cpasense

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Location: Westland, Michigan, United States

Graduate of Walsh Institute Of Accountancy (Now Walsh College) Michigan in 1959. Retired in 1987, but still active in the profession **World War II Veteran (Pacific) **PHONE 734-261-1979 **E-MAIL -cpabakem01@yahoo.com **(Domain Name CPASENSE Registered) **Mentioned in the Journal of Accountancy, SmartPros, Tax Prof Blog, CPA2BIZ, CPA Journal, AccountingWEB, CPATrendlines & More **Search Accounting Blogs: http://www.blognetnews.com/accounting (Includes cpasense)**TOPICS - FINANCE - FEDERAL & MICHIGAN TAXES ** Making Sense Of Your Finance & Taxes

Monday, September 22, 2008

2008-09 Tax Planning

In Year-End, Year-Round Tax Planning 2008/09, you will find helpful explanations of the current rules along with planning ideas for lowering your 2008 income taxes and planning for 2009.

We urge you to secure professional tax advice before you act on any of the ideas in this booklet

HTB CPAs

Bankrate: Strength & Stability of U.S. Commercial Banks, Savings Institutions And Credit Unions

Bankrate.com's Safe & Sound® service is a proprietary system designed to provide information on the relative financial strength and stability of U.S. commercial banks, savings institutions and credit unions.

The system employs a series of twenty-two tests to measure the capital adequacy, asset quality, profitability, and liquidity (CAEL) of each rated financial institution. Individual performance levels are determined from publicly available regulatory filings and are compared to asset-size peer norms, industry standards and key absolute benchmarks.

Combined results form the basis for our Composite CAEL and Star Ratings, which are described below. When possible, the system also produces a report that provides a detailed explanation of our findings, for each rated financial institution...................

Treasury Provides Further Clarity For Guaranty Program For Money Market Funds

Washington – September 21, 2008 - The U.S. Treasury Department is continuing to develop the specific details surrounding the temporary guaranty program for money market funds that was announced on September 19, 2008.

While these details are being finalized, Treasury is making the following clarifications:...............

Sunday, September 21, 2008

Small Business Owners Deal With The Financial Crisis

Experts offer guidance for business owners on banks, credit unions, business loans, labor, pricing, insurance, and equity investments

You can look up your financial institution's latest listed "Condition Report"............

Business Week

Proposed Treasury Authority To Purchase $700 Billion In Troubled Assets

Washington – September 20, 2008 - The Treasury Department has submitted legislation to the Congress requesting authority to purchase troubled assets from financial institutions in order to promote market stability, and help protect American families and the US economy. This program is intended to fundamentally and comprehensively address the root cause of our financial system's stresses by removing distressed assets from the financial system...........

Saturday, September 20, 2008

U. S. National Debt Clock

1 billion is 1 thousand millions and 1 trillion is 1 thousand billions, or a million millions. One-half trillion is 500 billions.

A billion and a trillion are difficult numbers to visualize, let’s put it into perspective:

** A billion hours ago, our ancestors were living in the Stone Age.
** If you count one number a second without stopping until you reach a billion,that task would take you 31 years, 259 days, 1 hour, 46 minutes, and 40 seconds.
** One trillion dollars would stretch nearly from the earth to the sun.
** It would take a military jet flying at the speed of sound, reeling off a roll of dollar bills behind it, 14 years before it reeled off a trillion dollar bills.
** If you had gone into business on the day Jesus was born and your business lost a million dollars a day, day in and day out,365 days a year, it would take you until October 2737 to lose a trillion dollars

Bad Debt Plan May Cost Up To A Half A Trillion Dollars

Treasury Secretary Hank Paulson briefed Congressional leaders on plans to address the "illiquid assets" on U.S. financial institutions' balance sheets, possibly including the creation of a government facility to take on financial firms' bad debts......

CNBC

Editor's Note:
A half-trillion price estimate would look like this on a check:
$ 500,000,000,000.00

Friday, September 19, 2008

Is Your 401(k) Plan Protected?

With the turmoil in the financial services sector, you might be concerned about the safety of all that money you've allowed to be deducted from your paycheck and invested in a 401(k) or other retirement account............

Forbes

Statement By Paulson On Comprehensive Approach To Market Developments

September 19, 2008
hp-1149

Washington, DC-- Last night, Federal Reserve Chairman Ben Bernanke, SEC Chairman Chris Cox and I had a lengthy and productive working session with Congressional leaders. We began a substantive discussion on the need for a comprehensive approach to relieving the stresses on our financial institutions and markets...........

Treasury Announces Guaranty Program For Money Market Funds

Washington- September 19, 2008 - The U.S. Treasury Department today announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund – both retail and institutional – that pays a fee to participate in the program.

President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion to guarantee the payment in the circumstances described below.............

Editor's Note: Some Money Market Funds Are Reporting Losses

CPA Financial Planners Offer Tips In Safeguarding Savings & Investments

New York (Sept. 18, 2008) – CPA financial planners associated with the American Institute of Certified Public Accountants advise a calm approach to American investors concerned about the safety of their savings and investments amid the present financial crisis.

With some money market funds reporting losses, CPA financial planners across the country are counseling their clients this week in the wake of Wall Street's turbulence on the necessary steps to protect their assets.

The first rule is not to lock in losses through panic selling.

Below are tips from five CPAs who hold the AICPA’s Personal Financial Specialist (PFS) credential..........

Thursday, September 18, 2008

How Long Should I Keep Records?

The length of time you should keep a document depends on the action, expense, or event the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.

The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional tax. The below information contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date........

Internal Revenue Service

MI Treasury Sends 24,000 Notices Of Intent To Assess

On September 12 the Discovery Division of the Michigan Department of Treasury mailed 24,285 Bills for Taxes Due-Intent to Assess notices for income tax for the 2004 tax year from their 2004 CP2000 program.

This mailing is in response to taxpayers’ failure to respond to or resolve 30,584 Notices of Proposed Income Tax Adjustments mailed on July 9. The current mailing means almost 80 percent of taxpayers receiving the initial notice did not respond.

Treasury's mailings were for taxpayers whose federal income tax increased as a result of the federal CP2000 document-matching program and failed to prepare an amended Michigan income tax return to pay the additional Michigan income tax.

While some were not required to amend their Michigan return because the federal tax increase was less than $500, they were still required to pay the additional tax shown on the July 9 notice.

Michigan Association of CPAs

Common IRA Rollover Mistakes To Avoid

If you don’t know the rules of the game, it’s easy to get fouled out, and when it comes to IRA Rollovers, those fouls can cost you big money if you are not careful. It’s inevitable, at some point or another we might ditch one provider, advisor or fund company for another. Or we may leave one job for a new one or simply retire. If you are planning to, or have already initiated an IRA Rollover, watch out for these common mistakes, because one misstep can cost you dearly........

AccountantsWorld

Wednesday, September 17, 2008

House Passes Energy Bill

House Democrats easily passed an energy bill that was crafted as a response to a shift in public opinion on the divisive issue of offshore drilling in the Outer Continental Shelf.

After surviving an attempt from Republicans to derail the measure by offering a bipartisan bill crafted by Reps. Neil Abercrombie (D-Hawaii) and John Peterson (R-Pa.) as their motion to recommit, the legislation passed 236 to 189...........

THE HILL

Baucus, Grassley, Senate Leaders Agree To Move Clean Energy Incentives, Extend Expiring Tax Cuts, Offer Disaster Tax Relief, Protect Millions From AMT

Washington, DC – September 16, 2008 - Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Chuck Grassley (R-Iowa) today announced an agreement with the Senate’s Democratic and Republican leadership to move legislation accomplishing the Finance panel’s remaining major objectives for the year: passage of clean energy tax incentives, the protection of millions of Americans from the alternative minimum tax (AMT), and extensions of expiring family and business tax cuts.........

Tuesday, September 16, 2008

Tax Credit To Aid First-Time Homebuyers; Must Be Repaid Over 15 Years

WASHINGTON — September 16 - First-time homebuyers should begin planning now to take advantage of a new tax credit included in the recently enacted Housing and Economic Recovery Act of 2008.

Available for a limited time only, the credit:

**Applies to home purchases after April 8, 2008, and before July 1, 2009.
**Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
**Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return..........

Internal Revenue Service

Monday, September 15, 2008

IRS Changed Extension Time For Partnership, Estates, And Trusts To Five Months

The extended deadline for these calendar-year tax returns is now September 15 (the same as S corporations).

This regulation goes into effect for extension requests for tax returns due on or after January 1, 2009 (tax years ending on or after September 30, 2008).

In an attempt to allow individual taxpayers more time to file their personal returns, the IRS cut the extension due date for partnership, estate, and trust tax returns from six to five months............

LarsonAllen CPAs

Sunday, September 14, 2008

Late Payments Of Estimated Tax Can Be A Smart Move

Need a loan? In today's lousy credit environment, securing one may not be much fun. It may not even be possible (at least at reasonable rates) -- unless you have access to an untapped home equity line of credit or a helpful relative.

If you do, that's great. If not, I've got a solution for anyone who earns money from something other than a salary. So if you're are self-employed, an investor, or someone who lives off Social Security benefits, pension payments, retirement account withdrawals, and the like, listen up. The IRS can actually be a short-term borrowing source for you -- and you don't have to fill out any annoying applications, prove your income, or fence with a balky loan officer. While this may sound too good to be true, it is true. Here are the details..........

Smart Money

Editor's Note: Interest rate is now 6% - October 1 - December 31, 2008
http://tinyurl.com/ypbdgd

Saturday, September 13, 2008

A Child Of Divorced Parents Can Be A Dependent Of Both For Limited Purposes

the Service says

If a noncustodial parent wants to claim the child as a dependent for health savings account purposes, he can do so, even though the custodial parent doesn't release the exemption.

Similar rules also apply for employer medical plans, medical savings accounts and fringe benefits.

But the Service makes clear that both spouses are not able to claim dependency exemptions for the same child.

Internal Revenue Service

IS Your Bank Safe?

TheStreet.com- Weiss Research, Inc:
WEAKEST BANKS & THRIFTS IN THE U.S.
Michigan Banks Rating Assets
Citizens First Savings, Port Huron D+ $ 2,091,041
Community Central Bank, Mt Clemens D- 544,704
Fidelity Bank, Dearborn D 1,045,530
First State Bank, Eastpointe D 738,642
Flagstar Bank FSB, Troy D 15,898,386
Independent Bank, Ionia D- 3,238,995
LaSalle Bank Midwest, Troy D 37,008,195
Macatawa Bank, Holland D 2,133,420
Sterling Bank & Trust, Southfield D- 670,627

Are Your Retirement Accounts Safe In Your Bank?

Less known is that since 2006, a traditional or Roth IRA, a Simplified Employer Plan (SEP) and several other types of retirement accounts that you hold in an FDIC insured bank are covered by insurance up to $250,000. This applies in addition to the $100,000 on your other accounts in the same bank..............

Business Week

FDIC: http://www.fdic.gov/

Friday, September 12, 2008

TIGTA Finds "Significant Errors" In Tax Returns Prepared By Unenrolled Preparers

Sept. 12, 2008 (SmartPros)
— The Treasury Inspector General for Tax Administration has publicly released its audit titled "Most Tax Returns Prepared By A Limited Sample Of Unenrolled Preparers Contained Significant Errors."......................

Wednesday, September 10, 2008

Court Rejects Stay Motions Over Procedural Grounds; Dillon Recall On Ballot

The U.S. Sixth Circuit Court of Appeals, in a 2-1 decision Tuesday, rejected motions for stay pending appeal of a lower court opinion that led to the recount and validation of signatures in the recall against Michigan House Speaker Andy Dillon (D-Redford Twp.).

Gongwer News

Tuesday, September 09, 2008

Michigan Reform Plan Kept Off Ballot

Supreme Court upholds ruling that package would make too many changes to Michigan Constitution.

LANSING -- The Michigan Supreme Court ruled Monday that a wide-ranging proposal to scale back state government is too broad to be put to a statewide vote Nov. 4.

Its 6-1 decision upheld the Aug. 20 ruling of the Michigan Court of Appeals that banned Michigan's elections bureau from going ahead with ballot language for the Reform Michigan Government Now (RMGN) proposition. Its backers had collected the required number of petition signatures...........

Detroit News

Monday, September 08, 2008

IRS Encouraged To Market Free Tax Services To RAL Recipients

The Treasury Inspector General for Tax Administration (TIGTA) has publicly released its review of the impact that Refund Anticipation Loans (RALs) have on taxpayers.

The report, titled Many Taxpayers Who Obtain Refund Anticipation Loans Could Benefit From Free Tax Preparation Services, was based on a survey of 250 taxpayers whose Internal Revenue Service (IRS) records indicated they had received a RAL. The survey was designed to gain an understanding of why taxpayers obtain a RAL, the cost of the loan, and their experiences during the process............

AccountingWeb

Sunday, September 07, 2008

SECTION 121 EXCLUSION LIMITATION

The Housing Assistance Tax Act of 2008 has enacted a new limitation on the exclusion.

Code Sec. 121(b)(4) now provides that if a residence was at any time NOT used as a principal residence of the taxpayer, the portion of the gain allocated to periods of "nonqualified use" will not be available for exclusion.

Thus, if a taxpayer rented out a residence or used it only as a vacation home for a period, but still otherwise used the residence as a principal residence for the prequisite 2 years out of the preceding 5, the full exclusion may not be available.

The available portion of the gain available for exclusion is determined by multiplying the gain on sale by a fraction.

The numerator is the PERIOD THAT THE RESIDENCE WAS USED as a principal residence by the taxpayer, and the denominator is the ENTIRE PERIOD OF OWNERSHIP of the taxpayer.

The resulting amount of gain is eligible for exclusion (up to the maximum of $250,000/$500,000)

Saturday, September 06, 2008

Dillon Recall Attempt On Michigan Ballot

Michigan Secretary of State says enough signatures qualify initiative for a vote after court-ordered recount.

LANSING --September 6 -- Secretary of State Terri Lynn Land has decided the proposed recall of Michigan House Speaker Andy Dillon should be on the Nov. 4 ballot in his western Wayne County district, following a court-ordered recount of petitions turned in by those who want him out...........

Detroit News

IRS Regs Clarify The Rules For Used Clothing Or Household Goods:

** You must get an appraisal and complete Section B of Form 8283 if the donated item is NOT in good used condition or better and you claim a deduction in excess of $500.
Otherwise, the Service will deny the write-off.

Per IRS (3rd paragraph from end) http://tinyurl.com/3axv9y
Household items and clothing contributed to charity after August 17, 2006 must be in at least good used condition to be deductible. This requirement does NOT apply to contributions of food, paintings, antiques. other art objects, jewelry and gems, or collections, and does NOT apply to a contribution of an item for which a deduction of more than $500 is claimed if the taxpayer obtains a qualified appraisal of the item

** But for items in good used condition or better, you only have to get an appraisal if the item is valued at more than $5,000.

Thursday, September 04, 2008

Provision Preventing Unenrolled Tax Return Preparers From Representing Taxpayers Before IRS Upheld

(Wright v. Everson, CA-11)
http://www.ca11.uscourts.gov/opinions/ops/200713167.pdf

31 C.F.R. 10.7(c)(1)(viii) is a valid regulation that did not unlawfully and arbitrarily limit an unenrolled tax return preparer's right to represent taxpayers before the IRS. In a case of first impression, CA-11 determined that 31 C.F.R. 10.7(c) (1)(viii), which limits the scope of representation by an unenrolled representative, was a reasonable legislative regulation and was not arbitrary, capricious or manifestly contrary to the statute. The provision balances the need for a taxpayer to have affordable representation and to be able to choose his representative with the need for competent representation that protects the taxpayer, the IRS and the general public.................

CCH

Detroit Mayor Agrees To Plead Guilty, Resign

DETROIT — September 4, 2008 - Mayor Kwame Kilpatrick pleaded guilty to a pair of felony obstruction charges on Thursday in a sex-and-misconduct scandal and will step down after months of defiantly holding onto his job leading the nation's 11th-largest city.............

MiLive

Wednesday, September 03, 2008

AICPA Tells Taxpayers To Check IRS Rules On Donating Used Cars To Charity

Save the Deduction or Make a Bigger Down Payment on a New Car
To Get Extra Mileage out of the Deduction

High gas prices are causing many Americans to think about buying a more fuel efficient vehicle, but if you think you can donate your old car to charity and then take a hefty tax deduction, the American Institute of Certified Public Accountants (AICPA) advises you to brush up on the rules because they may be different than you remember.

“Taxpayers usually can’t write off the full market value of a vehicle"............

Michigan Supreme Court Set To Tackle Ballot Proposal

LANSING — A court hearing could determine the fate of a ballot proposal aiming to reshape Michigan's state government.

The Michigan Supreme Court on Wednesday morning(September 3)is scheduled to hear arguments related to the Reform Michigan Government Now ballot proposal.

The Michigan Court of Appeals has ruled that the proposal is too broad to be covered in one ballot proposal. That decision is being appealed in an attempt to place the measure on the November ballot.........

MiLive

Tuesday, September 02, 2008

IRS Plans New Taxpayer Warning Letters

By WebCPA staff

The Internal Revenue Service is planning to increase its enforcement efforts by sending out warning letters to a larger group of taxpayers who may be underreporting their income.

The new warning letter, the CP2057, will differ from the CP2000 letter that the IRS has been sending out for years, according to The Wall Street Journal..........

Writing A Plan For A Successful Business

Many thriving businesses begin with someone’s great idea for a product or service. While that first inspiration is critical to any successful company, it’s also..........

Michigan Association of CPAs

Entering The International Markets

The global markets offer tremendous business opportunity, and a growing number of small businesses are taking advantage of them. About 97% of the exporters in the..........

Michigan Association of CPAs

Choices For Financing Your New Business

You’ve decided to take the plunge. You have a great idea for a new product or service and you’re going to turn it into a winning business. Or maybe you’ve seen a “For................

Michigan Association of CPAs