Major Articles (Strategies):

• Does an SUV Built on a Unibody Frame Qualify for $25,000 Expensing?
  • The unibody frame is traditionally a car frame
  • SUVs that qualify as trucks and meet the gross vehicle weight rating test qualify for BOTH expensing of up to $25,000 and exemption from the luxury auto limits (thus faster depreciation in a shorter period of time)
  • When does the SUV built on a unibody frame qualify as a truck
  • When does a crossover vehicle qualify as a truck-based SUV?
  • How did the “truck of the year” qualify as a truck if it was built on a unibody frame?
  • Why did the IRS delete the truck chassis reference from its IRS publications?
  • How does the gas-guzzler tax fit into this puzzle?
  • Why you have to dig into the legislative history behind the gross vehicle weight rating tests to find the answer to the unibody question
  • Learn how the new separate $25,000 limit on expensing applies to the unibody rules
    
    
• The Back-End Vehicle Deduction
  • Your vehicle write-offs come from depreciation, section 179 expensing, and loss or gain on sale (the back end)
  • Mileage rates include depreciation and thus produce a back end
  • Three rules can cause confusion: (1) mileage rates, (2) luxury-vehicle limits, and (3) section 179 expensing
  • How to find your back end when you use the mileage rate
  • How your back end disappears in a trade
  • How prior trades could give you a huge back end
  • How the luxury limits create a back end
  • How expensing changes the back end
  • Reminders of how to make the back end work for you
  • Planning the back end on your next vehicle
  • Remember these five financial truisms for your vehicle

In the News

• Fiscal lunacy award #9 (Because IRS tax collectors are considered a budget expense and lawmakers wanted to look like they were cutting the cost of government, they instructed the IRS to outsource its collections at a cost to you and other taxpayers of $8.6 billion.)
• Fiscal lunacy award #17 (In another move to make the cost of government look smaller while adding about $2.6 million a day to the deficit, the IRS cut 45% of its estate tax lawyers who were generating audit revenue of about $2,100 an hour.)
• 700,000 fail to claim sales tax deductions (One in seven taxpayers who lived in a state with no income tax failed to claim the newly enacted sales tax deduction that was effective in 2005. Amended returns may be in order.)

From the Courts

• Court rules taxation of injury settlement is unconstitutional (Perhaps the biggest deal in this case is learning that you can file a protective claim that can help you lock in a tax benefit when a court case or other event could change the tax law in your favor, after the statute of limitations expires.)

Answers to Questions from the Readers

• Sign on car (Taxpayer finds out whether he can write off more of his car because he placed a magnetic sign on it.)
• Top-producer trips (This taxpayer and 29 others won a five-day all-expense-paid trip to Disney World. The company planned no events of any type for the winning group, albeit the company housed the group in the same resort complex. This taxpayer learns how to make the trip deductible.)
• Gift of home (A mother wants to give her home to her daughter and have her daughter sell the home and take advantage of the $250,000 exclusion.)

Add November 2006 issue (Vol. 15, No. 11) of Tax Reduction Letter to cart (PDF download) $14.95

Major Articles (Strategies):

• Avoid Taxes with Section 1031 Exchanges of Vehicles
  • The purpose of a section 1031 exchange is to defer the taxes to the replacement vehicle
  • Your business vehicle can produce a taxable gain; the 1031 exchange allows you to defer the taxes on that gain
  • You are going to have a gain or loss on the sale of your business vehicle
  • You are going to have a gain or loss on the sale of the business vehicle on which you claim IRS mileage rates
  • With the 1031 exchange properly arranged, you can personally SELL your existing vehicle and BUY the replacement and QUALIFY for 1031 exchange treatment
  • Six easy steps can help you identify your vehicle’s gain or loss
  • Undesirable taxable gains can be large if you used bonus depreciation in prior years
  • Undesirable taxable gains can be REALLY large if you qualified for and claimed section 179 expensing in prior years
  • There is only one reason to do the 1031 exchange: Protect you money from taxes
• Putting Real Estate in Your IRA
  • The good rate of return is the one critical element that makes the IRA work to your economic advantage
  • Putting a real estate investment inside your IRA might give you that GOOD rate of return
  • Tax breaks neither justify nor overcome a bad rate of return
  • A bad rate of return can make the IRA a complete waste of time
  • How to find an IRA program that allows real estate investments
  • Learn the types of real estate that the law allows for IRAs
  • Learn when leveraged real estate inside the IRA incurs its own private IRA tax
  • How to avoid the private IRA tax
  • Why you want your IRA holdings to avoid dealer status
  • Understand why you can’t count on the IRA trustee to know the tax rules
  • Compare the rate of return on real estate investments
  • Roundup of other real estate investments that work in an IRA
  • How to make sure you don’t expose your IRA to the 50% penalty tax
  • Big picture of prohibited transactions

In the News:

• Expect tax increases (Tax Reduction Letter says that the budget and trade deficits are going to force tax increases in the very near future.)
• Tax Freedom Day is a joke (Tax Reduction Letter explains why “Tax Freedom Day” fails as a good measure of tax burden. A far better measure would be a calculation of “Monetary Freedom Day.”)
• New regulations on employing your child (The Department of Labor has issued new regulations on employing your under-age-18 children.)

From the Courts:

• State Farm agent has ordinary income from termination payments (Learn how this State Farm agency contract created ordinary income for this State Farm agent.)
• Failed proof costs $61,972 (This taxpayer kept such bad records on both his S corporation and his proprietorship that he had to pay a penalty in excess of $10,000 in addition to his taxes.)
• Court rules trusts a sham (This taxpayer attended a seminar on how to put his businesses into a trust and not pay taxes. The trust promoter went to jail. The taxpayer, who relied on this promoter, lost every one of the nine issues he brought before the court.)

Answers to Questions from the Readers:

• QDRO to child (This QDRO ensures that the divorced mother has no tax problems and it also puts the 15-year-old child in excellent tax shape.)
• Stockholders’ meeting (Taxpayer’s travel to look after his $500,000 stock investment is not deductible.)
• Vacant lot (Learn how to get maximum tax benefits from mortgage interest and real estate taxes paid on a vacant lot held for investment.)
• TurboTax (Is it better to use TurboTax or a CPA? Why?)

Add April 2005 issue (Vol. 14, No. 4) of Tax Reduction Letter to cart (PDF download) $14.95