Moore Bookkeeping

On Friday, the IRS released technical amendments to T.D. 9564 that, in response to numerous comments from taxpayers, delay the effective date of the temporary regulations it issued in December 2011 governing whether tangible property expenses could be deducted or had to be capitalized. Those regulations were supposed to apply to tax years beginning on or after Jan. 1, 2012 (T.D. 9564), but will now apply to tax years beginning on or after Jan. 1, 2014, instead. However, taxpayers are permitted to apply the temporary regulations for tax years beginning on or after Jan. 1, 2012, and before the applicability date of the final regulations. This makes the use of the temporary regulations optional until the final regulations are issued. (The IRS originally announced that it would make this change in Notice 2012-73, released on Nov. 20.)

via Tangible property regs. amended to implement delayed effective date.

In an effort to close the growing $450 billion tax gap, the IRS announced it will be coming down hard on small businesses in 2013, whom the agency believes are underreporting their earnings and contributing to an astonishing 84% of the total tax gap, or $387 billion. At national and regional tax forums held throughout this past summer, the IRS highlighted particular areas of focus for small businesses in the coming year.

via Small business tax compliance will be on the IRS radar in 2013 | 1099News.

Rome wasn’t destroyed in a day.

It took, time, my man. Time.

And no. The Roman Empire wasn’t destroyed by barbarians. But rather, by over-taxation, grotesque government spending, and currency debasement. Sound familiar?

As the United States government appears to be waddling down the same, sad, predictable path, Congress and this president haven’t quite decided on how quickly to accelerate the descent into ruin. Because of their indecisiveness, many US taxpayers are trying to figure out what the individual tax rates for 2013 are going to be. And here’s the thing: At this point, nobody knows. In this article tax attorneys Anthony E. Parent and Thomas S. Groth discuss the three most likely scenarios, giving the tax rates for each scenario.

via What are the 2013 IRS Tax Brackets?.

Since many tax planning articles focus on providing year-end tax advice and planning techniques that may be effective only under certain assumptions about control of Congress and the presidency, some of the time-tested strategies that may benefit taxpayers regardless of the outcome of the election have fallen through the cracks.

Tax professionals offering tips based on possible legislation are essentially gambling and “betting on the House” (and the Senate and the presidency). However, it may behoove tax and financial professionals to avoid the urge to bet on the House and to simply focus on some traditional tips that have withstood the test of time. By doing so, professionals can increase the odds of providing beneficial and effective tax financial planning advice during these uncertain times.

This column reminds advisers of those tips that may be beneficial regardless of what plan is in place in 2013—keeping in mind that effective tax planning advice should ultimately be tailored to each client’s current financial situation, tax bracket, and other key personal factors.

via Tax and Financial Planning in 2012: Betting on the House?.

The case: G, an attorney, also ran an import business. He reported his activities on separate Schedules C with his 1040.

To support his deductions, G submitted handwritten journals of payments by month with generic descriptions, such as “law book,” “repairs,” “software.” He claimed to have credit card statements and receipts but produced neither.

The IRS denied a number of the deductions for both businesses. Reason: inadequate documentation.

The decision: For the IRS. Self-generated expense records and receipts, or those that are not itemized, do not substantiate deductions. Receipts, credit card statements, canceled checks and other third-party items must have sufficient detail to substantiate the expenses being deducted. Credit card statements alone are rarely sufficient because they do not have enough detail about the expenses.

The penalty: Failure to keep adequate records is negligence. As a result, in addition to paying penalties, G’s denied deductions resulted in a second penalty for substantial understatement of tax. [Gorokhovsky v. Commissioner, T.C. Memo. 2012-206]

–AIPB Bookkeeping Tips