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READ IT AND WEEP - 5/22/09
by: Jeffrey Quinn
That would be the recently-released Treasury Department's "General Explanations of the Administration's Fiscal Year 2010 Revenue Proposals," also known as the "Green Book."
Not surprisingly, Obama and his Treasury minions (who are so good at paying their own income taxes) have in mind a few zingers which we and thee can hardly embrace.
- Beginning in 2011, the highest income tax rate would zoom to 39.6%, from the present 35%.
- For tax years beginning after 2010, a 20% tax rate on long-term capital gains and qualified dividends will apply--up from the present 15% enjoyed since the early years of the Bush administration.
- The tax value of all itemized deductions would be limited to 28%, even though one's marginal tax bracket were the higher 36% or 39.6% rates.
- The alternative minimum tax (AMT) would hang around, though exemption amounts would be indexed for inflation annually. (Thanks, guys.)
- Effective January 1, 2010, employers in business for at least two years that have 10 or more employees, and that don't otherwise have in place a qualified retirement plan would be required to offer an automatic IRA option to employees.
- The optional deduction for state and local general sales taxes would be extended through December 31, 2010.
- Businesses will love this one--use of the LIFO ("last in first out") inventory accounting method will vanish. This method, which has been around for eons, allows business to charge against sales revenues the costs of goods purchased most recently. In times of inflation (i.e.-almost always) this results in a larger deduction for the cost of goods sold. Not any more. Generally the FIFO (first in first out) method will prevail.
- On the compliance front, businesses would now have to file Forms 1099 for post-2009 payments to corporations, in the annual total of $600 or more. Until now, payments to corps were exempt from this annoyance.
- In an effort to raise over $24 billion over the next ten years on the estate and gift front, the Internal Revenue Code would be amended to preclude "discounting" in the measurement of the value of unmarketable assets, or those in which only fractional interests are held.
It's going to be an ugly year or two.
CONSULT YOUR TAX ADVISOR - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published twelfth edition of Tax Savvy for Small Business, published by Nolo. He can be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.
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