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Subject: FAIR TAX QUESTIONS
Posted by: steve houpt
- [451161019] Mon, Feb 18, 2008, 09:35
I did not seacrch to see if this topic has been covered anywhere, so apologies - it's already written and I am posting in a new thread.
The FAIR TAX ???? Any experts? Not buying book[s] to figure out what I think of this particular plan. If it’s so great, they should give the books away. Reminds me of the late night commercial on TV, pay $29.95 to learn how to get money from the government. Right.
I’ve got some problems with the explanations [or non] of the Fair Tax. They appear to be explanations for people with little background in math [not me] and less in ‘economics’ and tax structure [probably me]. Also - fair tax does away with FICA tax.
Example:
John ‘regular retired’ Doe [single/divorced]
Yearly spending:
Pension: _________________________ $24,000
Fed Inc Tax now [approx 10%] _______ [$2,400]
FICA _____________________________ 0
Fm Savings [tax already paid] _________ 10,000
NET spent each year ____________ $31,600
John has $31,600 available to spend each year out of an ‘income’ of $34,000 [$24K pension and $10K savings].
Assume [big assumption] a 10.95% corporate imbedded tax already. Imbedded tax = 10.95% times $31,600 = $3460. I use $10.95 to make example revenue neutral. A radio host uses the 23% as ‘already’ imbedded. If revenue neutral, does not compute with me.
Total tax John = $5,860 [$3460 + $2400]
===============================
Joe ‘working’ Sixpack [single/divorced]
Yearly spending:
Income: _________________________ $34,000
Fed Inc Tax________ [10%]__________ [$3,400]
FICA ___________________________ [$2,295]
Fm Savings [tax already paid] ______________ 0
NET spent each year _________________ $28,305
Joe has $28,305 available to spend each year out of an income of %34,000. Imbedded tax = 10.95% times $28,305 = $3099
Total tax Joe = $8,794
===============================
Say there are two working Joe’s for each John. Total tax received by government from these three = $23,348
When examples like this [usually only presented with the John ‘regular retired’ Doe example - not comparing the individuals], this is how John Doe’s tax situation is explained. --------------- When John spends his $34,000 [forget Joe], the tax is already imbedded, so he’s already paying the tax [ignores available to spend].
Under the ‘Fair Tax’, all have $34,000 plus a ‘necessity’ rebate each month [should be the same]. Fair Tax is supposed to be ‘revenue’ neutral so:
Under the Fair Tax, all pay 23% times $34,000 towards the government pot [or $$7,820]. About $23,460.
Any supporters? Where am I going wrong? And if I am correct, why not just say, some people using savings to live off of [and pensions with no FICA] may be impacted, but for good of country with “all the benefits seniors receive” [social security, medicare, prescription drugs, etc], so what.
==================== I've read this by Bartlett. A radio host / co author [Boortz] just rips Bartlett apart. But it appears to be the way my mind is comphrehending the 'fair tax'. Any thoughts? Like I said, I'm far from an economic expert or tax expert, but my math brain does not compute all I am trying to be sold. If it's revenue neutral, has to [even if it's small] benefit some, and not others.
Bruce Bartlett - why fair tax won't work |
| Only the 50 most recent replies are currently shown. Click on this text to display hidden posts as well. |
| 66 | weykool
ID: 2842717
Wed, Feb 20, 2008, 13:01
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If the fair tax or flat tax is implemented, it would eliminate a large amount of tax preperation jobs. People would no longer study to be a tax accountant. Even the best ones would no longer be needed because the average citizen could prepare their own taxes by themselves, as it should be. Thus, they would go into another field.
If you think about it, what a waste of resources just to figure out how much you have to dole over to the federal governemnt. pdwd
Again, beware of the promise that anything will be "simplified".
The calculation of the tax once you have determined net income is the easy part.
Almost any monkey can perform that simple task.
The problem is determining the net income.
There will always be the need for accountants to determine what is and isnt income.
Dont confuse income with revenue.
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| 67 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 13:33
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Zen That's simply not true. With the elimination of the estate tax, wealthy families are completely avoiding taxation on much of their wealth.
Go back and read my sentence, it doesn't contradict what you said. I said it was taxed when the ORIGINAL person earned the money. The one who passed away and left it for his family...he was taxed on it.
Also the estate tax hasn't been eliminated (Except oddly enough during one upcoming year) the exemption is only up to a certain point (Current tax year I believe it's $600,000 but it's hard to keep up because it changes.)
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| 68 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 13:52
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if you put your hard earned income, taxed once, into the bank and earn interest, are you going to complain when you are taxed on it? Are you not being taxed twice? Why is investing in an index fund so much better for the economy than interest income?
I think that is a great idea, (As long as you saved the principle for one full year) it would encourage people to save. I believe it applies already to bonds (I'm just guessing) which is essentially the same thing. Governemnt bonds are completely tax free.
To answer your question though the difference is the savings are FDIC insured so you are guaranteed of no loss and you are guaranteed a definite rate of return, no risk.
Zen do you know what an index fund is? You keep saying it like it's short selling...You are just investing in a basket of companies with one trade instead of a single company, otherwise there is no difference. The companies still borrow and use your money.
I don't care to argue with someone who relies so much on his personal experience when the argument is one of policy.
I don't even know what that means.
That's great that you scrimp and save, Nerve, but utterly irrelevant to our debate.
Not when you try to always make people who invest into sloth filled fat cats.
People who own stocks and property already benefit from only having to pay tax when they sell their assets,
How do they "benefit",they don't have access to it when it's invested, the second they go to use the money they have to pay taxes on it...what's your point?
people who have income-producing investments have to pay each year. Do the numbers, you can obviously see the advantage.
That depends, if the income producing investment is a government bond, the income is tax free. If the "math" is so great, why don't these people just invest in stocks instead?
So when these stock-property people then bellyache that they deserve a lower tax rate on top of it, I don't buy it.
I never imagined that you would, sorry to bother you with my "belly aching".
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| 69 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 13:55
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Weykool post 65, that is interesting, looks like you can offset some other income but it still limits you to $3,000 per year.
I thought in post 49 you were implying you could deduct much larger amounts then that? Or am I missing something?
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| 70 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 14:00
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I screwed up a couple italics in post 68.
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| 71 | weykool
ID: 2842717
Wed, Feb 20, 2008, 15:27
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Nerve:
What I am saying is you can reduce your ordinary income by up to 3,000 per year.
However, if you have a capital loss carryover you can reduce your gains up to the full amount of your loss C/O.
Another example:
You lose 50K by selling shares of stock.....you can deduct 3k on your taxes and the 47K is a C/O.
The next year if have capital gains of 100K you can deduct the 47K from those gains and you pay taxes on 53K.
As others have pointed out the gains you pay taxes on are not taxed twice.
While the money you invest might be taxed...any gains are based on what you made over your investment and only paid on money that has not been taxed yet.
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| 72 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 15:41
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The next year if have capital gains of 100K you can deduct the 47K from those gains and you pay taxes on 53K.
That would be more then $3,000 in a year. I've heard over and over you cannot offset more then $3,000 in a given year.
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| 73 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 15:44
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Weykool 65 Capital loss carryover. If you have a total net loss on line 16 of Schedule D that is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you had incurred it in that next year.
Yes you can carry the excess over but it still is a maximum of $3,000 in any one year. Your example allows an offset of 47K.
I'm sure that's not right.
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| 74 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 15:48
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As others have pointed out the gains you pay taxes on are not taxed twice.
While the money you invest might be taxed...any gains are based on what you made over your investment and only paid on money that has not been taxed yet.
Yes I understand this and I always have, I just didn't word it carefully.
My point was always that you are being taxed on gains that were made on the original money that has already been taxed. That is what I have always meant when I said you are taxed twice.
I completely agree I could have articulated it more clearly.
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| 75 | sarge33rd
ID: 99331714
Wed, Feb 20, 2008, 16:04
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I think its limited to a 3k NET loss in any given year, with actual losses beyond 3k carried over to offset any real gains in subsequent years.
Now, you take someone in a 28% bracket with say 30k in net investment losses, they get to deduct 3k this year form their "normal" income. That means, they reduced their net tax bill by 28% * 3,000 or $840.
Why on earth, would you complain about a 15% Cap Gains Tax, when losses shelter real income from a tax rate in some cases which will be double the capital gains rate?
(ie, those losses continue through a 4 yr down trend. That makes 3,360 in net reduced taxes. Then in the 5th year, you would still have 18k in carry-over losses to offset any gains as the market enters a broad rebound/recovery.)
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| 76 | weykool
ID: 2842717
Wed, Feb 20, 2008, 16:06
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Nerve:
You can never offset more than 3k of ORDINARY INCOME.
If you look on your 1040 there is a line from shcedule D.....that line can never be more than a -3,000
You can offets Capital Gains with any and all Capital Loss C/O.
In my example of deducting 47K.....you would be reporting 53K of Net Gains on the front page of the 1040.
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| 77 | Taxman
SuperDude
ID: 029463114
Wed, Feb 20, 2008, 16:55
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Responses to tidbits from earlier posts.
Gross Income, defined in § 61 Internal Revenue Code (IRC) " Income shall include all wealth received, unless specifically excluded hereafter" (paraphrased). Excluded from income are inheritances, gifts received (both covered under the Transfer Tax portion of IRC) and a litany of exceptions such as Municipal bonds interest, compensatory personal injury awards (but not lost future earnings awards) and loan proceeds. The Transfer Tax (previously known as Estate Tax and Gift Tax) is not a significant revenue source for Gov...but does inhibit creating fiefdoms by limiting uber wealth being passed to future generations.
NC On your taxed twice theory, do you consider the following to be taxed twice?? You make a 100,000 in capital gains, pay 15,000 in capital gains tax, then buying a 1 yr CD paying 10% with remaining $85,000. Upon maturity you receive 93,500 of which $8500 is interest and new income. Only the $8500 is taxed. Where is the double taxation? The tax system has always intended to tax the fruit, not the tree that grows the fruit.
Weycool .. Capital losses can be carried fwd and offset against all future capital gains as well as be deducted (limit 3k/yr) from other taxable income. And Passive Activity Losses (PAL) are carried fwd to be offset against qualified passive income or eligible for unlimited deduction in year of terminating ownership in property (investment) giving rise to a specific PAL.
No one has really gone into the At Risk limitations on deducting losses.
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| 78 | Taxman
SuperDude
ID: 029463114
Wed, Feb 20, 2008, 17:14
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You didn’t ask, but this is my opinion of an example of how the complexity of the IRC evolved.
In 1981 Reagan, enacted the Accelerated Cost Recovery System (ACRS) which allowed cost of business assets purchased to be depreciated in 3-5 years, and real estate (R/E) buildings (not dirt), repairs ETC to be written off in 15 years even though FMV was diminishing far less if not increasing. The intended result occurred. Upper Middleclass and those wealthier all began buying rental R/E for the purpose of reducing taxes, not for the purpose of creating their own wealth. The return on those investments was absolutely dependant on receiving the tax benefits.
Great plan, but was the engine soon became huckster R/E developers & puffed appraisals used by reckless lenders (many convicted of civil as well as criminal fraud, other’s escaped including the Clintons re: Whitewater escapade) as justification for loans in excess of FMV. The more egregious loans excluded the borrower from personal liability. Enter stage right: FDIC, FSLIC and other permeations thereof. Loan portfolio audits started forcing banks and S&Ls to increase reserves for upside down loans made on puffed appraisals and where the property values had fallen. Initial calamity was, no lenders were available to lend, or would lend, thus the R/E values took a nose dive. No lenders, meant no purchasers. 1985 saw lenders (Banks in Texas and S&Ls in California …really everywhere) began to fail. Property foreclosures soared as FDIC & FSLIC responded to the rampant fraud encouraged by Reagan's ACRS by shuttering thousands of banks and S&Ls nationwide. As the loans became delinquent FSLIC/FDIC first foreclosed on the R/E for later resale and then sold portfolios of the now unsecured delinquent loans to “bottom feeders” and “scavengers” who set about collecting from the makers and guarantors of the foreclosed loans. Scavengers typically paid less than 2% of face value of this “bad paper”.
When foreclosed, investors had to deal with large deficits owed the “scavengers” which was eventually partially forgiven in "workout agreements" (full release for payment of something to the scavenger) or negated by Chapter 7 bankruptcy filings, Additionally, the foreclosed investor had to recapture as income a portion of ACRES deductions. The coup de grâs found IRS ALSO taxing as income all forgiven debt (being relieved of a debt in receipt of wealth) even debts secured only by collateral containing no personal liability of the foreclosed owner.
Well you can imagine the fallout. US was jumped into a period of runaway inflation. Low interest rates exceeded 14%. The real estate industry had been trashed. All because of Reagan’s introduction of ACRS to help the economy.
The next tax act phased out ACRS and led to the Modified Accelerated Cost Recovery System (MACRS) and introduced PALS.
PALS simply limited deduction from passive activities. In general, PAL activities included all business income/losses received by anyone not “active” in the business and all real estate rental activity. Losses from real estate activities on an individual property by property basis were limited to income from that individual property (talk about a pain the ass for people owning/managing multiple R/E properties) and losses from passive business activities limited to income received from all passive businesses. PAL has mutated over the years and now far easier to work with.
PALS ended the era of fraudulent lending and rapid cost deduction (ACRS) of real estate investments. The ACRS deduction was a % of property's cost unrelated to actual dollars out of pocket. There were few if any dollars out of pocket more often than not. Hence the term "paper loss" (“paper deduction”) was coined. The "paper loss" favored high bracket taxpayers, such as famous entertainers, doctors, lawyers and corporate executives. A $1000 paper loss to a 50% bracket tax payer saved taxpayer $500 while that same deduction to a 15% bracket taxpayer saved only $150.
PAL ended paper losses. To deduct a dollar now, you must spend the dollar. As for depreciation, now R/E is depreciated under MACRS over 37-40 years (rather than 15 yrs under ACRS).
That is but one of the historical events underlying the ridiculous complexity of the IRC. The legislative motives seem based in fixing prior problems, or attempting to solve economic questions, but usually continue creating new disasters, such as current ALT MIN TAX bracket creep.
Gawd, hate to label myself, however I am both a CPA and an attorney (should probably include asswhole somewhere in description) and spent 35 years in the tax industry.. I hate new tax legislation. It has and never will be a good thing.
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| 79 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 17:16
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NC On your taxed twice theory, do you consider the
following to be taxed twice??
No, in this process you have been taxed 3 separate times.
first when you earned the money.
second when you invested it and earned income on the already
taxed money.
third when you invested the profits from the investment which
was taxed after it was made from the original money that was
also taxed.
that's 3 times.
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| 80 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 17:21
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sarge do i have to run through 63 or did my follow up points to
others make my position clear?
I don't disagree with your analysis, nor did i ever. we are arguing
semantics.
You are taxed twice, but yes the "capital gain" is only taxed once.
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| 81 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 17:23
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Tax
you can only deduct 3k a year in investment losses, period,
correct?
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| 82 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 17:27
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sarge I don't understand 75 after reading it 5 times.
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| 83 | weykool
ID: 2842717
Wed, Feb 20, 2008, 18:49
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Weycool .. Capital losses can be carried fwd and offset against all future capital gains as well as be deducted (limit 3k/yr) from other taxable income.
I think that is exactly what I have said at least 3 times.
Tax
you can only deduct 3k a year in investment losses, period,
correct?
As I have stated 3 times and Tax restated....no.
You need to add all your gains.
Then subtract all your losses.
Then you subtract any Capital Loss C/O.
If that number is positive you pay taxes on that number.
If that number is negative you deduct 3,000 on your return.(unless it is less than 3K then you deduct that number)
And yet another example:
This year you lose 133K (adding all your gains and losses together)
You deduct 3,000 on your tax return and you C/O 130K in losses.
For the next 10 years you make 10K per year in Capital Gains.
Each year you would use 10K of your losses to offset the gains and deduct 3K on your taxes.
At the end of 10 years your Carry Over would be used up and you would be back to square one.
If you still dont understand then I give up.
You should try to make as much as you can and pay the taxes as you go.
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| 84 | sarge33rd
ID: 99331714
Wed, Feb 20, 2008, 18:58
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If he couldnt follow 75, 83 should have him scratching his head in total bewilderment. (Though they say the same things.) {No disrespect intended NC. Absolutely none. I cant follow half your talk in the investment thread. All depends on what your "background" knowledge base is I guess.}
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| 85 | Taxman
SuperDude
ID: 029463114
Wed, Feb 20, 2008, 19:04
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you can only deduct 3k a year in investment losses, period, correct?
Well yes and no.
No to "investment losses" IRC uses very specific terminology and a question using a terminology not used in IRC is like asking how many points is a field goal worth in a baseball game.
I believe the term you intended was "Capital Losses" A Capital gain or loss is generated by the sale of a Capital Asset
Code section 1221 definition of a capital asset Not every investment is a Capital Asset.
As you can see from the lengthy IRC definition, what you ask as a general question can not be answered as a general answer.
But given you make an "investment" of $15,000 into 1000 shares of Dell, which qualify as a Capital Asset (and normally would), and you sell the 1000 shares for $5,000, you suffer a $10,000 Capital Loss (CL).
First the CL must be used to off set current year net Capital Gains (CG) then you are permitted to use remaining CL, not in excess of 3000, as an "allowed" deduction to other. Any unused CL at that point is carried over to the next year and available to be used, first to offset net CG for that year, then a deduction not exceeding 3000 is allowed with any CL balanced carried fwd to the next year.
Simple..no?
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| 86 | nerveclinic
ID: 105222
Wed, Feb 20, 2008, 23:52
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weykool
Taxman you can only deduct 3k a year in investment losses, period, correct?
As I have stated 3 times
I know what YOU stated 3 times, I was asking Taxman.
I still don't think Taxman answered my question.
Look at Weykool's example, he's implying that a large investment loss can be carried over to the next tax year to offset a very large capital gain the next year i.e. more than $3,000.
For example he says... The next year if have capital gains of 100K you can deduct the 47K from those gains and you pay taxes on 53K.
which is offsetting 47k. I am saying the limit in any one year is 3k. Can you please just address this one question?
Weykool no need to answer for a 4th time, I understood what you said the first time you said it. I'm just questioning the accuracy.
Tax?
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| 87 | sarge33rd
ID: 76442923
Thu, Feb 21, 2008, 08:45
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First the CL must be used to off set current year net Capital Gains (CG) then you are permitted to use remaining CL, not in excess of 3000, as an "allowed" deduction to other. Any unused CL at that point is carried over to the next year and available to be used, first to offset net CG for that year, then a deduction not exceeding 3000 is allowed with any CL balanced carried fwd to the next year.
He did answer it Nerve. To have a deduction of 3k, you'd have to have already offset 100% of any gains from other investments.
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| 88 | Building 7 Tax Prep
ID: 471052128
Thu, Feb 21, 2008, 09:04
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Schedule D Instructions
Page D-7 Capital Loss Carryover Worksheet
Also, see if a monkey can fill out the form on D-10. Most high school students could not IMO.
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| 89 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 09:49
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He did answer it Nerve. To have a deduction of 3k, you'd have to have already offset 100% of any gains from other investments.
Thanks Sarge but that is not what I asked.
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| 90 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 09:53
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BLDG 7 Also, see if a monkey can fill out the form on D-10. Most high school students could not IMO.
I'm not disagreeing with your point, it is ridiculous, but isn't that why most people with complicated taxes use a software program?
Doesn't Turbo tax eliminate most of these challenges?
Again I don't know the answer but that's what I've heard.
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| 91 | Building 7 Tax Prep
ID: 471052128
Thu, Feb 21, 2008, 11:16
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Turbo Tax: so now we have to buy a $50 software program every year just to see how much money we have to dole over to the federal government. I bet you don't have to under the fair tax.
The monkey response is for post #66.
The calculation of the tax once you have determined net income is the easy part.
Almost any monkey can perform that simple task.
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| 92 | Taxman
SuperDude
ID: 029463114
Thu, Feb 21, 2008, 11:37
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Nerve,
Maybe I don't understand the question. If you are asking ..as an isolated question..how much in Capital Loss can be deducted in a year..the answer would be ....the sum of net capital Gains (exclusive of the Capital Loss) + $3000
A continuing problem with many of my clientswas not hearing the desired answer :0/
I'm still in total confusion with your concept of taxing capital gains multiple times. The only accurate way to view income tax, is that of an ordinary reoccurring expense associated with a single item (income).
Same as a realator's fee is charged against the sales price of R/E. Except taxes do not hit your investment again, only your gain from subsequent investments. If you sell a house for 100K (no other sales expense) and pay 6% to realator, your net (before tax) is 94,000. When you by the next house..for all cash..you have but 94,000 to spend, and when you sell that house at @ 50% gain, oe 141K the realator expense @ 6% is 8460 and is comproised of 6% of your investment (94K) and of your profit (47K).
Taxes do not tax your investment (principal) only taxes the gain. If you don't want you gains taxed before you reinvest, set up an IRA or Roth and buy and sell from those entities. However upon distribution from those entities (IRA 100% as ordinary income)(Roth, the amount above your contribution received is ordinary income), you will pay a tax, but lose any Capital Gains lower tax hit by doing so.
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| 93 | weykool
ID: 2842717
Thu, Feb 21, 2008, 11:47
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Taxman wrote:
First the CL must be used to off set current year net Capital Gains (CG) then you are permitted to use remaining CL, not in excess of 3000, as an "allowed" deduction to other. Any unused CL at that point is carried over to the next year and available to be used, first to offset net CG for that year, then a deduction not exceeding 3000 is allowed with any CL balanced carried fwd to the next year.
Weycool .. Capital losses can be carried fwd and offset against all future capital gains as well as be deducted (limit 3k/yr) from other taxable income.
NC:
Perhaps this is more of a reading comprehension problem than a tax problem?
Taxman has answered your question twice.
I have answered it 4 times with examples.
In post 65 I posted the answer to your question from the IRS website.
You seem like a bright guy but somehow it seems you have a mental block on this one.
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| 94 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 14:34
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Weykool
It wasn't a reading comprehension problem.
I read everything you posted.
I also know in post 49 you said "I don't currently do taxes."
Also in the paste from the IRS in post 65 it doesn't specify if in the carry over to the next year you can deduct more then only an additional $3,000 the next year so I found the context vague.
I also read a post where you implied that all taxes we cut come back as revenue which is hogwash.
So even though you answered it 4 times, and even though I read and understood every word you said, I was looking for a second opinion from someone who DOES currently do taxes.
I hope that clears it up.
Please don't explain it a 5th time.
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| 95 | sarge33rd
ID: 99331714
Thu, Feb 21, 2008, 15:31
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with your permission NC; I'm going to rephrase what I think you are asking and then ask TAXMAN to answer it. (Feel free to correct my question(s) if I am misunderstanding YOUR question)
Assume that in tax year 2007, I sold investments and realized a real loss of $35,000 from the sale of those stocks, bonds, etc. I sold no investments, at a profit. (Simply divested myself of "losers".)
I can write off $3,000 as a capital loss, deducting that from my otherwise "normal" taxable income, AND I can carry forward to tax year 2008, the balance of $32,000 in losses.
Is that correct?
Now, tax year 2008, I sell some more investments, and show capital gains from those sales of $22,000. I have $32,000 in carry over losses so either;
1) I can "offset" the 22k in gains by using 22k of the carry-over losses, and THEN use another 3k of that carry-over, allowing my to deduct yet another 3k from my otherwise taxable "normal" income. This would leave me still with 7k in losses to carry over again to tax year 2009.
or
2) I can only use 3k of the carry over, and pay capital gains tax on 19k, while carrying over 29k in losses remaining from the 32k I brought into tax year 2008.
NC; is that essentially what you are asking?
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| 96 | weykool
ID: 2842717
Thu, Feb 21, 2008, 16:11
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NC:
I can understand how you would get the impression that maybe I didnt know the rules because I made the clarification that I dont currently do taxes.
The IRS makes changes to the tax laws every year and so I am cautious to make statements without clarifications in the event that the laws in question have changed.
After making that statement I went to the IRS website and verified that indeed the laws concerning Capital gains and losses are the same.
I can further understand your skeptecism when the Taxman rephrases what I have already posted and then makes it sound like he is correcting something I said.
If you dont care to believe me that is fine.
The bottom line is I would caution you against relying on anythng written on this site when it comes to your taxes.
You could look really silly trying to convince an IRS agent with..."But the Taxman and/or Weykool at Rotoguru said I could deduct it".
Along the same lines I would look really silly if I lost a bunch of money in the stock market because someone at Rotoguru advised to get into the market or recommended an investment.
The fact is if you find the context I posted from the IRS to be VAGUE then you have no business doing your own taxes or tax planning.
You need to hire a professional that you will have recourse in case you get audited and have to pay additional taxes and penalties.
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| 97 | Taxman
SuperDude
ID: 029463114
Thu, Feb 21, 2008, 16:16
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nerve
it has always been my opinion that free advice (if you are lucky) is worth what it costs
:)
and maybe my moniker should change to Taxedman, or better yet Xtaxman, as I shuttered my practice @4 years ago. I now help wifey-poo operate Invisible Fence Brand distributorship (exclusive rights to Texas and New Mexico) and a retail Invisible Fence Brand operation from Austin with employees (35 in total) also in Houston, Dallas and Albuquerque and a pet products web page. I still have the various tickets (law and cpa licenses), but they are becoming a bit dusty.
nerve ...and about that CG are taxed more than once idea..where do we sit on that??
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| 98 | Building 7 IRS Agent
ID: 471052128
Thu, Feb 21, 2008, 17:15
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Sarge33rd post #95....1) is correct. In fact, that was one of the most coherent posts you've ever made. It's not that simple, though. If you look at the worksheet linked in #88, you'll see that your capital loss carryover has to retain it's short-term and long-term status. Thus, you could have a short-term capital loss carryover and a long-term capital loss carryover. Or just one or the other. Then those are combined with the next years' capital gains/losses via the worksheet. I've had to complete that worksheet in the past for my mother's returns. And people want to keep this tax system.
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| 99 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 17:20
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Sarge 95
Thank you.
You see I must not of explained it completely wrong because you got it.
My assumption was #2 is correct. Sounds like Weykool and Tax are saying number #1.
I've always invested in tax free 401K's until this year so it's never come up for me in the past.
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| 100 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 17:45
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Weykool I can understand how you would get the impression that maybe I didnt know the rules because I made the clarification that I dont currently do taxes.
no offense I read and understood your posts, just looking for a second opinion.
The fact is if you find the context I posted from the IRS to be VAGUE then you have no business doing your own taxes or tax planning.
You need to hire a professional that you will have recourse in case you get audited and have to pay additional taxes and penalties.
I use a tax lawyer to prepare my taxes because I am an Ex Pat at the moment. He has 20+ years in Expat tax law. Used him last year and will use him again this year.
I was just making the typical BS post on Roto. Fortunately my losses this year are no where near $3,000...yet, so it's not an issue.
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| 101 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 17:47
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and maybe my moniker should change to Taxedman, or better yet Xtaxman
HA yes you should.
Well then you are officially in the same room as Weykool and I will just have a talk with my accountant...of course he charges me by the minute.
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| 102 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 17:50
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with your permission NC; I'm going to rephrase what I think you are asking and then ask TAXMAN to answer it.
Now Sarge, when have you ever needed anyones permission around here?
Anyway you got the Oscar for interpreting a foreign language because you articulated what I was trying to mumble.
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| 103 | nerveclinic
ID: 105222
Thu, Feb 21, 2008, 17:56
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B7 I don't know anyone who wants to keep the current system except for the accountants etc.
Just because the present one is screwed up, doesn't mean the "flat tax" is fair.
It will be no easy task getting this titanic turned around though.
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| 104 | sarge33rd
ID: 99331714
Thu, Feb 21, 2008, 18:00
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lol @ 102. True that, but I have to rethink my approach. According to 98, my post made perfect sense to B7.
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| 105 | Taxman
SuperDude
ID: 029463114
Thu, Feb 21, 2008, 21:58
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My assumption was #2 is correct. Sounds like Weykool and Tax are saying number #1.
And Building 7 IRS (shudder)Agent joins in selecting Sarge's #1
Building 7 IRS (shudder)Agent also puts into play the Long term Capital Loss (LTCL) versus Short term Capital Loss (STCL) concept...and that/those label(s) impact the use of the carryover in future years. It adds a layer of complexity that truly exceeds the understanding of most non-tax professionals (and actually that of more than a few CPA's and Attorneys)
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| 106 | biliruben
ID: 5610442715
Fri, Feb 22, 2008, 13:29
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Man.
I go to Vegas and an actual useful thread breaks out. And me without internet access for the foreseeable future. Bah.
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| 107 | Taxman
SuperDude
ID: 029463114
Fri, Feb 22, 2008, 13:33
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Most people just lose money in Vegas :>)
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| 108 | biliruben
ID: 5610442715
Fri, Feb 22, 2008, 13:38
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I actually did pretty well! Bellagio poker room was full of folks with more money than sense.
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| 109 | protester
ID: 121472717
Wed, Feb 27, 2008, 18:47
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ya'll missing the point. If you enact the Fair Tax, YOU keep what YOU earn and you pay taxes on what you buy minus the neccessaries(per poverty level code) minus the prebate. In 1979 a study on embedded taxes stated that the cost more to book keep that they cost the manufactor. In the study, a loaf of bread sitting on the store shelf has between 182 to 234 different minute taxes on that loaf, there by running up the cost of business and the product. Before congress in 1981, Roger Smith, chairman of GM told congress that if it were not for the embedded taxes, he could at that time sell $10,000.00 Chevy for $5000.00. Bottom line, the Fair Tax funds the government, Social Security, Medicare, and allows your IRAS and 401s to stay profitable and the earnings TAX FREE when you retire. If you don't tax my business, I buy what equipment I want and therefore keep the increased profits from doing more work. It's simple folks 2+2= 4 and the government out of your business and life.
secutity
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| 110 | sarge33rd
ID: 99331714
Wed, Feb 27, 2008, 18:54
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No protester...you dont "keep" anything. Your take home pay, would not change from what it is now. It would be THE SAME. (see the link I provioded in post 59 above)
The retail price of goods, would NOT include the "Fair Tax" as those goods are marked today. So...your take home stays falt and your out-of-pocket for everything you buy goes UP 30%.
No thanks.
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| 111 | Boldwin
ID: 3013265
Wed, Feb 27, 2008, 23:33
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I just got done destroying my sons at poker [just chips, not cash]. The funny part is they are currently hooked on poker on TV and I can't bear to watch.
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| 112 | Boldwin
ID: 3013265
Thu, Feb 28, 2008, 00:39
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“I would like to electrocute everyone who uses the word "fair" in connection with income tax policies.” - William F Buckley
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| 113 | nerveclinic
ID: 105222
Thu, Feb 28, 2008, 04:56
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YOU keep what YOU earn and you pay taxes on what you buy minus the neccessaries(per poverty level code) minus the prebate.
Well protester I think "Y'all missing a point"
A person who makes $20,000 a year has to spend pretty much everything to survive. Therefore he/she will be taxed on almost their entire income. (minus the necessaries(per poverty level code) minus the prebate.)
A person who make 5 million dollars a year might only spend 5%-10% of his/her income.
Therefore the poor will be paying an almost 30% income tax (Plus state tax) while the rich will pay 30% of 5-10% of their income (Maybe a 3% income tax) therefore the poor will pay at a much higher tax rate then the rich.
How is that "fair"?
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| 114 | Mark Curran
ID: 30154289
Thu, Feb 28, 2008, 10:54
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Scientology isn't whats wrong with the "fairtax" -- its MATH. Fairtax is a bunch of garbage math. Its like those little pills they sold suckers years ago, advertized to let you use water in your gas tank. Utter nonsense.
Fairtax only works if Math isn't real. For example, almost a trillion dollars that fairtax pretends to be able to collect -- comes from the GOVERNMENT itself.
That's right. The GOVERNMENT will just pay ITSELF a huge sales tax. How stupid can you get?
Neal Boortz wrote in The Fair Tax Book (Page 148) "The federal government ITSELF will become a MAJOR TAXPAYER".
Hello you con artist huckster. How the hell can the government PAY ITSELF a tax? It would have to WRITE the check.
If governments can just write themselves checks to magically pay 900 billion in taxes - why stop there? Why not a trillion? WHy not 2 trillion? Hell, just leave us alone, let the government pay itself ALL its taxes.
These lunatics would not only tax the FEDERAL government -- they will tax ALL goverments a huge sales tax -- state, city, and county. Thats a sales tax on everything from the space shuttle, to air craft carriers, to bridges, school desks and cop cars.
The lunacy doesn't even slow down there. The fairtax also puts a huge sales tax on nursing home patients, cancer surgery, heart transplants -- ALL medical bills would have a huge sales tax on them.
How stupid is that?
And there is more. Renters would have to pay the tax on their RENT. You sould have to pay SALES tax on your insurance premiums -- car insurance, health insurance, life insurance -- all have to pay a huge sales tax.
Same thing with utilities- - high sales tax. Same thing with gasoline - high sales tax.
Its absolutely insane crap.
When it becomes clear with this lunatic plan would tax, people will reject it.
Personally, I wish it would pass, cause I want to see these idiots try to tax NASA and nursing home patients. I want to see them try to tax the parents of a child with leukemia 70,000 dollars to keep their child alive.
Please PLEASE pass the idiot fairtax.
8:30 AM
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| 115 | sarge33rd
ID: 99331714
Thu, Feb 28, 2008, 12:24
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according to this papre from "FairTax.org", ALL consumption other than Education Tuition, would be subject to the Tax. (Other papers I've seen, would also exclude "used" goods.) So, even essential get taxed. Then, monthly, the US Govt would send "prebate" checks to every American household, the size of said check dependant upon household size and Govt established "poverty level" spending tables. (The idea being, to rebate those taxes paid against "essentials".)
First problem...those who favor the Fair Tax, by and large stem from "the right" side of the political spectrum. Traditionally, opposed to welfare in virtually any form, yet here they are endorsing a plan which grants a govt check (welfare) to EVERY American household. AM I alone in seeing some glaring irony there?
Now, many proponents calim that take home pay would increase to current gross pay. In post 59 above, I provide a link to a Q&A with the economist predominantly behind the Fair Tax, and he sates explicitly, that take home pay would NOT increase and that retail prices WOULD increase, by the amount of the Fair Tax.
So, lets take the ex of a single American worker. Person makes $2,500/m or $30,000 annually and nets (for the sake of argument) 80% of that or $24,000/yr which is 2k/m.
What happens to that person, when their costs rise by 30% (necessary to raise prices 30% to submit 23% of the revenue and still retain the current sale price of goods.)
Util: Was $150/m...now $195
Groc: Was $400/m...now $520
Car Ins: Was $50/m...now $65
Gas: Was $100/m...now $130
Rent: Was $500/m...now $650
Phone: Was $30/m...now $39
Cable: Was $100/m...now $130
Hlth Ins: Was $200/m..now $260
Remaining: Was $470 ...now $11
Prebate Check: Was $0...now $187
Net: Was $470...now $198
So a middle class, middle of the road avg worker, gets to pay an additional tax of $272/m or $3,264 annually.
Someone please tell me how raising actual taxes on an avg joe by almost 11% of their current annual gross...is going to benefit them in any way, shape or form?
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