On Jun 19, 10:08 pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

To all:

Here is the law.

Sec. 164. Taxes
a) General rule

Except as otherwise provided in this section, the following taxes
shall be allowed as a deduction for the taxable year within which
paid or accrued:

(3) State and local, and foreign, income, war profits, and excess
profits taxes.


DEFINITION:

ACCRUE: 1: to come into existence as a legally enforceable claim.

There is a legally enforceable claim for state income taxes on income
as the income is received from a cash basis taxpayer. Therefore, a
taxpayer has the right to include all state income taxes on all income
earned in a year as a deduction on the return for the tax year in
which the income was earned whether it was paid in that year or in the
next year if he so chooses. He just can't claim a deduction for the
same tax twice. For a cash basis taxpayer, taxes are paid on a
"quarterly" basis with some quarters being shorter or longer that
others with the payment date for the fourth quarter being in the next
year. The taxes on the fourth quarter earnings accrue in the fourth
quarter of the tax year, not the first quarter of the next year.

You can point to IRS regulations, instructions, or forms until you are
blue in the face and it is not going to change the language in section
164(a). And pointing to Form 1116 does nothing to diminish the
specter that there is no one that is able to provide a coherent
reconciliation of the language in sections 111(a) and 56(b)(1)(D) and
the IRS instructions derived from those sections. Why? Because the
instruction yield "DOUBLE OR NOTHING" taxation (unrelated to tax rate)
of the income/refund related to a tax overpayment and sections 111(a)
and 56(b)(1)(D) provided for a "ZERO SUM GAIME".

In case any of you were not around for a prior disagreement that I had
with a professor, an accountant and a highly respected authority on
state taxation issues here are a couple of links to threads that you
might find interesting.

http://groups.google.com/group/misc....8887b95d308f6d

http://groups.google.com/group/misc....0c63cb27affbfd

So what happened between 2000 and 2006? I had a chance encounter with
a prominent North Carolina politician and I took the opportunity to
ask a rather direct question. Voila!

Cheers,

WDK

--
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On Jun 19, 9:08*pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:
- quote -

How can I agree or disagree? I can't even understand what you're
saying let alone why you're now talikng about Foreign Tax. Do you have
a beef with the IRS over that too? Cash basis= pay foreign or state
tax in 2008 deduct it in 2008. Plus you have the lattitude to shift
the last estimate to either year. what's not to like?

ed

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 19, 12:18 pm, Stuart Bronstein <spamt...[at]lexregia.com> wrote:
- quote -

What about the foreign tax credit on form 1116?

http://www.irs.gov/pub/irs-pdf/f1116.pdf

It looks like if you're a cash basis taxpayer then you put the tax
paid. That means if you pay your foreign tax for tax year 2008 in
country XYZ on 2009, then you can only take the foreign tax credit for
it in 2009. Do you agree?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 19, 6:00Â*pm, KEBSCHU...[at]aol.com wrote:
- quote -

It is not "ludicruos" that the taxpayer escaped AMT through out the
year by using the AI Method. His 4th iinstallment makes up the
difference between the lower of last year's tax or 90% of current
yeaars tax and what he has already paid in the first 3 quarters.
That's a pretty good deal for the taxpayer. It's not just the 4 th
quarter subject to AMT, it is the whole year on his 1040. If he
chooses to pay State income tax in December he loses the benefit due
to AMT.. He can postone it to January in the hope that he won't be
subject to AMT next year. I think it's prohibitive for him to switch
back and forth between accrual and cash without gioing through the
3115 routine.

Â*For it to be as you have stated
- quote -


The language is already there. All that is needed is that someone
use ommon sense when intrepreting it. You can't pick and choose ,
particularly between quarters, whether to accru or cash.

- quote -

is scrfewed up for (probably)this and other reasons. Which part of OR
don't you understand? Are you objecting because the IRS intreprets OR
to mean accrual or cash in a way to somehow cheat the taxpayer?

ed


- quote -

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 19, 3:18�pm, Stuart Bronstein <spamt...[at]lexregia.com> wrote:
- quote -

Stu:

When estimated taxes are paid on schedule the first three quarters
are paid within the year and the fourth quarter taxes are accrued but
not paid within the year. Thus the requirement of section 164(a) are
met to claim all four quarters taxes for the year as deductions.

Cheers.

WDK

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 19, 3:12�pm, ed <edcos...[at]sbcglobal.net> wrote:
- quote -


For a cash basis taxpayer taxes accrue throughout the as income is
received. Look at Form 2210. It is simply ludicruos for a person to
be thrown into the AMT due to a large capital gain in the fourth
quarter and the fact that the fourth quarter payment for a cash basis
taxpayer is paid after December 31. For it to be as you have stated
"either or", Congress would have to add language to that effect to
section 164(a).

I believe that I have show conclusively how screwed-up IRS's
interpretations of section 111(a) and 56(b)(1)(D) are. IRS's
interpretations of those sections result in "DOUBLE OR NOTHING
TAXATION" of the income/refunds related to state income tax
overpayments even though the language in those sections does not
permit such nonsense. When you can reconcile IRS interpretation of
sections 111(a) and 56(b)(1)(D) with the language in those sections, I
will concede on the "paid or accrued" issue but until then I am going
to base my opinion on the words that are in section 164(a). No more,
no less.

Cheers,

WDK

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 19, 11:35�am, ed <edcos...[at]sbcglobal.net> wrote:
- quote -

ed

"correct this" Correct what?????

Section 111(a) does not address the potential changes in regular tax
rates from year to year causing the tax on a refund being more or less
than the benefit received by the deduction of the overpayment in the
prior year. Some times the government benefits and sometimes the
taxpayer benefits when the regular tax rate in the overpayment year is
different from the rate in the refund year. That is just part of the
law.

Where IRS goes off track is when its instructions cause the taxable
income ATTRIBUTABLE a refund to be more or less than the refund
amout. When the refund from an itemized deduction recovery is
included in AGI and there are AGI or MAGI based phase-outs of
deductions, exemption, exclusion, credits, etc.and the regular tax is
paid the taxable income attributable to the refund is almost always
greater than the refund. That is not what is not permitted under the
terms of section 111(a) of the Internal Revenue Code. Look at what
happens when state income tax refunds are included in the calculation
of taxable Social Security benefits.These instructions along with
others have cost taxpayers billions of dollars going back to at least
1984.

As I have noted previously, section 56(b)(1)(D) does not provide for
excluding tax refunds from gross income for purposes of determining
Alternative Minimum Taxable Income when the refunds are from years
when the regular tax was paid and the overpayments that produced the
refunds were deducted under paragraphs (1), (2), or (3) of section
164a). But IRS has not been deterred in doing just that since 1988.
That instruction has cost the Treasury billion of dollars.

"obvious intent"

That is not obvious to me. If Congress meant for "accrued in section
164(a) " to only apply to accrual basis taxpayers then it should said
that, and it didn't. It is sheer nonsense for a taxpayer to be
saddled with more than $10,000 in taxes simply because he received a
very large amount of income in the fourth quarter and paid the tax
after December 31 but by January 15 without penalty as provided by
law.

WDK

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

ed <edcosoft[at]sbcglobal.net> wrote:

- quote -

I agree with that. The clause from section 164 is "for the taxable
year within which paid or accrued:..."

It means, "paid or accrued, whichever is applicable to the taxpayer."

Stu

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 19, 11:21*am, derk...[at]gmail.com wrote:
- quote -

Individuals can elect to be accrual taxpayers by filing form 3115 with
the IRS. I doublt if you will find it advantageous even if you could
figure out form 3115,and the IRS allows you to change. But you CAN'T
combine accrual and cash for an item as WDK imiplies. You might have
an accrual Schedule C or F within a cash1040. and I guess you could
choose a *hybred* method of acounting where State Taxes are computed
on an accrual method on an otherwise cash method 1040, but the
complexities this causes would probably cause the IRS to not allow the
accounting method change. .All 1040 instructions (and specifically
for line 5 of Schedule A) refer to payents, not accruals, probably
because no individual in his right mind would choose accrual
accounting personally.and if you did you would know how to intrepret
them for accrual vs cash. So, in this regard, as I said before,
WDK's sites allow for *either* accrual or cash accounting.

You said " I just did the experiment and it reduced federal
taxes
by about 14,294. Not bad"

I don't think that's right because a $270K State tax payment might
reduce 2006 *Regular Tax*, but then the AMT will apply in 2006 without
the benefit of that Deduction.

ed

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

How does one change a persons accounting method choice
from paid(A.K.A. cash?) basis to accrued basis?

And there must of course be some drawbacks to doing it,
or else we would all be doing it already What are they?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 18, 9:40Â*am, KEBSCHU...[at]aol.com wrote:
- quote -

refunded (1040 line 10) as you deducted on Schedue A is valid and as I
recall the IRS corrected this. However, you are reading "accrued or
paid" as meaning *both* for the same taxpayer, whereas the intent is
obviously to mean "whichever accounting method that taxpayer used".

ed

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Ed, I think the more interesting experiment implied
by WDKs post would be to recalculate 2007 taxes
as if the 270,000 had been paid on before or on
2007-1231.

I just did the experiment and it reduced federal taxes
by about 14,294. Not bad,

The real question I think is whether anyone has
case law to back this up with. I really would not
want to be the first one to try this

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 17, 3:37�pm, ed <edcos...[at]sbcglobal.net> wrote:

- quote -


Where does it state in section 164 of the Internal Revenue Code that
derk had to be an accrual taxpayer to deduct a state income tax
accrued
on income earned in 2007 but paid in 2008? As I read section 164, it
only
speaks of tax accrued in a year.

Where in section 56(b)(1)(D) of the Internal Revenue Code does it
state
that a tax deducted under paragraphs (1), (2), or (3) of section
164(a) in a year that the regular tax was paid is to be excluded from
Alternative Minimum Taxable Income? The instruction on Line 7 of
Form 6251 that does that has cost the Treasury billions of dollars
since
1988 as a result of neither the income used for a state income tax
overpayment nor the refund of the overpayment being taxed when
the overpayment was in a year that the regular tax was paid and the
refund was
in a year the AMT was paid.

Section 56(b)(1)(D) precludes refunds that provided only a limited
long-term capital gains rate based tax benefit in the prior year when
the AMT was paid from being included in AMTI.
Without section 56(b)(1)(D), both the income and the refund related to
the limited long-term capital gains rate based tax benefit would be
included in AMTI and therefore double taxed.

Sometimes, IRS and states taxing agencies go off track with their
instructions to taxpayers. Taxpayers just have to be alert.
Example: North and South Carolina had a requirement for years prior
to 2006 that non-residents with income in their state had to file MFS
if his/her spouse did not have income in their state. The problem
with that was that North Carolina did not have a statute with that
requirement and if they did it violated the privileges and immunities
clause in the US Constitution. Here are links to threads that
discussed that issue in 2000 and 2006.

http://groups.google.com/group/misc....8887b95d308f6d

http://groups.google.com/group/misc....0c63cb27affbfd


Cheers,

WDK

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 17, 1:28�pm, derk...[at]gmail.com wrote:
- quote -

derk:

I don't know. What I do know is that IRS has accepted four returns
that I have filed that complied with the Internal Revenue Code rather
than IRS Instructions. It was necessary for the Taxpayer Advocate
Service to pry a refund related to one of the (amended) returns.
loose. IRS had already issued a refund under similiar circunstances
for the prior year.

Looks to me like you have to choose between being a lemming or a
Guinea Pig.

If you choose to be a Guinea Pig, you could have an opportunity to
expose IRS's "DOUBLE OR NOTHING TAXATION" of the income/refund related
to a tax overpayment when the AMT is paid in one year and the regular
tax is paid in the other that violates the sections 111(a) and 56(b)
(1)D) of the Internal Revenue Code. .

Here is a link to correspondence between IRS and me that was published
in Tax Analysts' in 1999 regarding DOUBLE OR NOTHING TAXATION of
refunds that provided a tax benefit in a year the regular tax was
paid.

http://groups.google.com/group/misc....e2260aac94605#

You should have no trouble determining that IRS instructions related
to the tax treatment of state income tax refunds are not consistent
with the Internal Revenue Code sections 111(a) and 56(b)(1)(D) of the
Internal Revenue Code..

Cheers,

WDK

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 17, 12:28*pm, derk...[at]gmail.com wrote:
- quote -

We have seen where you lost all use of the $270K in 2008 and will be
paying AMT. That means you won't have to add any refund on it to
taxable income next year.

I ipersonally don't agee with his statement: "The fact that you are
not an accrual basis taxpayer is irrelevant." It's EITHER Cash or
Accrual, not both.

ed

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 16, 9:20 pm, KEBSCHU...[at]aol.com wrote:
- quote -


WDK,

Is there any case law to support this, or would I be the Guinea Pig?

What does the rest of the crowd here think about this argument?
It must be a common occurrence to want to to do what WDK
suggests, for certain it is not only I that could need this.

OTOH, maybe it would make no difference because of AMT.
I should check first.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 12, 9:51*pm, derk...[at]gmail.com wrote:
- quote -


Not so fast.

What's the problem?

Let's start with section 164(a)(3)

Title 26, Subtitle A, Chapter 1, Subchapter B, Part VI
Sec. 164. Taxes

a) General rule

Except as otherwise provided in this section, the following taxes
shall be allowed as a deduction for the taxable year within which
paid
or accrued:

(3) State and local, and foreign, income, war profits, and excess
profits taxes.

The taxes that you paid to CA in 2008 were taxes that ACCRUED in 2007,
therefore are deductible on your Federal Income Tax Return for 2007
per section 164(a)(3). If you have already filed go back and amend.
The fact that you are not an accrual basis taxpayer is irrelevant.

If you think that my argument is frivolous, please consider the
argument that an IRS attorney made to support the exclusion from AMTI
of the refund of a state income tax overpayment that provided a tax
benefit in a prior year when only the regular tax was paid. When the
regular tax is paid state income taxes are deducted under section
64(a)(3) of the Internal Revenue Code as opposed to being disallowed
as a deduction under section 56(b)(1)(a)(ii) when the AMT is paid.
For section 56(b)(1)(D) to apply to the refund of a tax overpayment,
the tax must have been disallowed as a deduction under section 56(b)
(1)
(A)(ii). Here is the law and the summation of the IRS attorney's
argument.

Title 26, Subtitle A, Chapter 1, Subchapter A, Part VI,
Sec. 56. Adjustments in computing alternative minimum taxable income

(b) Adjustments applicable to individuals
In determining the amount of the alternative minimum taxable
income of
any taxpayer (other than a corporation), the following
treatment shall
apply (in lieu of the treatment applicable for purposes of
computing
the regular tax):

(1) Limitation on deductions
(A) In general
No deduction shall be allowed -

(ii) for any taxes described in paragraph (1),
(2), or (3) of
section 164(a). Clause (ii) shall not
apply to any amount allowable in
computing adjusted gross income.

(D) Treatment of certain recoveries
No recovery of any tax to which subparagraph (A)
(ii) applied shall be
included in gross income for purposes of
determining alternative
minimum taxable income.

The December 10, 2001, post that contains the published correspondence
with IRS's argument can be found on misc.taxes.

Now, here is the IRS attorney's argument.

73] Likewise, from a theoretical standpoint an individual taxpayer
who receives a refund of state income taxes should not be required to
include the refund in gross income for purposes of computing AMTI.
Section
56(b)(1)(D) provides this result. The fact that a taxpayer was not
liable for AMT for the taxable year when the state income taxes were
deducted, and therefore received a tax benefit from the deduction
through a
reduction in regular tax liability should not change the result. A
taxpayer is
only required to compute tax liability on regular taxable income and
tax
liability on AMTI and pay the higher amount. The integrity of the
respective tax bases should be maintained in determining which tax
applies and to
what extent.

If you were to examine the letter from the attorney in the IRS Office
of Chief Counsel you would find that the attorney argues that section
111(a) and 56(b)(1)(D) allow for 'DOUBLE OR NOTHING TAXATION" of the
income/refund related to state income tax overpayment while the
taxpayer argues that those sections provide for what amount to a "ZERO
SUM GAME".

When the correspondence was published the second sentence in the
following paragraph was false and IRS has never addressed the falsity
of the statement.

[59] As stated in prior correspondence we disagree with your
assertion that recoveries of taxes described in paragraphs (1), (2),
or (3) of
section 164(a) should only be excluded from gross income in computing
AMTI to
the extent deduction of the taxes did not reduce the taxpayer's income
tax liability. Under your interpretation section 56(b)(1)(D) would be
unnecessary; it would only apply to exclude items from gross income
when such items are already excluded from gross income under section
111.

What makes the second sentence in the paragraph above false?

The limited long-term capital gains rate based tax benefit! When the
AMT is paid a deduction taken on Schedule A for a state income tax
overpayment can increase the portion of capital gains taxed at 5
percent and reduce the portion taxed at 15 percent, thus a nominal 10
percent tax benefit. The benefit is exposed when IRS instruction in
IRS publication 525 are followed. Here is the instruction

Subject to alternative minimum tax.

If you were subject to the alternative minimum tax in the year of the
deduction, you will have to recompute your tax for the earlier year to
determine if the recovery must be included in your income. This will
require recomputation of your regular tax, as shown in the preceding
example and a recomputation of your alternative minimum tax. If
inclusion of the recovery does not change your total tax, you do not
include the recovery in your income. However, if your total tax
increases by any amount, you received a tax benefit from the deduction
and you must include the recovery in your income up to the amount of
the deduction that reduced your tax in the earlier year.

Section 56(b)(1)(D) is required to preclude DOUBLE taxation of the
refund that produced the capital gains rate based benefit if the AMT
is paid in the refund year. However, because IRS ignores a critical
part of section 111(a), a taxpayer who received the capital gains rate
based benefit in a year the AMT was paid will be taxed at the AMT
rate and then the regular tax rate on the income/refund.

There is little doubt that IRS would try to deny a deduction on your
2007 tax return for state income taxes accrued in 2007 but paid in
2008. But when problem with IRS's argument for excluding from AMTI
refunds of tax overpayments that provided a tax benefit in the prior
year when the regular tax was paid is exposed, they just might want to
reconsider their position.

Three reasons:

1. In recent years IRS's instruction for line 7 on Form 6251 has cost
the Treasury about ONE BILLION DOLLARS annually.

2. Section 164 states quite clearly,

a) General rule

Except as otherwise provided in this section, the following
taxes
shall be allowed as a deduction for the taxable year within
which paid
or ACCRUED:

3. Examination of IRS Form 2210 suggests that taxes can “accrue” even
before the income is
actually earned for determining the interest due to tax
underpayment.


Cheers,

WDK

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 13, 12:38*pm, derk...[at]gmail.com wrote:

- quote -

Note that if your AGI is larger than a threshold (around 150k), then
your itemized deductions are phased out. The phase out is small --
about 3k for every 100k above the threshold -- but be aware that it's
there. In addition, the Bush tax cut is phasing out the phaseout, so
in 2008 and 2009 the phaseout will actually be only 1k if I'm not
mistaken, and in 2007 it was 2k.

- quote -

They're required by law to give you a copy of your return (in addition
to the one they file by paper if you choose or have to file by
paper). It's good to dig into the details yourself so that you know
what's going on. Many tax preparers won't dig into details. For
example, they may not tell you to make state estimated payments in the
year your income is high in order to get the benefit of those
deductions, or they won't dig into deductions for medical expenses
with clients over 70 years old, etc.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jun 14, 8:27*pm, derk...[at]gmail.com wrote:
- quote -

Derk: The annualized income for the 2nd quarter, cumulatively, is
$384,000 (160K*2.4). the TMT on 384K is $104,020 ( by then you've
lost the entire AMT Exemption so it's .28 * 384,000-3500=104,020))
Multiply that by .45 factor to get cumulative tax due for 2nd quarter
$46,809.. They get you on the factors, 2.4 X .45 = 1.08. Probably
because of the short (2 month long) quarter. Another reason not to
make quick estimates when annualizing.

ed

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On Jun 14, 2:17 pm, se...[at]panix.com (Seth) wrote:
- quote -

Seth, Wikipedia agrees with you that the AMT exemption phaseout
above 150,000 causes the marginal rate to increase towards 35%,
but my observation was about the effective (aka. average) rate. How
can the effective rate be over 28% of gross. I simply do not
understand
how that is mathematically possible.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >