Ron Piner, CPA asked:


I learned something new today. Or maybe I received financial revelation. Regardless of what happened, I am about to share this combination income tax, portfolio building finding with my faithful radio listeners and article readers. “Do what the hell I tell you” takes on a new meaning and is a force to be reckoned with.

I was asked by a financial planner to review a new client’s income tax return for the previous year. In familiarizing my self with the situation, I found that the client has W-2 income, makes contributions to his 401K, owns a home and is paying mortgage interest, and even makes contributions that are non deductible to a traditional individual retirement account (IRA). This taxpayer is married with one child and is in the dreaded alternative minimum tax. What can be done for this poor man and his family?

At first glance, there appeared to be nothing that could be done. This guy has a W-2 and some pretty standard itemized deductions. He is in what I refer to as situational AMT. This is to say that he is in the alternative minimum tax due to his normal situation and not by special transactions. I was beginning to feel that this guy was just destined to stay in the AMT until Congress takes action. Starting to think about Roth IRA’s, I considered electing to forgo the 401K salary deferral and contribute to the Roth IRA instead. Remember, a taxpayer is ineligible to contribute to a Roth IRA is his adjusted gross income (AGI) is in excess of $150,000. However, one can contribute to a Roth IRA if it is part of an employer’s 401K, regardless of one’s AGI. This would increase income tax currently but would be beneficial later as earnings and contributions would not be taxable when withdrawn. This could even save tax money by allowing social security benefits to escape income tax. The problem with our guy is that the income sacrifice today is too great (as he would still be in the AMT). This taxpayer is clearly committed to saving by virtue of the fact that he is willing to make non deductible contributions to a traditional IRA.
What this really means is that this family has its entire savings invested in the stock market. Conventional wisdom tells us that here should be some investment that is not correlated with the stock market and its movements. Here’s where real estate comes into play. Real estate will provide for savings through investment and will provide for diversity away from the stock market. The money that was being contributed to the non deductible IRA can be used to finance the debt service on the real estate. The mortgage interest in this case will qualify as a tax deduction (second home qualification) along with the real estate tax paid. Of course, the hope is the real estate will appreciate over time. It is even possible for the family to make this investment a principal residence in the future (see my article regarding the addition of real estate to one’s portfolio). Here’s the icing on the cake. The additional mortgage interest deduction gets this family out of the alternative minimum tax. My additional thoughts are that the traditional IRA’s be converted to Roth’s as long as the new tax law lasts.

In closing, let’s remember that the most important part of adding any investment to a portfolio is its economic value. In this case, we are able to diversify away from the stock market, create a tax deduction that gets this taxpayer out of the AMT, and add something of economic substance to the portfolio. Wow, this has really been a good day in the world of income tax and financial planning. I hope all is right with your financial planning. Always feel free to ask any questions and you are always invited to listen to the most complete business program on radio, “Better Business”, Saturday mornings at 10ET on WBIS AM 1190. “You can do what ever you want, but my way is better. Save yourselves and do what the hell I tell you”!

Ron Piner, CPA

Host of “Better Business”

Saturday Mornings at 10ET

ON WBIS AM 1190

www.wbis1190.com

www.mwibonline.com



DERRICK

Mike asked:


Do you know that there are hundreds of CPA affiliate networks out there available for you to join?

However we want to focus on a few that can truly maximize our time, efforts and money.

Thus it is crucial that we do the neccessary research to find the CPA affiliate network that is efficient in their campaign and payment management.

You do not want to pull out of a CPA network halfway in the midst of your marketing campaign due to some payment disputes.

You will be losing your momentum> and wasting your days and weeks of efforts.
Let us now look at some of the critical issues when choosing a good CPA affiliate network

Word-Of-Mouth

Every CPA affiliate network are going to boost how fantastic they are in every department.

To verify their claims, we have to look through their testimonials and complaints from their own affiliates.

A good CPA network would definitely have their affiliates complimenting highly on their commission-deals and services.

Not to say a good CPA network will not have complaints but you want to know how they actually resolve their complaints.

You will want to run away from the CPA network if you hear them refusing payment for the affiliates’ efforts.

You can easily google around searching affiliate forums, affiliate blogs and review sites for such information.

Payment Punctuality

Most CPA affiliate network offer payment every month with a minimum payment.

Do make sure you do a payment withdraw when you reached the minimum threshold so you could have a feel of their payment system.

You do not want to deal with a CPA network who can’t keep up with their payment.

This is especially important for affiliates who use paid marketing to generate leads.

Not Full of Old Offers

Leads and buyers like new and trendy deals so updating your deals every monthly or even weekly would make your lead generation much easier.

A CPA network with many fresh offers will allow you to drop out unsuccessful campaigns and start with a new attractive campaign.

Higher Rewards thru’ Bigger Sales Volume

Make sure that your CPA network offer higher rewards as your sales volume get bigger.

At least they should offer a negotiation on this part even it is not stated clearly in their commission structure.

You worked hard to generate a bigger sales volume and thus should be rewarded better among the rest.

Affiliate Marketing Tools and Advertising graphics

To improve your leads conversion, you will need the tools for detailed statistics, tracking actions, conversion rates, profits and so on.

They should also provide you with unique and attractive graphics for you to integrate with your marketing campaign.

You just focus what they need most that is to solely bring traffic to them for leads conversion.



SERGIO

vania141173 asked:


Is it an Accounting test? Or an aptitude test? I was not asked to bring a calculator. It has a 3 hour duration.

MOSES

CPA International Investigations asked:


to you all. At CPA Investigations/ CPA recovery headquarters we have many good days. But there are those days when we get the grim task of recovering a loved one in the ocean, river or fast moving creek. The CPA dive team assembles the scuba gear, loads the trailers and trucks and backs up to our inflatable boat. The CPA dive team utililizes the best dive gear in the world. Divers have full face mask communications and have the ability to converse with the boat handler or other dive buddies in the water. The diver suits can be used in nuclear waste dumps, petroleums and the worlds harshest conditions without harming the divers. Videotaping or photographs are taken underwater at times, depending on visibilty to capture evidence surrounding the deceased. The inflatable boat is capable of being Heli- lifted into very hard to get areas that cannot be reached by 4×4 vehicles. The CPA Recovery team is comprised of 2 to 3 divers, 2 seperately used cadaver dog teams, 1 communication liason (between divers and media liason), 1 boat operator, 1 media liason, 2 ground personel. All of the above mentioned are highly trained divers and all are licenced private investigators with a vast background in missing persons, witness interviews and chronologies. We’ve been trained to preserve DNA and protect evidence so we can help the coroner, and the authorities to determine if this recovery was a homocide or an accident. In this article I would like to give you a little history on cadaver bloodhounds and their use for recoveries. These animals are trained on a daily basis in all types of environments under every imaginable scenerio. Samples of tissue, blood or bone matter are hidden in concrete, sewer, waterways and in articles for the dogs to practice searching while the cadaver dog handler learns and watches how the dog reacts, sniffs and claws. The relationship is truly amazing to watch. The dogs truly are the heros here.

 

Utilization and the History of the Cadaver Bloodhound

"Not knowing" is a greater burden for the family than the grief of positive knowledge of the death of a missing person. Discovering the truth of a missing person mystery is important in many reasons. That’s also the job of a special breed of canines.

This breed is known as the bloodhounds, a unique structurally designed dog whose olfactory cells (scenting ability) exceed any other breeds capabilities. The human nose consists of 5 million scenting olfactory cells, compare this to the bloodhound which exceeds 270 million. We cannot pinpoint the dog’s searching limitations because they seem to have none.  

Documented detection with the use of bloodhounds has recovered 125 year old grave burials and 200’ detection below the water surface. The bloodhounds are uniquely trained on all DNA molecules that take place during the decomposition of a human body ie: hair, blood, teeth, body fluids and tissue. As we say, the whole body doesn’t need to be present for the dogs to identity (scenting out pieces of the puzzle to complete the initial picture) the dogs will locate substantial evidence in cases where the body has been moved, advanced decomposition, and or animal activity has taken place and aided in eliminating the complete picture. The dogs can detect all levels of aged decomposition above and below many earth’s surfaces including water ways.  

The success and utilization of cadaver dogs have been evident for years, receiving much exposure in the USA, therefore bloodhound testimony is accepted in the US court of law. We’re still working hard to get some type of certification in Canada, as cadaver dog usage is not utilized or recognized in Canada. The local authorities and some security companies use canines to sniff out weapons, drugs and particular things that would be a recipe for a bomb. CPA Recovery has cadaver dogs that have been utilised at the 911 trade center attackes, San Francisco earthquake, Kenya bombings just to name a few. CPA Recovery utilizes the use of cadaver dogs to achieve success in the locating of cadaver and or remains.

CPA Recovery has found that cadaver, scenting dogs is an incredible resource that holds all the answers, to solve the mystery. Skill, experience and coordinated effort are required to locate an individual. The bloodhound is a skilfully trained tool, that can be applied as an asset in early and late detection. The relationship between scuba diver and dog is one that is very unique. The ability of each diver and dog is important but the meshing of the two are unequalled anywhere. The partnership of dog and diver is unusual and bizarre to the untrained un-lookers. CPA Recovery has been utilized by the FBI and many police authorities with great success. Look into the archives within this web site to read about the successful case files CPA has been a part of. Next time you hear a dog barking, it might not be that he is annoyed at something but rather detected something with his senses.

"It’s the Nose that Knows"

CPA divers and support………..

"impossible, merely defines the degree of difficulty"

Author: Darryll W. Harasemow

Dive team Leader  

ELBERT

Stephen L. Nelson, CPA asked:


Are you an entrepreneur beginning some new venture? Or are you, perhaps, the owner of an existing business that needs to find a new CPA? Finding the right accountant can be easier if you employ the following five tips:

Determine Whether You’ll Outsource Your Bookkeeping

Some businesses like to do their bookkeeping in-house using an accounting program like QuickBooks. Other businesses like to assign the work to an outside service or to their accountant.

Either approach can work well, but before you choose a CPA, think about whether you want an accountant who also provides bookkeeping services. Some do. Some don’t.

Often, by the way, CPAs that provide business bookkeeping services describe themselves as “comprehensive accounting firms.”

Consider Your Need for an Industry Specialist

Many, perhaps even most, small businesses use a generalist accountant. But if you’re in an industry with its own unique tax laws or special regulatory issues, you may want to look for an accountant who specializes in your industry.

A specialist, by the way, will probably cost you more money. And you may not like (for good reason) the idea of your accountant also working with your competitors. But if you truly need specialized industry expertise, you may want to go this route.

An industry specialist may be able to offer suggestions about industry-specific tax planning strategies, discuss industry-specific accounting solutions, and refer you to other industry specialists at banks, law firms, and consulting firms.

Forecast Your Future Requirements for Accounting Services

Basically all small business CPA firms offer tax preparation and tax planning services for businesses and their owners. And most of these firms also provide consulting services to their business clients–especially in the area of selecting, installing and operating accounting software.

Your small business, however, may need additional services such as compiled, reviewed or audited financial statements. Accordingly, you want to think about any additional services you may need a year or two down the road.

Note that you don’t need to get too carried away with this sort of fortune-telling. Don’t worry about what services you may need ten or twenty years from now. Both your firm and your accounting firm will have changed significantly by then. Do, however, think about the services you’ll likely to need over the next two to three years. Switching CPAs every five or ten years is fine. Switching CPAs every year or two is too much work–and makes you look to CPA firms like a flakey client.

Budget Your Accounting Fees Upfront

CPAs structure their practices in a variety of ways. Some CPAs charge their clients very modest fees. Other CPAs charge their clients rather large fees.

Accordingly, you want to make sure your budget synchronizes with your accounting firm’s billing practices.

Two quick comments are in order about billing practices, though. First, CPAs that charge low fees of necessity do not spend much time on any individual client’s tax return or question. Understand, therefore, that Wal-Mart-like fees mean you’re buying only small slices of the professional’s time. (In many low-cost practices, non-CPA employees do much of the work and the CPA only checks the work product at the very end–a bit like your dentist operates.)

Second, CPAs that charge high fees should be able to provide you with a markedly higher level of expertise and or service. You definitely should get what you’re paying for…

Choose a Level of Personalized Service

A final point: If you want truly personal service from your CPA, look for an accounting firm that’s either a sole proprietorship or a small partnership. In either of these cases, you’re likely to regularly work with the owner or an owner year after year.

If you don’t care about personal service, you can work with any size firm. Accordingly, you should consider working with a less personal large firm. Personnel within a large firm tend to charge more often. But a big CPA firm delivers a big advantage to some small businesses. Big CPA firms can offer your business just about any accounting service you would ever need.



FRED

Ron Piner, CPA asked:


I know you must be frustrated with this alternative minimum tax but do you really know what it is all about? Chances are you don’t fully understand. I will attempt to explain the alternative minimum tax to you and offer some tax planning strategies to help you endure.

The alternative minimum tax (AMT) is a tax calculation that is run simultaneously with the regular income tax calculation. The AMT is was originally designed to keep taxpayers from taking too much advantage of income tax deductions and potentially limiting the amount of income tax to be paid. If a taxpayer had certain deductions or exercised incentive stock options without selling the stock, there would quite likely be exposure to the AMT. The funny thing is, these days a taxpayer doesn’t have to have a bunch of deductions or a complicated tax structure to all into the AMT. In fact, many who are in the AMT are married filing joint returns with just the normal course of itemized deductions. When the married filing joint tax tables were adjusted to reflect twice the single tax rates(an attempt to eliminate the marriage penalty), more of these tax returns were in the AMT as a result of phasing out the lower income tax brackets. The lower income tax brackets of 10% and 15% were phased out by applying the AMT rate of 26% form most taxpayers. Throw in the fact that taxes taken as itemized deductions and miscellaneous deductions subject to the 2% adjusted gross income floor are add backs to arrive at alternative minimum taxable income, its no wonder that more Americans found themselves in this predicament.

The best way for the average American to avoid, or lesson the effects of the AMT is to reduce income. Increasing contributions to 401K’s is an excellent way to do this. This serves to reduce both regular tax and AMT. In fact, I have run scenarios that have gotten the taxpayers out of the AMT by reducing income through use of a 401K. Another helpful task is to reduce state income taxes withheld. This is an addition to arrive at AMT taxable income. If one is making estimated tax payments, don’t make the fourth quarter estimate in December, wait and make it in January. This will reduce exposure during the current year and will make it possible for a deduction in the following year. The same principal applies for those having state taxes withheld from their pay. Reduce withholding to the bear minimum. If one typically gets refunds on the state return, claim more exemptions to lesson the tax withheld. In fact, it might make sense to reduce withholding down to an amount that would have an amount due on the return. This amount due would be paid in the following year and can be calculated to avoid penalty and interest for the current year’s return. My favorite tactic for reducing exposure to regular tax and the AMT is getting reimbursed for un-reimbursed expenses. If one is an outside salesman, then there is definite chance that these expenses are helping to bring on the AMT. Here’s how this can work. In lieu of getting a bonus or commission check, have the employer reimburse for the expenses instead. This will provide income that is not subject o tax. The income will not be placed on the W-2 form and will therefore lower exposure to regular tax and the AMT.

These are a few of the ways to help cope with what I call operational AMT. Operational AMT does not require the use of amazing tax attributes and finds its way to the taxpayer by virtue of where the tax bracket falls and the type of normal deductions taken. Situational AMT involves specific transactions like exercising ISO’s or the sale of Internal Revenue Code 1202 stock. Situational AMT will often provide a credit that can be carried forward to offset regular tax in a future year, subject to limitations. I will discuss this more in a later article. For the time being, it is important to know how one’s income will fall over the next few years in order to plan for operational AMT. Calculate your own exposure to AMT by filling out form 6251 for the current year as well as the next three or four years. If you need help, you know where to find me.

Ron Piner, CPA

Host of “Better Business”

Saturday Mornings at 10ET

ON WBIS AM 1190

www.wbis1190.com

www.mwibonline.com

taxguy9@hotmail.com



LOGAN

The JZA asked:


Do they alleviate pain or suffering? Do they add to our knowledge about the natural world? Do they contribute works of aesthetic beauty to be admired for generations?

I’m an accounting major and recently gave a speech to my accounting fraternity about why only rich people need accountants, and accountants don’t really help better the human race, they only make people get richer or look richer. “RICHER” DOES NOT EQUAL “BETTER”. They didn’t like me very much after that, but I strongly feel that I was telling the truth. I’ve just been thinking about this a lot, because I’m about to go into public accounting.

What do you think?

LUCIEN

Linda asked:


Can someone name a few of the popular titles accountants use to calculate taxes, wages, etc?

JEFFRY

heart_and_troll asked:


Many accountants routinely expense things that should technically be depreciated, but because the amount is low - I’ve heard anything under $100, expense, under $1000 expense. Because the depreciation category is no longer being used for these furniture, computer, and other items, what Sked C category is or should be used? Supplies? Office expense? Miscellaneous (then you’d need to break it out and admit it really should have been depreciated). ???
PS - My understanding is the accountants in question are NOT using Section 179 - because that still requires the completion of depreciation schedules - they are just expensing it in regular expense categories to save time. My question, to clarify, is whay expenses categories are they using OTHER THAN depreciation?

STAN