Notes from the State Director
I mentioned last month that I would not be writing any more messages to you, but here I am again!! Andy Stamatelatos our new president will write his first message next month, so you’re stuck with me again this time.
Andy, Greg Cash, and I attended “Grape Expectations” the CSEA Annual Meeting in Rohnert Park last month. The meeting was hosted by the North Bay Chapter and they did a truly outstanding job. I’m not sure what the final count for attendance was, but I think they probably set a new record. So to Gary, Sandy and the entire team, on behalf of the South Bay Chapter, I thank you for all your hard work in making this Annual Meeting a huge success. The North Bay Chapter has raised the bar higher than ever!! We’re looking forward to next year’s meeting when we join our hosts, the San Gabriel Chapter, “On the Red Carpet.”
A big highlight of the meeting was the presentation of awards. The winner of the Chapter of the Year was the Channel Islands Chapter and the Booster of the Year was attorney Frank Acuna one of our outstanding Super Seminar speakers. The biggest award of all is the Enrolled Agent of the Year. This award honors those who in the prior and current CSEA fiscal year contributed significantly to the enhancement and/or improvement of the status of EAs or the California Society of Enrolled Agents. This is our version of Entertainer of the Year. I am proud to say that the winner of the award this year was our own Greg Cash, EA, MST!! Greg is most deserving of this award and I think I can speak for all members of the South Bay Chapter and say, “Congratulations Greg, we’re proud of you.”
Gina Jones, EA, the President NAEA, also attended the meeting and she gave us some timely updates on what’s going on at the national level. She also presented an overview of the NAEA questionnaire we all received regarding the changing of the name Enrolled Agent to something else. This possible name change is being pushed by the IRS so the public will be able to distinguish EAs from all the other practitioners who will be registered in the future. Stay tuned, more will be coming on this subject in the future.
Our next dinner meeting will be held on July 20th. Isaac Kim of Morgan Stanley Smith Barney will be making a presentation on two topics, “Choosing the Right Retirement Plan for Your Business”; and “Roth IRA Conversions.”
We hope to see you there.
George A. Van Buren, EA, MBA
Director, South Bay Chapter
gavb@cox.net
Tax Notes of the Month
First-time Homebuyer Credit: The Section 36 first-time homebuyer credit applies to principal residence purchases occurring after 4/8/08 and before 5/1/10. Under current law, the purchase of a principal residence will qualify for the credit if the taxpayer entered into a binding written contract before 5/1/10 to close on the purchase by 7/1/10. Because of a backlog in closing these purchases, thousands of homebuyers risked losing the credit. So, on 6/30/10 the Senate passed the Homebuyer Assistance and Improvement Act of 2010 (H.R. 5623), which replaces "7/1/10" with "10/1/10." As a result, taxpayers who entered into a written binding contract prior to 5/1/10 will have until 9/30/10 to complete their home purchase. The House passed the Act on 6/29/10, so it now goes to the President for his signature.
Source: Thomson Reuters/PPC
Estimating Allowable Deductions: When a taxpayer establishes that he or she incurred a deductible expense but cannot substantiate the exact amount, the court is permitted to estimate the deductible amount under the Cohan Rule [ Cohan v. Comm. , 8 AFTR 10552 (2nd Cir. 1930)]. However, the court can "estimate the amount of the deductible expense . . . only when the taxpayer provides evidence sufficient to establish a rational basis upon which the estimate can be made." In this case, taxpayer did not provide any explanation or excuse for his failure to maintain and produce records of actual expenditures. His estimates were not permissible reconstructions and were not based on any other evidence, which prevented the Court from estimating the amount for him. Philip Jensen , TC Memo 2010-143 (Tax Ct.).
Source: Thomson Reuters/PPC
Audits of Sole Proprietors: After evaluating a sample of 298 correspondence audits of individual returns reporting sole proprietor operations that were closed by tax examiners during fiscal year 2007, the Treasury Inspector General for Tax Administration (TIGTA) found 129 audits where sole proprietors may have avoided tax and interest assessments totaling more than $1.7 million because potential income misstatements were not addressed during the audits. This was attributable in large part to the fact that unlike field agents, correspondence examiners are not required to complete minimum checks for unfiled employment tax and information returns, or to probe for unreported income. For the complete report (number 2010-30-024), go to www.treas.gov/tigta/auditreports/2010reports/201030024fr.pdf .
Source: Thomson Reuters/PPC
Some Fun Stuff – A Few Failed Predictions
"It will be years --not in my time-- before a woman will become Prime Minister."
--Margaret Thatcher, October 26th, 1969.
She became Prime Minister of the United Kingdom only 10 years after saying that holding her chair from 1979 to 1990. But she wasn’t all that wrong since she is the only woman to have held this post. Maybe she should have added the word “again.”
“I think there is a world market for maybe five computers.”
--Thomas Watson, chairman of IBM, 1943.
It may sound ridiculous now, but the prediction was actually true for about ten years after it was made. Almost every forecaster would settle for a ten year limit on the testing of their forecasts. Of course, by the 1980s and the advent of the PC, such a statement sounded completely idiotic.
"Drill for oil? You mean drill into the ground to try and find oil? You're crazy."
--Associates of Edwin L. Drake refusing his suggestion to drill for oil in 1859.
Only one hundred fifty years passed by since the first attempt to dig out oil from the ground met such contempt, and now the whole world is trying to look for unimaginable places to satiate the thirst for money that is propelled and sustained on this black gold.
“A rocket will never be able to leave the Earth’s atmosphere.”
--New York Times, 1936.
10 years later, in 1946, the first American-built rocket to leave the earth's atmosphere was launched from White Sands, attaining 50 miles of altitude.
"Reagan doesn’t have that presidential look."
--United Artists Executive, rejecting Reagan as lead in 1964 film The Best Man
Before becoming the 40th President of the United States in 1981, Ronald Reagan pursued an acting career, but spent the majority of his Hollywood career in the "B film" division.
