Lately, the term "Real Estate Professional" has come under serious scrutiny by the IRS. People who qualified under the definition were finding out that they were no longer to take certain deductions on their tax return.
It appears that the IRS is willing to compromise. Read the story for the details
March 13, 2009
March 11, 2009
Thank You Jon Stewart!
Sometimes, people will get on me when I call out the so called "Financial Pundits" of the World. In a previous post I added in my own two cents on the topic. Feel free to read it at your leisure.
At this time, I'd like to thank Jon Stewart from the Daily Show, for putting together these pieces.
http://www.thedailyshow.com/video/index.jhtml?videoId=220252&title=cnbc-gives-financial-advice
Again, you have to ask yourself are these people that are on the Financial News Program there to make you money or to be entertaining? What is the parent company's objective? To make you a better investor or to sell advertising on their programs?
This one also gave me a good laugh as well:
http://www.thedailyshow.com/video/index.jhtml?videoId=220253&title=the-dow-knows-all
At this time, I'd like to thank Jon Stewart from the Daily Show, for putting together these pieces.
http://www.thedailyshow.com/video/index.jhtml?videoId=220252&title=cnbc-gives-financial-advice
Again, you have to ask yourself are these people that are on the Financial News Program there to make you money or to be entertaining? What is the parent company's objective? To make you a better investor or to sell advertising on their programs?
This one also gave me a good laugh as well:
http://www.thedailyshow.com/video/index.jhtml?videoId=220253&title=the-dow-knows-all
March 9, 2009
Tax Cuts and The Rich
I was scrolling through the blogs that I subscribe to and this one jumped out at me. Since my practice serves many physicians, I enjoy reading Jose DeJesus MD blogs. Please take a moment to read the full story.
I've used the following story at speaking engagements to get folks thinking.
Another common misconception is that tax cuts are for the rich. This is nothing more than political "get-me-re-elected" talk. It is obvious that the rich make up such a small portion of the tax paying population, the politicians view this as a small group of voters. There are more poor, middle class, and upper middle class voters then there are rich voters. So don’t be surprised when a politician favors the area where there are more voters. The tactic is as old as dirt. Divide and conquer, blame someone else for your problems, so you will vote for them. These are not poor or middle class people running for office. Remember, these people will spend millions to get elected to a position that pays a couple of hundred thousand dollars a year. Makes sense, right?
I would like to compare our system of paying taxes to ten people going out to dinner. The common belief is the rich get more back than us ordinary tax payers and that is not fair. The reality is, the rich pay more so they should get more back.
If ten people went out to dinner, and when the bill came we used the rules of the tax code to pay this bill, it would look something like this: The bill for dinner for ten came to $100.00; Persons #1 through #4 would pay nothing; Person#5 would pay $1.00; Person #6 would pay $3.00; Person #7 would pay $7.00; Person #8 would pay $12.00; Person #9 would pay $18.00, and; Person #10 (the richest person) would pay $59.00.
If the restaurant owner decided to give the group a 20% discount, the dinner for 10 is only $80.00. How should they divide up the $20.00 savings? Remember, the first 4 paid nothing to begin with, so the savings should be divided between the remaining six. Twenty dollars divided by six equals $3.33 each. If you subtracted that amount from those six people's share, then persons #5 and #6 would be paid to eat their meals. This doesn’t seem fair, so the equitable answer is to reduce each person’s bill by the same percentage. The results look like this: Persons #1 through #5 would pay nothing; Person #6 would pay $2.00; Person #7 would pay $5.00; Person #8 would pay $9.00; Person #9 would pay $12.00; Person #10 (the richest person) would pay $52.00 instead of $59.00.
Now everyone starts comparing and complaining. Person #6 complains because he only got $1.00 back and Person #10 got $7.00 back. "Why should he get $7.00 back when I only got $2.00?" shouted person #7. “Why should the wealthy get all the breaks?” Person #1 through #4 yelled “We didn’t get anything back. This system exploits the poor!” Then the nine people surrounded Person #10 and beat him up. That seemed to satisfy them. The next time they went out to dinner, Person #10 did not show up, so they sat down and ate without him. When they were finished the bill came and they discovered they were $52.00 short.
The people who pay the highest taxes get the most benefit from a tax deduction. It's common sense math. If you tax them too much and attack them for being wealthy, they may decide not to show up at the table anymore. For everyone involved that would create an unintended consequence. Everyone would have to pay more.
I've used the following story at speaking engagements to get folks thinking.
Another common misconception is that tax cuts are for the rich. This is nothing more than political "get-me-re-elected" talk. It is obvious that the rich make up such a small portion of the tax paying population, the politicians view this as a small group of voters. There are more poor, middle class, and upper middle class voters then there are rich voters. So don’t be surprised when a politician favors the area where there are more voters. The tactic is as old as dirt. Divide and conquer, blame someone else for your problems, so you will vote for them. These are not poor or middle class people running for office. Remember, these people will spend millions to get elected to a position that pays a couple of hundred thousand dollars a year. Makes sense, right?
I would like to compare our system of paying taxes to ten people going out to dinner. The common belief is the rich get more back than us ordinary tax payers and that is not fair. The reality is, the rich pay more so they should get more back.
If ten people went out to dinner, and when the bill came we used the rules of the tax code to pay this bill, it would look something like this: The bill for dinner for ten came to $100.00; Persons #1 through #4 would pay nothing; Person#5 would pay $1.00; Person #6 would pay $3.00; Person #7 would pay $7.00; Person #8 would pay $12.00; Person #9 would pay $18.00, and; Person #10 (the richest person) would pay $59.00.
If the restaurant owner decided to give the group a 20% discount, the dinner for 10 is only $80.00. How should they divide up the $20.00 savings? Remember, the first 4 paid nothing to begin with, so the savings should be divided between the remaining six. Twenty dollars divided by six equals $3.33 each. If you subtracted that amount from those six people's share, then persons #5 and #6 would be paid to eat their meals. This doesn’t seem fair, so the equitable answer is to reduce each person’s bill by the same percentage. The results look like this: Persons #1 through #5 would pay nothing; Person #6 would pay $2.00; Person #7 would pay $5.00; Person #8 would pay $9.00; Person #9 would pay $12.00; Person #10 (the richest person) would pay $52.00 instead of $59.00.
Now everyone starts comparing and complaining. Person #6 complains because he only got $1.00 back and Person #10 got $7.00 back. "Why should he get $7.00 back when I only got $2.00?" shouted person #7. “Why should the wealthy get all the breaks?” Person #1 through #4 yelled “We didn’t get anything back. This system exploits the poor!” Then the nine people surrounded Person #10 and beat him up. That seemed to satisfy them. The next time they went out to dinner, Person #10 did not show up, so they sat down and ate without him. When they were finished the bill came and they discovered they were $52.00 short.
The people who pay the highest taxes get the most benefit from a tax deduction. It's common sense math. If you tax them too much and attack them for being wealthy, they may decide not to show up at the table anymore. For everyone involved that would create an unintended consequence. Everyone would have to pay more.
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