We interrupt our tax tales with a breaking story. There is a lot of myth going around about the taxability of the Cash for Clunkers Program. Some news programs have said that you will owe income taxes on the credit. That is not correct. According to Section 1302(h)(2) of the Act creating the program the $4500 is excluded from gross income. Most state income taxes adopt the IRS definition of gross income. As a result there should be no income tax on the money received. However, for sales tax purposes, you would have paid full sales tax in many states for the purchase price of the car including the amount paid by the Government. Some commentators have gotten confused by this. But clearly there is no income tax on the Cash for Clunkers Program. However, the dealers will pay tax on the rebates received by them, because it goes into their pocket as a gross receipt (this is of course off-set by Cost of Good Sold, inventory deductions, and other deductions).
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A Funeral and a tax return
November 2, 2010.
Laura Holden looked at the charred body in front of her. “5’10” height, weight 230 pounds. White man. Dental records match one Sheldon Jones. DNA records confirm it is Sheldon Jones per his physician. Cause of death, plane crash. Probably blunt force trauma to the head since the burned skin appeared to be post-mortem. Clearly, it was Sheldon Jones. Date of death November 1, 2010” She turned off the tape recorder massaged her long neck and called the funeral home, “he’s yours Robbie. I’ll have the death certificates to you in a couple of days”
November 12, 2009
The funeral for Sheldon Jones was other worldly to say the least. It was held at the West Zion Church outside of town. The children didn’t look all that upset for one thing. Some attributed it to their Christian beliefs, others figured they were happy to be rich. There were no eulogies either, other than the minister saying some points of personal privilege. The ashes were kept by the family for a private disposal at sea, so there was no graveside service.
July 15, 2011
Roger Johnson looked at the file in front of him. He had been tasked with preparing the Federal Estate Tax return for one Sheldon Jones. He pulled out the death certificate. “No surprise there, date of death November 1, 2010, plane crash,” he thought. He pulled out he appraisals of the multiple parcels of real property owned by Sheldon Jones. They did the three standard appraisal tests, income, replacement value and comparable sales approaches to get to the Fair Market Value. After adding up all the numbers, it totaled, $735 Million on the date of death, he had debts of $215 Million and a charitable deduction of $100 Million. “Boy, he sure died in the right year”, was the thought that raced through Johnson’s mind. “Wow, what a difference a year makes, $175 Million in savings on Estate Taxes”, he muttered to himself. He carefully filled out all of the pages of the Federal Estate Tax return. After finishing it, he took the return to Christine Jones to sign.
NO BLOG TODAY
I’m playing with Trains today in Chantilly. Come back tomorrow!!!
Its Sunday, no Blog today!!!
Please come back tomorrow!!
We interrupt this story for some breaking news
It appears that UBS has reach a settlement with the IRS vis a vis its summons. They will turn over documentation to the IRS on August 12. Why is this relevant you ask? if you have a foreign UBS account, that means that if you did not file a Form 90.22-1 (FBAR) for that account and don’t do so by Tuesday night, you could be subject to criminal penalties. This effectively moves up the amnesty deadline for UBS overseas customers from September 12 to August 11.