursuing tax breaks. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 137 Sat Feb 06, 1993 L.ROSENTHAL [LG] at 23:43 EST Janet - Could you give me a code section for the reclassification of listed property? According to what I've got (CCH US Master Tax Guide), Code Sec 280F(b) does not _ever_ allow for changing the nature of an asset from listed to non- listed. (If business use of listed property drops below 50%, however, there is some recapture of depreciation.) Lew ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 138 Sun Feb 07, 1993 L.ROSENTHAL [LG] at 00:29 EST Janet - My justification for interpreting "one-time" publishing as supplemental income instead of self-employment income is akin to the sale of one piece of land, as opposed to regularly engaging in the buying and selling of same, i.e., an investor as opposed to a dealer. For example: FRED sells a parcel of land which he bought 10 years earlier. He makes a net profit of $5,000 on the sale. The entire transaction is reported on Schedule D, as a capital gain. His friend, TED, also sells a parcel of land which he bought 10 years earlier, but he regularly engages in the buying and selling of vacant land. The service takes the position that TED is a _dealer_, and therefore, although the transactions are _materially similar_, TED must report his activity on Schedule C, and reduce his inventory appropriately (as a dealer, this parcel would have been held as inventory prior to its sale). The net gain, to wit, $5,000 would be subject to self- employment tax on TED's return, but not on FRED's. Taking this one step further: BOB does not write professionally. He has, however, written several pieces of fiction which he has never marketed, nor originally intended to market. His wife persuades him to "send one in" to his favorite magazine, which in turn, decides to publish it, and sends him a royalty of $500. His royalty income would be offset by his expenditures necessary to get the manuscript to the magazine; the difference would be royalty income, reportable on Schedule E, as supplementary income. His friend, JOE, on the other hand, regularly writes and submits for publication pieces specifically drafted for sale. This is JOE's only livelihood; he is a professional writer. His $500 royalty _is_ subject to self-employment tax, and is reportable on Schedule C as business income. This isn't necessarily an "aggressive" approach; we merely take the position that if the service can deem an individual to be a dealer vi sa vi an investor, the taxpayer can excercise like-qualifications and determine whether or not he or she is a professional or merely has sold something of value. _Usually_, this is a fairly clear-cut area, where a significant proportion of gross income and/or time has or has not been earned/spent related to such activities. In addition--although this is _never_ an indication of future results without a letter ruling--, I have had this same scenario stand up to audit. The auditor and his supervisor declined to argue the point further, as the nature of self-employment income and activities is just that: employment. Your point about making decisions as to how aggressive a stance to take (such as the above) cannot be stressed enough. It is the taxpayer's ultimate responsibility (and the legal ramifications to the tax preparer are too involved to be expounded upon here) and he or she should make sure that there are no misunderstandings about this--or any other interpretive matters--prior to filing any returns. Lew ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 139 Sun Feb 07, 1993 JSLICK [JACK] at 21:39 EST Lew, The cite for the business establishment rule is Regulation Section 1.208F- 6T(b)(3)(ii). Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 140 Tue Feb 09, 1993 J.ATTARD [Janet(sysop)] at 03:39 EST LG: I didn't say switching from listed to nonlisted.. just that if property was used in a busines establishment it didn't have to be considered listed property if used exclusively for business. On the royalty issue.. the problem with your "approach" is that you aren't using the correct terms and don't seem to know how writers get paid. Someone who makes a sale to a magazine does not get royalties. They get a flat fee. A one-time fee usually. (They might get an additional flat fee depedning on the contract if the place they sold the piece to reused it, or if they sold only one-time, non- exclusive rights.) If you actually reported someone's magazine fees as royalty income, you are way, way off base. The way that should be reported would be either as business income or if an occasional thing, as miscellaneous income. A royalty, when the term is used in publishing, is when one gets a percentage of the cost of each book sold. --Janet ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 141 Tue Feb 09, 1993 BRAD [Brad Solomon] at 05:11 EST The miscellaneous income would still be subject to self employment tax, of course. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 143 Sat Feb 13, 1993 V.ROWE1 [Val] at 01:45 EST A minister who is paid by a church as a self-employed person also receives a housing allowance. Instead of getting a 1099, he was given a W-2, with the housing allowance in the "other" box. Am I correct in assuming that the housing allowance does not need to be counted as taxable income? He has records reflecting that he used all but about $1500 of the housing allowance during 1992. So, if the answer to the first part of my question is yes, then should he include the remaining $1500 in taxable income anyway? Since he claims that he is self employed, he wants to report the income as "non-employee compensation" or Schedule C income. Since the church gave him a W-2 instead of a 1099, is he going to have trouble calling himself self-employed? The church did collect some withholding, but not any FICA. He realizes the FICA is his responsibility via Sch. SE. Thanks in advance for any suggestions on where to find the answers to these questions. Val ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 144 Sat Feb 13, 1993 D.MULVANY [Dana, MSW] at 15:02 EST All, Thanks for the information about the "tax number" not needing to be changed. I've heard from other people that getting such a tax number would be unnecessary. Jack, So how's life in your new company? In January of 1992, I was paid for a commentary I wrote (just $75) and I have self-employment income from independent contracting work I do. Is it ok to put the $75 from the commentary on the one Schedule C I file for my independent contracting work (social work services)? Would it make a difference tax-wise? (The commentary happened to be somewhat related to social work services.) Dana Dana ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 145 Sun Feb 14, 1993 R.BARBEE at 17:11 EST SEVERAL YEARS AGO I WAS 1099 BY MY FORMER EMPLOYEE. IS THERE ANY WAY THAT I CAN GET THE IRS TO DETERMINE IF THIS WAS THE CORRECT WAY TO PAY ME. COULD I GET THE IRS TO CORRECT THIS IF THE COMPANY ERRED.BREAK ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 146 Sun Feb 14, 1993 G.CONNOR [George] at 21:45 EST WIll someone please tell me what the mileage deduction is, for charitable work? (I don't think it is the full .28) And, do you take it on Sched A under charity? Thanks... ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 147 Sun Feb 14, 1993 BRAD [Brad Solomon] at 22:38 EST R.BARBEE, You can file form SS-8 to ask the IRS to determine your status. Presumably you have already reported the income, and paid self employment tax on the money. Or is that why you're asking - you just got a notice that you owe back taxes? By the way, all capital letters is akin to shouting on a bulletin board. Most people find mixed case easier to read, assuming that your computer can handle it. -=-=-=-=-=-=-=-=-=-=-=-=-=- George, The standard mileage rate for charitable work is $.12 per mile, plus applicable tolls and parking. You take this on Schedule A, as long as you weren't reimbursed for this. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 148 Mon Feb 15, 1993 L.DEVRIES [Lloyd] at 05:27 EST Do we know yet what the mileage deduction is for 1993? <<>> ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 149 Mon Feb 15, 1993 J.ATTARD [Janet(sysop)] at 21:30 EST Dana, if the writing you got paid for was related to your business, I can't see any harm in putting it on the same Schedule C as your business. As far as I know, the only time you have to file a separate schedule C is if it's a whole different business. If you don't report on schedule C you could also report it as miscellaneous income. --Janet ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 150 Mon Feb 15, 1993 G.CONNOR [George] at 21:59 EST Thanks, Brad. Got another question.. Wife is a Registered, licensed dietitian. She had a paying job during 1992, AND, was a "contractor" for a while, teaching a class for a school. I understand wages from this class, and class supplies she paid for, go on a sched "C". Can other general, expenses, (Dues, publications, etc.) be deducted on the "C", rather than on the sched "A", subject to the 2% deduction? If the un-reported wages never happened, i.e., no sched C required, just employee wages reported on a W2, I realize they would have to go on the sched A. But as long as a C is filed...?? And any problem if the C carries a loss over to the 1040, for just one year? Thanks again.. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 151 Mon Feb 15, 1993 BRAD [Brad Solomon] at 23:38 EST George, If the teaching was just a small, one time item, then it probably would be a stretch taking all, or perhaps even some, of the "general expenses" on the Schedule C. Assuming, though, that the dues, pubs, etc. were in the field that she was teaching, then it wouldn't hurt to allocate the expenses, based on earnings. Taking the whole expense, especially when it exceeds income, on the Schedule C would be an aggressive position, and would probably not hold up. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 152 Tue Feb 16, 1993 JSLICK [JACK] at 23:03 EST Val, The minister does have federal taxable income equal to the unused housing allowance. Keep in mind though that the housing allowance doesn't have to be used just on rent or house payments. It also can be offset by utilities, basic phone service, cleaning, etc. Generally these things are handled via a 1099 MISC with a note stating what the housing allowance was. Some churches though use the W-2 especially when they are otherwise paying the minister a salary. It is odd though that a church would issue the W-2 only to report the housing allowance and not pay the FICA on it, in fact it's more than odd it's wrong.:> Oh and regardless of whether or not the housing allowance is taxable the full amount of the allowance is subject to Self- employment taxes unless the church had already payed them. Jack ___ Dana, Does the length of time between your question and my response give you an idea of how it's going? :> On one hand it's great to busy, on the other hand I sure wish I was busier. :> Anyway the answer to the question is that just report it on your one Schedule C. There really isn't an advantage of separating this for such a small amount. Jack ___ George, Technically you need to allocate those expenses between th tow incomes rather than report them all on the schedule C, as Brad stated taking them all against self-employment income is an aggressive position. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 153 Tue Feb 16, 1993 O.WATKINS [OLAN WATKINS] at 23:44 EST Brad My son lives at home, he goes to school a little over half time, he turned 24 in December of 1992, he pays no room and board type money to me, and he had income of about $6500 last year. My question is would it still be possible for me to claim him as a dependent and if so would I be required to prove that the value of housing, food, utilities, etc was greater than the $6500 that he earned? It would cost him about $300 for me to claim him, but it would save me about $900 to do it that way. Olan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 154 Wed Feb 17, 1993 BRAD [Brad Solomon] at 05:06 EST Olan, Not to worry, he is too old. You just missed the age test. You cannot take a dependent who earned more than the exemption amount ($2300 this year), except for your child under 19 at the end of 1992, or your child who is a student and under 24 at the end of 1992. You just missed on that count. Now, for anyone else who would have wanted the support question answered: his income was not a factor - rather the amount spent for his support. If he put the money in the bank, then it would not count as support. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 155 Wed Feb 17, 1993 O.WATKINS [OLAN WATKINS] at 19:57 EST Brad Thanks, thats the way I was reading it also, but then I got to wondering what the heck does the magic number of 24 mean if you are still providing support at age 18, 24, or even 30. Olan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 156 Wed Feb 17, 1993 BRAD [Brad Solomon] at 20:59 EST Olan, Magic numbers or not, they apply. Tax law is full of magic numbers. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 158 Thu Feb 18, 1993 O.WATKINS [OLAN WATKINS] at 00:55 EST Brad The point I was getting at is lets assume that you were providing support for your sister or even your mother, it appears that if you provide over half of their support you would be able to claim them as a dependent. However, for a child if they have reached the age of 24, you can not claim them as a dependent, no matter what the level of support is. Olan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 159 Thu Feb 18, 1993 BRAD [Brad Solomon] at 05:45 EST Olan, As long as they don't earn more than the $2300, and you meet the other tests, you can claim your sister, mother, etc. The only thing the under 19, or under 24 and a student, does, is exempt them from the income test. If a total stranger lives in your house, earns less than $2300, you provide the support, is a citizen or resident, does not file a joint return, and the relationship doesn't violate local law, then you could claim that stranger. With a list of relatives, the requirement that they live in your household is lifted, and with your child within the age constraints, the income limit is eliminated. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 160 Thu Feb 18, 1993 V.ROWE1 [Val] at 21:04 EST Jack: Thanks. I agree that the W-2 is filled out wrong. I'd like to talk to the accountant for the church to see what his/her thinking is. This minister's CPA told him last year that he didn't have to pay FICA on the housing allowance, but I see in the IRS publications that that's just not true. I'll be interested in seeing how it was handled on last years return. Also, the minister is under the impression that FICA tax can be paid during the year, or it can be paid at the end of the year -- without penalty. I can't find anything to substantiate that. It seems to me that even if the only tax he owes is Self-Employment FICA, he might still have to pay a penalty (unless he meets one of the exemption tests). Do you have any additional info on that? Val ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 161 Thu Feb 18, 1993 JSLICK [JACK] at 23:02 EST Val, The minister needs to be paying the self-employment tax along with his federal tax in quarterly estimates. If the church is going to pay the tax then they would pay it monthly with quarterly filings of form 941. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 164 Sun Feb 21, 1993 D.MULVANY [Dana, MSW] at 04:43 EST If a "child" over 24 is disabled, wouldn't the parent be able to claim him/her as a dependent? Dana ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 165 Sun Feb 21, 1993 D.GLOCKNER [The Judge] at 11:51 EST I am considering hiring an employee. I run an electrical contracting business specializing in 24 hour 7 day a week troubleshooting and repair. I have decided that my service area needs expanding, and I need to hire an employee to cover the additional territory. I have researched wether or not he will be an employee or a independant contractor, and 18 out of 20 rules say he is an employee. Now what I need to do is find a California state witholding tax scale and a federal tax witholding scale. I need a bit of help with FICA, SDI, and all that. Is there a place I can go to in the library here or do I need to go to a government office ? ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 166 Sun Feb 21, 1993 JSLICK [JACK] at 16:23 EST Dana, If the child is over 24 then the income becomes the issue. If earnings were above the amounts Brad mentioned (too lazy to look up :>) then per se the exemption can't be claimed by the parent. Jack ____ The Judge, You need ot get you r hands on a circular E which details all the tables for federal withholding taxes. Your local IRS office will have this. Your local state office is where you will need to go to get the state withholding information. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 168 Mon Feb 22, 1993 BRAD [Brad Solomon] at 00:19 EST Dana, and others, A dependent can be any age. The "under 19" or "under 24" tests for your child allows you to bypass the income test. That means that your child is allowed to earn more than $2300 without being disqualified from being a dependent. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 169 Mon Feb 22, 1993 D.A.SOUZA [Dan] at 18:59 EST Any one know where to deduct software expence for a business? Do I put it in 'C' under "office expence" or maybe "supplies"? Or maybe Sec. 179 for the entire amount? If I use 4562 do I use S/L ? Any help is appreciated. Both by me and the IRS :-) -Dan ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 170 Mon Feb 22, 1993 B.STEIN3 [PLATER B] at 20:24 EST Hello to everybody: Last year I started a part-time consultancy, while holding a full- time job. Having hardly generated any income from the consultancy, I invested substantial sums into office equipment (computer, etc.) and other purchases for my business. Now, I would like to show a business loss for last year, but my friend's tax accountant told him that unless you set up a separate bank account for your sole proprietorship and *lend* yourself $1000, you can not do it. I did keep good records, but the money was spent from my own account. Does it matter at all? Any help would be greatly appreciated. Plater B ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 171 Mon Feb 22, 1993 JSLICK [JACK] at 22:06 EST Dan, If you expense it as you purchase it (generally upgrade costs) then it would go under office expense) Original purchases are amortized not depreciated and don't qualify for section 179. They get reported on the back of Form 4562 in the amortization section. Its life is the estimated useful life of the software but not to exceed 5 years. Jack ____ Plater B, If you can decoument your expenses you can claim the deduction. A separate business account gives someone looking at your books the impression that you are serious about making money at this venture, it doesn't determine whether or not something is deductible though. So your friend's accountant is wrong in this case. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 172 Tue Feb 23, 1993 S.ANDREWS6 [David A.] at 01:23 EST My business account and personal account are one and the same. I just keep the appropriate records and all is O.K. It is easier for your accountant the other way - that's all. The law does not (yet) determine how you set up you bank account(s). ............ David A. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 174 Sat Feb 27, 1993 J.KING26 [JohnK] at 05:59 EST If I pay only half of my 1992 property tax in 92 and the other half in 93, do I only deduct the half that I paid in 92, or can I deduct all of it? John King ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 175 Sat Feb 27, 1993 JEFFCHASALOW [Jeff] at 07:55 EST you get to deduct the half you paid in 1992, and the half of the 1991 taxes you paid in 1992 - so in fact, you get a full year's tax deduction.... Jeff ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 176 Sat Feb 27, 1993 C.CALHOUN1 [CC] at 21:44 EST If you pay into a civil service retirement system, is that deductible on the 1040? There is no other retirement plan. Thank you. CC ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 177 Sun Feb 28, 1993 BRAD [Brad Solomon] at 06:25 EST CC, In general, the contributions to a civil service retirement system would not be includable in income, but they would have been excluded already on your W- 2. If this was not done, then perhaps you elected to have after tax money contributed. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 178 Sun Feb 28, 1993 J.MEEHAN3 [Joe Meehan] at 09:18 EST John, How do you account for income; when you earn it or when you get it? If you are not in business you generally account for income when you get it not when you earn it. In general deductions work the same way. Business often does it different. There are a lot of exceptions however. Maybe someone with some specific knowledge can help you. >> Joe M << ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 179 Sun Feb 28, 1993 JSLICK [JACK] at 15:47 EST CC, It's not deductible by you on your tax return, regardless of another plan or not. The good news though is that when you do receive your retirement a portion of it will be non-taxable because of your contributions. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 180 Sun Feb 28, 1993 C.CALHOUN1 [CC] at 16:30 EST Thank you Brad and Jack. I beleive I will be in trouble somewhere down the road because I taken a deduction for the total amount of payments made int into the civil service retirement system each tax year, for about 5 years, mistakely thinking I could take the deduction. It was brought to my attention I could not do that, so I wanted to get a second opinion. And you confirmed what I was told. Now the questions is what am I to do? Again thank you for your help. CC ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 181 Sun Feb 28, 1993 G.UNDERWOOD1 [George] at 18:14 EST I have been to the library and can't get a clear answer from the manuals on this one: My wife and a friend had a partnership (small retail store) for 3 years that didn't do well. The business closed and all inventory and assets of the partnership were liquidated and distributed to the partners in 1991. I filed the partnership returns (form 1065, K, K-1) and supporting schedules for them and assume the 1991 return was the last one needed. Unfortunately, the partners are still repaying a bank loan used to get the business started and for building inventory. The interest on this loan was previously deducted on the partnership return. Can the former partners now deduct the interest on their personal returns (50% each)? If so, where should it be shown on the 1040 or supporting schedules? Should I include an explanation with the partnership tax ID number? Or, do I have to file the 1065/K/K-1 showing only the interest expense until the loan is paid? ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 182 Sun Feb 28, 1993 G.UNDERWOOD1 [George] at 18:20 EST We refinanced our home in 1992. There were no points paid. Are any of the one-time expenses (other than taxes) we paid deductible? They include: - loan origination fee - appraisal fee - credit report fee - tax service fee - underwriting fee - title examination fee - title insurance - recording fee - state tax stamp fee - survey fee - pest inspection fee ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 183 Sun Feb 28, 1993 G.UNDERWOOD1 [George] at 18:24 EST I am one of the procrastinators who failed to change my withholding exemptions in 1992. As a result of this and additional unexpected tax liability for a mutual fund investment, I underpaid my 1992 taxes by about $1,200. Will I be slapped with a penalty when I file? Is there any way to reduce or avoid the penalty? ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 184 Sun Feb 28, 1993 G.UNDERWOOD1 [George] at 19:43 EST My wife is currently a full time student in the field of Special Education. She will be student teaching (unpaid) for three months this year as part of a required course. Are we entitled to deduct from our 1993 taxes any of her expenses such as travel or supplies used in the classroom? If travel expenses are deductible, is it at the business mileage or charitable deduction rate? If non-travel expenses are deductible, are they condsidered a charitable deduction or a miscellaneous deduction subject to the 2% floor? ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 185 Mon Mar 01, 1993 BRAD [Brad Solomon] at 04:54 EST CC, Where did you take the deduction (i.e. how did you list it on the return)? The only place I can think of is the IRA deduction, which it certainly is not. Besides, that is limited to $2000 ($4000 if your spouse has one, too), and the pension plan box being checked on the W-2 would probably throw that out, too. In short, I can't think where you might have listed it, and can't imagine why the IRS hasn't picked up on it yet. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 186 Tue Mar 02, 1993 C.CALHOUN1 [CC] at 01:02 EST Brad, I put the amount on line 24a of the 1040 form. And the pension box on the W-2 form was checked. I don't know why it wasn't caught; but it was an honest mistake on my part. I know now I can not take a deduction. CC ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 187 Tue Mar 02, 1993 JSLICK [JACK] at 19:43 EST George, When the loan was originally taken out it had a valid business purpose and so the interest was deductible by the business. After you closed the business there weren't enough assets to pay off the loan, so you distributed the inventory and assets to the partners and the partners continued to pay the debt personally. As long as the partners were actively trying to sell the inventory the interest on the debt should be deductible as a business expense on a schedule C. However if they aren't actively trying to sell the inventory then I think it should be personal debt which means the interest would not be deductible. The expenses of refinancing your home aren't deductible currently but would be deductible as increased basis in your home when you sell it. Generally loan origination fees are a euphemism for points, which would be deductible over the life of the loan. Penalties that are related to the change in the withholding tables to get more after tax income to the taxpayer are eligible to be abated, as well as being able to lower a penalty by using the annualized income method if your income spiked late in the year. See form 2210 and its instructions on how to get out of any penalty that may apply, and whether a penalty does apply. Your wife would be able to deduct the supplies she purchases for school use, they are miscellaneous iotemized deductions subject to the 2% floor. Travel to the school she student teaches at isn't deductible. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 189 Thu Mar 04, 1993 BRAD [Brad Solomon] at 04:16 EST Underpayment penalties apply if you haven't paid in 90% of the tax, on a quarterly basis. Withholding can be treated as if paid in equally in each quarter, but estimates are only credited when paid. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 190 Mon Mar 08, 1993 R.TAYLOR64 at 20:03 EST In September I changed my IRA from my bank to another company. I reinvested the wted the whole amount in a new IRA. I got a 1099 from the bank for the amount I withdrew. How do I file my return to show that I reinvested into another IRA and not pay taxes on the amount shown on the 1099. Thanks. Rob Robert Taylor ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 191 Tue Mar 09, 1993 BRAD [Brad Solomon] at 04:23 EST Rob, Officially, all you have to do is show the full distribution in line 16a, and zero in 16b. But, if you want to avoid a letter from the IRS, I'd include a note indicating the IRA was rolled over to a/c ___ at ___ on ___. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 192 Sun Mar 14, 1993 S.DENNIS8 [Susan Dennis] at 16:12 EST W-4 type question please... I'm confused about the relationship between the number of 'allowances' you claim on a W-4 and the amount of federal income tax withheld from my paycheck. Is there some kind of formula for figuring this out? I want to have the number of allowances that will trigger the amount withheld that comes closest to my tax bill next year (or, said another way, I want to get nothing back and pay nothing or as close as I can come). I did the worksheets on the W-4 to figure the number of allowances. Then I got the IRS booklet called "Is My Withholding Correct for 1993" and now I'm totally confused. The booklet never mentions allowances and talks only about $$ amounts. How many dollars is one allowance? Susan confused in Seattle ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 193 Mon Mar 15, 1993 BRAD [Brad Solomon] at 00:10 EST Susan, In general, each extra allowance is supposed to save you about the amount for one extra exemption (varies according to your tax bracket). If you want to go about it backwards, and specify the amount to have withheld based on your calculations for the amount of the tax, there are several things you can do: 1) Ask your employer for a copy of their withholding tables. 2) Use your current figures, but ask for a fixed amount of additional withholding (but I think you want LESS withheld). 3) Get a copy of Circular E - Employer's Tax Guide (AKA Publication 15) from the IRS. This has the official federal withholding tables. Be careful, though - in many cases, your state withholding is based on what you claim for the federal, and this might not be desirable, especially if the state doesn't follow the federal rules. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 194 Mon Mar 15, 1993 JSLICK [JACK] at 22:19 EST Susan, The easiest way to go about this is to get a copy of circular E, which has the withholding tables in it. Look up your average gross pay per pay period then come up with the withholding allowance number that gives you the tax you want to withhold. keep in mind that anything above 14 exemptions I believe is required to be reported to the IRS. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 195 Sun Mar 21, 1993 M.ESSEX1 [MICHAEL] at 01:20 EST Jack & Brad, In 1990 I assumed a mortgage to purchase my main home. This assumption required a fee to process the application. Could this have been fully deducted in 1990? If so, how would I correct this? ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 196 Sun Mar 21, 1993 JSLICK [JACK] at 23:39 EST Michael, I don't think the fee is deductible currently, it gets added to your basis in the house and deducted when you sell it. Now if the fee was specifically called points or loan origination fees then you would be able to deduct it and you would have to amend your 1990 return. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 198 Fri Mar 26, 1993 R.SCHENOT [Bob] at 08:25 EST I owned a buch of stock in Prime Computer. I sold all but 50 shares of it while it was still high The brokerage commissions on selling the odd lot were high enough that I just kept the extra shares. When Prime went private, I got a bond in place of the stock, which "paid" a very high rate of interest. Prime had the option of paying me money or _more_script_ for the first five years of the bond. Of course, they sent me paper --- and 1099s on their "interest payments" ---- I paid federal taxes on this "income" as well as New Hampshire interest & dividends tax. Prime has now declared bankrupcy. How do I undeclare this interest? -BobSchenot ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 199 Sat Mar 27, 1993 S.WATJUS1 at 12:32 EST I have a question for a school teacher that I work with. She has a child in Catholic kindergarten. The school claims that the tuition and money spent for the child's kindergarten is not tax deductible. However, when she called the IRS, she was informed that the kindergarten expenses are deductible. She is confused and since she felt that the expenses might not be deductible, but would like to claim them if they are. Does anyone know if she can take the deduction for kindergarten expenses? I would also like to point out that these are not daycare expenses. She told the IRS this, but the person she spoke with said that the tuition was deductible anyway. I didn't think that private school tuition was deductible, but offered to pass her question by this board and see what you all thought. Thanks a bunch, Steph ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 200 Sat Mar 27, 1993 F.ZUNIGA at 19:12 EST the person at IRS your friend spoke to was wrong. Must have been one of those temps. Tuition is not deductible. period. Frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 201 Sun Mar 28, 1993 JSLICK [JACK] at 00:00 EST Bob, The face amount of the "bonds" gets reported as a capital loss on schedule D. Make sure though that the company is insolvent and nothing will be received on the bonds. If the thing is still in court waiting to be settled I would wait until all issues have been resolved so you can report it properly. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 202 Sun Mar 28, 1993 BRAD [Brad Solomon] at 00:04 EST Bob, I don't know the specifics of the prime deal, but I'll give you a general answer. First, you have a bond whose basis is PROBABLY equal to your basis for those 50 shares. It may be something else, in which case they might have told you about it at the time. Next, it sounds like you have a "Payment In Kind", or PIK, bond. You declared the interest every year, and paid taxes on it. Your basis on the new units would be the amount of taxable income you had when you received it. The company should have been sending you information about this all along. In any case, IF it is really worthless, then you have a capital loss equal to your basis in it all. What do I mean, "IF it is really worthless"? Well, companies can emerge from bankrupcy, or bondholders can get some money when the company is disolved. Unless you get something telling you that it is really worthless, you either have to wait until that time, or sell what you have. To be safe, you can sell it for $1 to a disinterested party (not a close relative). -=-=-=-=-=-=-=-=-=-=-=-=-=- Steph, The expenses MAY be usable for the Child Care Credit (form 2441). If your friend is single, or if both parents work, that's encouraging. If placing the child there allows the parents to work, it is not first grade or higher (which, unless school has changed drastically since I went, is true), the cost of schooling is incidental to the cost of care (er, do they teach nuclear physics in K now?), then they may be able to get the credit. I s'pose the big question is what is the difference between daycare and tuition, when it comes to Kindergarten. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 204 Sun Mar 28, 1993 JEFFCHASALOW [Jeff] at 08:29 EST i really have to disagree with whomever said "tuition is not deductible, period." in the event that the courses are being taken to maintain job related skills or to keep a job, the tuition payments ARE deductible. They are not, however, deductible for courses that will enable one to persue a different job or in a different field of work. gnerally, tuition is not deductible, but there are cases when it is. jeff ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 205 Mon Mar 29, 1993 PEACHIE [TAX PREP] at 21:47 EST To: JEFFCHASALOW [Jeff] >tuition is not deductible, but there are cases when it is. Don't forget Jeff, though, that it is subject to that old 2% of AGI limitation. * * * * * * * * * PEACHIE!! * * * * * * * * * * ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 206 Tue Mar 30, 1993 JEFFCHASALOW [Jeff] at 19:52 EST unless its a bussiness expense, and you put it on a schedule c.... jeff ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 207 Sun Apr 04, 1993 R.ELWELL1 [Ron] at 03:58 EDT Hi, I'd like to get a hand with the following: I now have 2 small businesses and each gets a schedule C - how do I proceed with the Deprec/sec 179 form(s) ? in 1 bz. I use a car and in both businesses I'd like to use sec 179 ( for a total of $10,000 ) Also, in schd C it asks whether you plan to use the standard mileage rate for your car deduction OR actual expenses. How do you deal with using a car for 8 months and taking the standard mileage deduction, but then getting a new car for the last 4 months & wanting to use actual costs on the new car ? Thanks for any help . Ron ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 208 Sun Apr 04, 1993 JSLICK [JACK] at 22:06 EDT Ron, Out to get your money's worth today? :> You fill out a seperate form 4562 for each business. You can only use up to 10,000 of the costs of assets purchased for section 179 deductions between the two businesses. Keep in mind that the section 179 deduction is also limited to taxable income, you can't use it to create a loss or make a loss bigger. The car you used 8 months and want to take the standard mileage rate deduction you need to take the total miles driven and multiply that by the rate (28 cents). Report that amount on the car and truck expenses line of your schedule C. The vehicle you want to use actual expenses on, you would take your actual expenses and multiply them times the business mileage and divide by the total mileage for that vehicle. Those expenses get added to the mileage deduction for the first vehicle and are reported on the same line. The depreciation is reported on the depreciation line however. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 209 Tue Apr 06, 1993 R.ELWELL1 [Ron] at 02:07 EDT Thanks Jack, I hope to get more then my money's worth :) ( not paying much for this thanks to the basic services)... Here's one more thing you can maybe help me with: On that "Taxable income" limitation to the 179 deduction - if my taxable income is more then 10,000 dollars before I include the 179 expense on my schd C then I can deduct up to $10,000 ? even if after the 179 expense my taxable income will then be less then $10,000 . Am I understanding what they mean correctly ? Ron ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 210 Tue Apr 06, 1993 BRAD [Brad Solomon] at 04:33 EDT Ron, Yes - the Section 179 can certainly reduce your income below $10,000. It can even lower it to zero, and in the case of Schedule C, W-2 income can also be considered. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 211 Tue Apr 06, 1993 GW.TONY [GeoWorks RT] at 10:38 EDT Jack (and everyone), How would I deduct the purchase of programming language software? Thanks, Tony ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 212 Wed Apr 07, 1993 BRAD [Brad Solomon] at 04:34 EDT Tony, It depends on what you use the software for. Basically, it is amortized over 5 years, and you cannot use the Section 179 election to deduct it up front. Amortization is reported on Form 4562, the same form as for depreciation. From there, it would go on Schedule C if you are a sole proprietorship, or to Schedule A - the 2% misc deductions if it is for a job for which you're an employee. If some other form of business, it goes onto the appropriate form. If you're an employee, it's virtually lost unless you have enough 2% misc itemized deductions already. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 213 Wed Apr 07, 1993 JSLICK [JACK] at 22:44 EDT Tony, What Brad said except that if you can justify a useful life oif less than five years then you can use that life instead of the five year standard. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 214 Thu Apr 08, 1993 BRAD [Brad Solomon] at 05:01 EDT Jack, I had considered that (useful life < 5 years), and had figured that compilers would have that long a life (subject, of course, to constant upgrades). Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 215 Fri Apr 09, 1993 N.FRIEDMAN2 [Neil] at 15:06 EDT Jack and/or Brad... I think I have a handle on the following tax questions, but I would very much appreciate your comments: (1). When refinancing a house that is rented out, how are such non-interest costs as appraisal fee, credit search fee, title search fee, legal fee, etc. handled? I believe that they are amortized over the life of the mortgage with any unamortized portion deducted in the year the mortgage is paid off. I think that amortization must be straight-line. (2). If a house that is rented out is purchased for cash and, at a later date, a mortgage is obtained that exceed's the house's basis, is income recognized? Are the interest payments deductible? I believe that income is not recognized at this time (although it could be when the real estate is transferred and the mortgage is assumed) and that the interest payments are deductible business expenses. (3). When refinancing one's personal residence, how are the costs listed in question (1), above, treated? I believe they are added to the house's basis, but I am not sure. (4). If an employee has an employee stock ownership plan at work, does this preclude the employee from having a fully tax-deductible IRA? I am pretty sure that the answer is no. Thank you in advance for any help on the above. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 216 Fri Apr 09, 1993 JSLICK [JACK] at 22:31 EDT Neil, 1) loan costs are amortized over the life of the loan, and any remaining portion when the property is sold is written off then. 2)Loans in excess of basis as long as you are personally liable don't trigger income. Interest payments are deductible. 3)Your assumptions regarding refinance costs for a personal residence are correct, except points would be amortized over the life of the loan. 4) If the plan covers the employee then the employee may have limitations apply to the employee's IRA deductions. My answer is based upon this being a stock bonus retirement plan. If the plan doesn't provide for deferral of income in some way then it may not affect the IRA deduction but I would need more details in order to decide. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 217 Sun Apr 11, 1993 BOB.JOHN [BJ] at 20:25 EDT I need to calculate the cost basis on a tax free zero . and I can't seem to get the OID information locally....in this small community ;-( . ISSUE LOCAL GOVT FIN JT PWR AT CA RV ANAHM A8.00% CIMBIA SEP 88 00.00% SEP01 16 CUSIP # 539561AU . I purchased the 25000 issue on 11-13-89 4057.10 and sold it on 8-10-92 5468.40 . any help would be appreciated and I also need the tax free interest amount for 92.......my broker's annual tax statement (with whom I no longer do business)doesn't seem to have the information.. no OID is recorded for tax frees ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 218 Sun Apr 11, 1993 R.ELWELL1 [Ron] at 22:11 EDT Thanks for the help. As you said I am using the sec 179 to reduce a W2 income thru the schd C. A good thing in a Bad year... Ron. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 219 Sun Apr 11, 1993 A.HULL3 [Allan H] at 22:57 EDT My father retired from U.S. civil service on November 30, 1990. Since then, he has received two lump sum payments, one in Calendar year 1991 & one in Calendar year 1992. When he retired there was a class action legal suit to make these lump-sum payments tax-free because tax had already been withheld on these distributions when contibutions were made to the retirement fund. Question: Are these lump sums taxable at this time? In IRS publication 17, page 98, a statement appears that seems to say that all of an employee's contributions may be recovered tax free. Thanks for your help, Allan H. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 220 Mon Apr 12, 1993 BRAD [Brad Solomon] at 04:34 EDT Allan, I don't know of any special treatment for a civil service pension, but in general, the employee's AFTER TAX money included in a payout is not taxed. For periodic payouts, there are ways to calculate what portion of a payment represents the such funds, although it should be obvious for lumpsum payouts. In fact, the 1099R should indicate what part is taxable - if it doesn't, and checked the box stating TAXABLE PORTION NOT DETERMINED, call them and make them determine it - they are the ones with all the info. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 222 Mon Apr 12, 1993 JSLICK [JACK] at 21:36 EDT BJ, Hate to tell you this but it is your broker or his brokerage which will have all the info regarding the bonds and what constitutes OID on them and how much of your selling price represents capital gain. Unfortunately we can't help you. Jack ___ Neil, And anyone else that read my reply to your question. A couple of things I stated in that reply need clarified. Loans can be taken against a rental property, whether the interest on those loans will be deductible depends on how the loan proceeds are used. Thus you can't borrow against a rental property to finance college, for example and be able to deduct the interest, or buy a car, or anything else personal. If the proceeds are used to improve the rental property or even to purchase a new one, then it isn't a problem. If the proceeds are invested in stocks or bank accounts then the interest is investment interest subject to the investment interest rules. As to including loan costs in the basis of your home on refinancings. If the loan pertains to the purchase or improvement of your home then the costs can be included in the basis of your home, adding expenses of refinancing to pay personal expenses to your home basis is a bit on the agressive side and might not stand up. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 223 Mon Apr 12, 1993 V.ABREGO at 23:42 EDT As I was busy working on my taxes so I can get a fair estimate to send with my "extension" request, my brother pops up with this one. He says "Havn't you seen in the paper, you don't need to pay when you file for the extension. Better yet, as long as you pay by August, you will have no penalty." According to what he read, this was to be a one time ('92 taxes) thing only. Did someone change the rules while I wasn't looking? Please say yes. I would love to have the interest. ===Victor=== ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 224 Tue Apr 13, 1993 BRAD [Brad Solomon] at 02:42 EDT Victor, There WAS a change, but only in something that most people don't realize. Before this year, if you underestimated on the extension, it could be disallowed after the fact, meaning that you do not have permission to file late. In that case, you would owe the tax plus interest, PLUS 5% PER MONTH late filing penalty (up to 25%). What they just announced was that there would not be a late filing penalty if you file a timely extension. However, you will still owe interest PLUS 1/2% per month (up ot 25%) late payment penalty. And even the interest would be more than you can earn elsewhere. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 225 Tue Apr 13, 1993 V.ABREGO at 21:55 EDT Do I take it that it would be in my interest to make my "best guess" and pay that at the time I file for the extension? I will need the extra time but, the less I owe, the less penalty I pay, correct? If I can't earn more interest to offset the penalty, I am better off paying as accurately as possible, right? I think I am a little confused now. Thanks for the reply, Victor. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 226 Wed Apr 14, 1993 BRAD [Brad Solomon] at 05:31 EDT Victor, Ideally, your estimate should be the exact amount of the tax. Yes, there are occasions where you can know the exact number but still be unable to complete the return). I would err on the conservative side rather than the short side here, if possible. Anything short will cost you interest PLUS 1/2% a month. Anything over and you will not get interest (but, the IRS charges a much higher rate than you can earn safely elsewhere). Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 228 Thu Apr 15, 1993 GW.TONY [GeoWorks RT] at 17:48 EDT As we approach the wire... :) If I use Schedule C-EZ, and part of my expenses are two expensed items, do I still need to file 4562? Thanks, Tony ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 229 Thu Apr 15, 1993 JSLICK [JACK] at 22:33 EDT Tony, Yes you still need to file form 4562 if you are claiming section 179 on a schedule C-EZ. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 231 Wed Apr 21, 1993 T.PANCOAST1 at 21:18 EDT I have a question about sales taxes rules... How much variation is there between states. I know (of course) that sales tax rates are different for each state, and that localities may add thier own rates to the state's. But how much do the calculations differ? For example, in Virginia (please correct me if I am mistaken) the rate is 4.5% and companies are allowed to round up on ".003" (tax of .122 becomes .12 and .123 becomes .13). Is this universal? How do other states do it? (I ask because I am working on some software, and I want to make sure it works in other states.) Thanks in advance... ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 232 Thu Apr 22, 1993 BRAD [Brad Solomon] at 05:31 EDT T.PANCOAST1, Re: different states sales taxes: In NY you have about 50 different counties with different rates for each one. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 233 Thu Apr 22, 1993 J.MEEHAN3 [Joe Meehan] at 21:35 EST We have 50 states, that should give us almost 50 different answers. Do all 50 states have a sales tax? In Ohio there are likely to be several different rates in each county. Collection is based on brackets. >> Joe M << ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 234 Fri Apr 23, 1993 T.PANCOAST1 [Ghost Writer] at 06:39 EDT I understand that there are MANY different tax rates... Different Rates are easy to handle... I am most interested in difference in calculation. Are they all calculated the same? Like I said VA rounds on '.003'; is this just a local difference, or is this universal? Another question: If a delivery or a shipment is made to a different locality, whoses tax rate is used? (In some states if you order something from another state, you are required to pay the sales tax of your area on that item. Seems like taxing interstate commerce to me.) ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 235 Fri Apr 23, 1993 P.CORCORAN [Metro Man] at 21:09 EDT To: J.MEEHAN3 [Joe Meehan] > We have 50 states, that should give us almost 50 different > answers. Do all 50 states have a sales tax? New Hampshire does NOT have a sales tax, although they do have a 7% meals tax. I believe that Burlington, VT is the only locality in New England with a sales tax added on the state sales tax. P.CORCORAN "Metro Man" ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 236 Fri Apr 23, 1993 J.MEEHAN3 [Joe Meehan] at 22:20 EST T.PANCOAST1 [Ghost Writer], Like I said, Ohio does not round. Their sales tax is base on brackets. For example 0-.20 = 0 .21-.50 = 1 .61-.80 = 2 .81-1.25= 3 Not real numbers, but you get the idea. >> Joe M << ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 237 Sat Apr 24, 1993 BRAD [Brad Solomon] at 00:15 EDT Ghost Writer, In GENERAL, you pay (or collect or charge, as applicable), the local sales tax for purchases made on the spot. If it is for a delivery elsewhere, in a place where you have a nexus, then you have to charge the sales tax at that place. If not, then you don't have to charge or collect it, but than the purchaser is supposed to pay use tax, which to my knowledge is the same rate and rules as sales tax. Now, many people do not pay use tax. I read on bulletin boards all over "buy mail order and save the sales tax," "I'm not buying from them, they charge sales tax on the mail order sales," etc. Do you think those people expect to pay use tax? Although the states are attempting to trace some of those sales (they'd like to trace all of them). This is why they try to pass federal legislation making mail order sales subject to sales tax - it's easier to trace. I just looked back at your note - no, they are not taxing the interstate commerce, they are charging tax for the use of the product locally, not required if you already paid the equivalent in sales tax. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 238 Sat Apr 24, 1993 J.MEEHAN3 [Joe Meehan] at 14:29 EST BRAD [Brad Solomon], You are going to surprise a lot of people if they read your message and discover they are legally obligated to pay a use tax on those items they buy mail order from out of state when the seller does not collect sales tax. Most, I would guess, will refuse to accept what you say, but I will be none will be willing to call their state tax departments and ask the question while giving their real name. >> Joe M << ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 239 Sat Apr 24, 1993 S.ANDREWS6 [David A.] at 18:40 EDT Oh, oh, when I went through my stuff for 92 taxes late night on the 15th I discovered that I never filed my 91 tax return. What should I do now? .......... David A. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 240 Sat Apr 24, 1993 F.KEENEY1 [frances] at 23:01 EDT David, File it, of course. If you have a refund you will receive it, if you owe, the irs will bill you with intrest and penalties. You wont really have a choice, but if you owe, the sooner you file and pay, the less the interest will be. frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 241 Sun Apr 25, 1993 BRAD [Brad Solomon] at 05:53 EDT Joe M, Actually, I'm surprised that state tax reps don't pick up on bbs posts where people publicly state that they are avoiding sales tax by purchasing mail order. Or maybe they do. . . I'd have to believe that the people posting that advice are honestly unaware - certainly no one who knew that would give their names in such a post. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 242 Sun Apr 25, 1993 P.CORCORAN [Metro Man] at 08:32 EDT To: S.ANDREWS6 [David A.] > Oh, oh, when I went through my stuff for 92 taxes late night on > the 15th I discovered that I never filed my 91 tax return. > What should I do now? The clock's still ticking...file ASAP. You might want to get some info from the IRS (first via an anonymous call) before you plunge ahead. As far as penalties are concerned, they are based on taxes owed. If you are like most people, you have/had a refund coming, and ---darn, where's that reference material when I need it? I believe that if you are owed money, there is no penalty (except that you don't get to collect interest), but if you owe them money, things have piled up high percentage-wise by now. P.CORCORAN "Metro Man" ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 244 Sun Apr 25, 1993 D.MORSE6 [David] at 12:21 EDT I have a question re deductibility of the cost of tax preparation software on Schedule C. If you are filing a joint return with one spouse having salary income and the other having self-employment income, can the entire cost of tax preparation software be deducted on Schedule C or does it have to somehow be prorated? Thanks for your help. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 245 Mon Apr 26, 1993 BRAD [Brad Solomon] at 01:12 EDT David, That's a judgement call. Just like you can deduct the cost of tax preparation on Schedule C, since you would probably have a much simpler return otherwise, I'd probably put the software there, too (same reason). Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 246 Mon Apr 26, 1993 G.BYRUM2 [Omicron] at 12:56 EDT Hello Everyone: I need some help in determining the kind and amount of taxes my spouse would have to pay on me as the only employee in her sole proprietorship business. For example, what kind of payroll taxes would she have to pay on me and are there any advantages since I am her spouse? How would this affect our personal income tax situation etc. Thanking you in advance for any help you could offer, Glenn Byrum ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 247 Mon Apr 26, 1993 JSLICK [JACK] at 22:34 EDT Glenn, Your wife will have to pay all the normal employment taxes on you. Specifically she will need to withhold Federal, State, FICA and medicare taxes. In addition depending on the state involved other taxes, like local, or unemployment may have to be withheld. She will have to match the withheld FICA and Medicare, as well as pay federal and state unemployment taxes on the wages paid to you. Generally there isn't any advantage to paying a spouse other than assisting that spouse in paying i something toward social security. Children under 18 on the other hand are a different matter. As far as where to go to determine withholding taxes, etc. Circular E is what you would need there. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 248 Sun May 02, 1993 K.OSTERBACK [Kim] at 18:11 EDT Well, we've survived April 15, but it looks like our tax situation is now going to be more complicated than ever. Briefly, our situation is this: We are in the process of selling our home (purchased in '85 for 58,000) for approx. 92,000. Deducting the 5,000 in capital improvements, and closing costs of 8,000 leaves capital gains of 21,000. We are in the process of purchasing an old farmhouse on 3 acres that needs a lot of work. The purchase price is $75,000. My questions are as follows: 1) Can we include the approximately 10,000 we plan to spend renovating as soon as we move in the basis of the new house, or can you only count the purchase price? 2) We refinanced last year and paid off a HUD 235 loan. The recapture amount was approx. 8,000. Can that be included in the basis of our old home? 3) I've claimed the home office deduction for my business for the last two years (5% of available space), but have not claimed the depreciation deduction. Does that mean I cannot roll over 5% of the capital gains? Help! I know we'll probably need to consult a professional, but any general answers anyone has here would be much appreciated. Thanks! Kim ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 249 Sun May 02, 1993 J.NELSON4 [JOYNEL] at 20:51 EDT ======= To: K.OSTERBACK [Kim] ======= > We are in the process of selling our home (purchased in '85 for > 58,000) for approx. 92,000. Deducting the 5,000 in capital > improvements, and closing costs of 8,000 leaves capital gains > of 21,000. We are in the process of purchasing an old > farmhouse on 3 acres that needs a lot of work. The purchase > price is $75,000. My questions are as follows: 1) Your Realized price is (92-8 = 84) Since you are buing for 75, you only have 9 to worry about (84-9) > 1) Can we include the approximately 10,000 we plan to spend > renovating as soon as we move in the basis of the new house, or > can you only count the purchase price? 2) The Renovation, if done within the 24 month replacement period is considered part of the purchase price --VOILA you had 9 to worry about now you can deferr ALL-- (84-(75+10))=<1> > >2) We refinanced last year and paid off a HUD 235 loan. The > recapture amount was approx. 8,000. Can that be included in the > basis of our old home? 3) I don't know what you mean by "recapture" amt. > I know we'll probably need to consult a professional, but any > general answers anyone has here would be much appreciated. GOOD IDEA. And do it ahead of time. The best surprise is no suprise Joynel ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 250 Mon May 03, 1993 BRAD [Brad Solomon] at 00:20 EDT Kim, Is there any reason that you didn't take the depreciation? Because, if you were entitled to it, you are treated as if you did take it, and your basis would be lowered accordingly. The law is, "depreciation allowable or allowed." Also, if you were using it as an office when you sold it (i.e. it qualified for the home office deduction), then you did not just sell one property, your house, you sold two - a house (95%, according to your numbers), and an office (5%). The profit can be rolled over from the house, but the office has to be treated as a sale of a business property. Brad Solomon Marlton, NJ ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 252 Wed May 12, 1993 L.DEVRIES [Lloyd] at 03:38 EDT What's the IRS allowance for mileage in 1993? Still 28 cents? 28.5? <<>> ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 253 Wed May 12, 1993 F.KEENEY1 [frances] at 22:05 EDT Lloyd, it is still 28c for 1993 frances ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 254 Thu May 13, 1993 H.LUNSFORD1 [CHEER$] at 19:59 EDT Re the question above about spousal salaries. Jack's answer was of course to the point as regards FICA, federal and state withholding taxes. There are some states however that do not subject a spouse's wages to unemployment taxes. Naturally Alabama is the state that comes to mind, but I believe there are others. A client just asked me about this today, since his wife is now the office manager for his proprietorship. I told her to go ahead and take out FICA, but no federal or state was really necessary since they file a joint return. Thus income taxes will be taken into account on the 1040ES On a related note, since a proprietor's children are not subject to FICA tax, a client wanted to know if that also included grandchildren. AFter all, he had it on good authority - Chas Givens! Research and consultations with other Tax Gang members concluded that the operative phrase was "children employed by their PARENTS." Cheer$, y'all. H ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 255 Sat May 22, 1993 P.CORCORAN [Metro Man] at 11:26 EDT I don't know if this has been asked --- does anyone know what the current federal excise tax is per gallon of gasoline? Also, state excise taxes (MA, RI, CT)? I use Quicken to account for household expenditures, and I am trying for the first time (1993 fiscal) to account for every last dollar directly attributable to taxes. ART/Metro Man 1.1 + Anything free is worth what you pay for it. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 258 Sat May 22, 1993 JSLICK [JACK] at 23:11 EDT Metro Man, The rate on federal taxes is 14.1 cents a gallon, the state rates are generally posted on the pump (at least they are in MD) so you would have to check there, or else maybe someone else may no your state rates. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 261 Tue May 25, 1993 D.NESBITT4 [Davetech] at 02:03 EDT Hello all! I own & operate a small repair shop in which I repair electronic equipment. My business is not incorporated and I'm the only employee. My wife is also self-employed. She has been repairing cable-converter boxes for another company as sub-contracted labor for the last 3 years. Due to cable legislation or something, the boxes have slowly quit coming. She is practically out of work. I have shouldered paying my company bills and our personal bills. She has started coming to my shop and running the front for me so I can get more repairs done. Am I missing out on a deduction by not paying her a salery to pay our personal bills from? Perhaps as long as she does not make enough income to have to pay taxes? Or does it just all come out the same in the end? Thanks, Dave ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 264 Tue May 25, 1993 H.LUNSFORD1 [CHEER$] at 19:57 EDT To Dave: By all means consider putting your wife on your payroll and taking out the FICA on her. Of course you should check with local qualified tax pros, for there may be some state unemployment tax implications involved. Sounds like her business is on the ropes anyway, so maybe she should just fold it anyway. The other possibility is to form a partnership, which necessitates the filing of a partnership return each year. But the partnership doesn't pay any separate income taxes, for the profits flow thru to the partners, and y'all may divide the bottom line any way you so desire, as long as both of you are active, that is. And thus if profit is split 50-50, then both of you pay in equal amounts of self employment taxes. I have a client who makes over the limit for SE tax (57,600), so if he paid his wife a salary, it would be subject to an additional 14.1% which he would in reality have to bear. Of course she would be building up her social security earnings and thus possibly qualify for more than just by drawing on his account in the future. BUT; he prefers to treat her as an unpaid volunteer, and in some ways she fits that description. His thinking is that a bird in the hand is worth two in the bush. My situation is different, for what I pay my wife it is genuine pay and FICA is paid over to IRS, so that she may qualify for higher benefits later. For every dollar in wages paid her, her benefits increase greater than mine decrease. Bottom line: every situation is different, and if you want to post some numbers here, we'll give it a go. Best of course is to seek local help. Cheer$, Harlan Lunsford, EA ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 265 Tue May 25, 1993 J.NELSON4 [JOYNEL] at 23:07 EDT ======= To: Dave ======= Whether wife should be on payroll is an individual decision. Every situation is deifferent. Age, FICA already pd in, contribution to business, local payroll taxes, workers comp etc. I suggest you take your particulars to a professional. The National Chains will do a consultation like this for about 35.00 per hr, joynel ======= To: JSLICK [JACK] ======= Jack-- A schedule C is a SOLE PROPRIETORship return. By definition that means only 1 person owns the business. Do you mean that the IRS could reclassify as a partnership? Do you have any specifics on this? I'm VERY interested. Do TELL! joynel ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 266 Thu May 27, 1993 D.NESBITT4 [Davetech] at 01:28 EDT Thanks for the responses... a friend of mine insists that I am missing out on big deductions by not incorporating and putting my wife on payroll, but it looks to me like if I play it straight, it all comes down to the same thing when we file our joint return. Thanks again, Dave ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 267 Thu May 27, 1993 JSLICK [JACK] at 08:47 EDT Joynel and Harlan, I have to retract my statement regarding the joint schedule C, it appears to me after researching further that this would only apply in a joint venture such as oil and gas working interests and not to a business. So what that means is that a partnership return would have to be filed if yo wanted to recognize your wifes contributions to the business without paying her a salary. Anyway I apologize for the misinformation and have deleted the post. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 269 Wed Jun 02, 1993 R.CHEVRIER [Randy] at 19:28 EDT Davetech, One other benifit of paying your wife a salary would be the fact that she would be able to deduct a full $2000 IRA contribution if you are so inclined. I do this with my wife. She does some bill paying and filing for me and makes about $2600 per year. $2000 goes to an IRA. The rest of the time she cares for our 3 year old and our 5 month old twins...overtime at least. Sounds like she probably has enough earned income this year from the cable boxes for the IRA but you might consider it for next year. On the other hand state & federal unemployment, workers comp is something to look out for. There might be ways around those but it may take a change in business organization. Randy ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 270 Thu Jul 08, 1993 R.BARASCH [Dick] at 22:33 EDT Jack/Randy, Is there any instance where the sale of Mdse. Inventory can be treated as a Capital Asset where it is one of the assets sold in the sale of a Sole Proprietorship? SP of business was $40,000 plus Inventory of $65,000. I treated Inventory as ordinary income New accountant filed Amended Return showing Inventory as Capital Asset and taxpayer received refund of S/E tax. Also accepted by SS admin. as a reduction of Earned Income. Thanks Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 271 Fri Jul 09, 1993 JSLICK [JACK] at 23:52 EDT Dick, Sorry it took so long for me to respond. Nope inventory can't be a capital asset. It doesn't change its character just because you closed shop and it should be reported on the Schedule C and subject to the employment tax. If it were held more than five years after you shut down then whether it would be a capital asset would be determined by the manner in which you held the asset on the date of sale. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 272 Sun Aug 29, 1993 R.BARASCH [Dick] at 21:43 EDT Jack, CCRe: Inventory.....Is it possible that it can be reported as ordinary income anywhere other than Schedule C and not be subject to self- employment tax due to the fact it was part of a Bulk Sale (Sale of a Business)? Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 273 Mon Aug 30, 1993 BRAD [Brad Solomon] at 01:20 EDT Dick, Sale of a business is reported on form 4797, and is not subject to SE. Not on Schedule C. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 274 Tue Aug 31, 1993 R.BARASCH [Dick] at 19:52 EDT Brad, Sale of a business is broken down to various types of assets. I assumed that Mdse. Inventory was included in Schedule C. Your answer seems to conflict with Jack's previous answer in which he states that Inventory is reportable on Schedule C. Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 275 Tue Aug 31, 1993 JSLICK [JACK] at 23:29 EDT Dick, When you make 1 bulk sale of the inventory to one purchaser then schedule 4797 is the right place to put it. If you sell inventory as you would normally to the general public then it would go on the Schedule C. The fact that you are selling it in bulk does make a difference in how the sale is treated. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 276 Wed Sep 01, 1993 R.BARASCH [Dick] at 20:40 EDT Jack, Would you show the sale of Inventory on 4797 if it is just one of several assets sold in the sale of the business? Jack and Brad, If above is proper treatment, what happens on Schedule C ? Sale of Inventory isn't included in Sales and there is no closing Inventory which would probably result in a Scedule C loss and no S/E income. The sale was made to a purchaser who was to continue the business. Does any of above make a difference? Thanks, Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 277 Wed Sep 01, 1993 BRAD [Brad Solomon] at 23:12 EDT Dick, Inventory sold as a part of doing business goes on Schedule C. I would put the closing inventory when you ceased doing business as the final inventory, and use that figure as the basis on Form 4797 (Part II). All IRS documentation is clear that inventory is not a capital asset, and that the sale of same is considered ordinary income. If you have no formal breakdown in the sale to attribute a value to the inventory, I would probably value it at market price. If you value it at the lower of cost or market, you may have a gain. If you value it at cost, it could be either a gain or a loss. Brad ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 278 Thu Sep 02, 1993 JSLICK [JACK] at 12:57 EDT Dick, Reading between the lines I get the following scenario, if its not right let me know because some of the answers to your question would change if the scanario changed. Scenario: You operated the business during 1993 for part of the year. Making sales, purchasing product, etc. Some time in 1993 you then decided to sell the business and found a purchaser that purchased the assets of the business and then started up the same business. Your question is how do I report this on My schedule C and my tax return for 1993? Answer: All operation up to the date you sold the business and any costs incurred after that date that pertained to winding down the business would be reported on your Schedule C. Your final Schedule C would show a reduction of cost of goods sold for the amount of inventory you had on hand at the close of business. This line you would call inventory sold in bulk sale. This should allow you to show a zero inventory and the cost of the items sold in the bulk sale don't appear on the Schedule C. On form 4797 you would report the sale of the inventory as "Bulk sale of inventory" and report the amount you received for the inventory as well as the cost of the inventory sold (this would be the amount you reported as the bulk sale on Schedule C plus any costs attached to the sale, for example legal costs, or filing costs) in part 2 of the form. Any other assets sold would either be reported on form 4797 in part 3 if you had a gain, or part 1 if it was a loss. If this isn't clear let me know and I'll try to clarify it further. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 279 Thu Sep 02, 1993 R.BARASCH [Dick] at 22:24 EDT Jack, You state in your answer "your final Schedule C would show a reduction of Cost of Goods Sold for the amount of inve ASSS close of business". If the inventory on hand at the close of business was 65K which was sold as part of the Bulk Sale, does this mean you would show an ending inventory on Schedule C in the Cost of Goods Sold section as 65K ?, and then report the Bulk Sale of inventory on form 4797 as the next step? I added the sale of inventory of 65K to Sales Income on Schedule C and showed ZERO closing inventory in the Cost of Goods Sold section. Even though my treatment might have been incorrect, wouldn't my Schedule C bottom line be the same as yours?. Thanks again. Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 280 Thu Sep 02, 1993 R.BARASCH [Dick] at 22:29 EDT Jack, My first sentence should have read: You state in your answer "your final Scedule C would show a reduction of Cost of Goods Sold for the amount of inventory you had on hand at the close of business". Dick ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 281 Sat Sep 04, 1993 JSLICK [JACK] at 00:39 EDT Dick, Yes they wouldhave both come out the same. The only difference is that your sales figure is inflated for the bulk sale. My way would have reduced the inventory to zero, by showing an offset to cost of goods sold for the inventory removed and sold in the bulk sale, your way just ended up netting out to zero. You shouldn't have a problem using either method. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 282 Sun Sep 05, 1993 R.ELWELL1 at 23:14 EDT Hi, got some help last april, hope to get a hand again with the following: My father in law borrowed 30,000 and gave it to his son to buy a business (franchise). He pays back the loan quarterly and his son pays him back. How does my father in law show this on his tax return? I thought he would deduct the interest paid and considered the interest he got from his son as investment income, but that did not match the basic tax instructions I have. Thanks for any help. Ron ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 283 Wed Sep 08, 1993 JSLICK [JACK] at 23:53 EDT Ron, The interest your father-in-law paid is investment interest and requires a separate form (4952) to be filled out. It goes on a different line of his Schedule A. The interest income he receives from his son is of course reported on Schedule B. The two should net out to zero, provided other limiting factors don't apply to your father-in-law's itemized deductions. Keep in mind that there should be a investment purpose to the loan. In other words your father-in-law should charge a small premium to make the investment angle stick. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 284 Fri Sep 10, 1993 L.DEVRIES [Lloyd] at 03:39 EDT I hope this doesn't run too long, or get too complicated... When I started by stamp business, I didn't understand how to report inventory costs on Schedule C, and whatever I bought, I deducted. My then-accountant, in another state, accepted the figures I provided. Then I learned the difference between inventory purchased and "cost of goods sold." I also acquired a new accountant, in the same state. (He may be the reason I understood the difference. :) I switched from one system of reporting to the other. However, the new accountant continued to check the "cash" method-of- accounting box for at least a year or two beyond my switch in methods. Now I'm selling off the inventory, at well below my cost in most cases. I had planned to take a big write-off...but my accountant is afraid that my past ignorance may prevent this. Most of my larger purchases were made after I switched to CGS; that is, I have never deducted the cost of most of the inventory that is being liquidated. What can I do to straighten this out? Paying income taxes on a failed business would be rubbing salt in a wound. Also, this might be the third year out of five that the business will show a loss...and my accountant is worried that may get me audited. But the fact is, I'm losing a bundle this year. Does the IRS make any allowances for a truly terrible economy? <<>> ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 285 Fri Sep 10, 1993 BILL.WISE [Bill] at 05:27 EDT Ask your accountant about re-doing the last two years--filing amended returns with the accounting done correctly, and then following it up with a correct final return. You may be audited, but if your records are complete you should have nothing to worry about. ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 286 Fri Sep 10, 1993 JSLICK [JACK] at 23:14 EDT Lloyd and Bill, Unfortunately there is more to it than that. When Lloyd switched over to accrual (when you have inventory that's the method you are using) basis accounting a form should have been filed with the ditrict director of the IRS requesting a change in accounting method. The form is 3115 and the director either approves or disapproves the change. In most cases the director will approve a change to the accrual method because that method more accurately reflects income. Going back the other way from accrual to cash is harder to get approved. Since you hadn't requested the change in method, you are open to the IRS auditing the return and forcing you back to the cash method. I don't think that will occur, especially if the statute has run on returns filed after the change was made. You should deduct the costs of the inventory as you would normally, and amend the prior three years returns to properly show that the business was using the accrual method. Your accountant's concern over the number of loss years is legitimate, especially since the business you are in can easily be called a hobby. They really don't make allowances for a terrible economy, and the burden of proof is on you to show that this really is a business. Good records are a must, as well as documentation that you are really trying to make the business go. I know you have been trying to liquidate your inventory and get out of the business, the question you are going to have to answer is why you chose the route you did rather than selling it all off to another dealer. Documentation of the reason you chose the method you did even if ultimately it wasn't the right choice would be good to have if the return is audited. If I was your accountant I'd be telling you the same thing regarding the hobby rules and suggesting that you take steps to get out of the business before the losses become undefendable. Jack ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 287 Sat Sep 11, 1993 L.DEVRIES [Lloyd] at 07:51 EDT >>> JSLICK [JACK] > I know you have been trying to liquidate your inventory and get out of > the business, the question you are going to have to answer is why you > chose the route you did rather than selling it all off to another > dealer. No one wanted it as a single purchase. In fact, I had trouble finding anyone to take sections of it. The material has been auctioned in DEALER lots....so in effect the answer is I did both (and still didn't get very reasonable prices ). > suggesting that you take steps to get out of the business before the > losses become undefendable. Actually, I'm out of the business after this year; or the business (a sole proprietorship) is being re-directed. But I think I'll put "writing" under type-of-business on Sked C after this year, rather than "philatelic sales" (which covered the philatelic writing), just to make it clear this is a new focus. > Good records are a must, as well as documentation that you are really > trying to make the business go. I was aware of the hobby vs. business rules, and could defend that this was a business, not a hobby. Thanks. <<>> ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 289 Sun Sep 12, 1993 V.ROWE1 [Val] at 16:20 EDT Good points about potential tax/inventory problems. This is the first year that my business has an inventory (last year it was services only). Can anyone suggest where on HOSB I can read about record keeping and inventory in general? Thanks. Val ------------ 2 Home Office/Small Busines Category 7, Topic 2 Message 290 Tue Sep 14, 1993 JSLICK [JACK] at 22:23 EDT Val, Sorry I've been gone so long and didn't answer the question. There are a bunch of program files in the library that will assist you with inventory management, a search on the keyword inventory will list those for you. There are also a few files that have information on inventory, these file numbers are 894, 892 and 891. You might take a look at these. Jack ------------