QuickBooks-Blog

Dropping Drive Prices

I am happy to report on dropping drive prices. There was severe flooding in Thailand from the end of July 2011 until mid-January 2012. It caused 815 deaths and $45.7 Billion in damages by December 1, 2011 (the world's fourth costliest disaster). Most of the damage was to manufacturing, with floods of as much 10 feet. This caused a global shortage of hard disk drives.

 

Many really like the Western Digital RE4 WD5003ABYX 500GB hard drive. It is especially good for RAID, but works amazingly quickly and reliably as a single drive. 84% of Newegg users give this drive 5 stars. This is the highest rating of any at drive.

I bought this drive for as little as $68 last year, but that was before the Thailand floods. They pushed prices to more than $215. Flood recovery is now giving us dropping drive prices. Newegg now has the drive down to $130 and others have it for as little as $70, though I suspect the lowest prices are obsolete. Many expect further dropping drive prices throughout 2012.

Taxes Have Nothing to do With Logic

Would it surprise you to learn that taxes have nothing to do with logic?

Taxes have nothing to do with logic. Many laws have little to do with logic, but taxes are often completely devoid of it. I can cite hundreds of case where taxes have nothing to do with logic. My favorite involves a fictional astronaut and a salesman. Let us say the astronaut travels a million miles AND PAYS FOR HIS OWN MEALS (humor me please). Can he deduct them?

NO! It may seem that he was away from home overnight, but he never landed away from home. He also was not off duty, for four hours at a time, with a place to sleep. He was never off duty and never had a separate place to sleep.

Now say a salesman tells his wife that he has an overnight business trip. What he really has is a nearby customer and a motel, where he takes his secretary. Can he deduct his meals and motel?

YES! He was away from home overnight, even if he was only a few miles away. He also was off duty for more than four hours, with a place to rest, even if his secretary never let him rest.

That alone should show you that taxes have nothing to do with logic, but there is much more that every CPA knows. How can you tell that taxes have nothing to do with logic? It is easy. All you have to do is learn the number of pages in our income tax laws (around 70,000 and growing fast) and the number of lobbyists. 13,000+ lobbyists get about $3.5 billion a year to make sure that taxes have nothing to do with logic.

Here is my big gun, in my campaign to show why taxes have nothing to do with logic. It is as simple as red and green. What can be simpler than the difference between these colors? Is either color right or wrong? Does either of them have a universal sacred meaning? Is there a LOGICAL difference between them, which makes us behave completely differently when we see them?

Their wavelengths may be different, but that is not why we defy logic in treating them completely differently. YOU GO ON GREEN AND STOP ON RED! Why do you do that? You could say that you do it so you will not get into accidents or get tickets (especially with red light cameras). However, you mainly do it because IT IS THE LAW!

If the most basic traffic law has nothing to do with logic, why would you expect that complex tax laws have anything to do with logic? You can spend a lifetime of hard work, to try to understand taxes, or contact me and let me make them simple. It rarely costs you anything after tax savings.

 

Stop Wasting Deductions

I try very hard to stop wasting deductions. It hurts me to see clients pay more tax than the legal minimum. Many CPAs know the same ways to stop wasting deductions, but seem to ignore them. This often relates to only doing one tax return at a time. That is what many CPAs do, especially in larger firms, but it is wrong, wrong, wrong!

I will not do business financial statements or tax returns without current personal data and prior company and personal returns. You can only stop wasting deductions if you have them all together. We otherwise get personal return data we wish we had when doing company returns. For example, many deductions are better on company returns. They do not waste personal exclusions and standard deductions. They also lower personal income, so Internal Revenue is less likely to audit business and personal returns.  

Personal income and deductions also can make us want or not want some or all of your fast (Section 179) company depreciation. This also can make us capitalize repairs, interest or taxes, or even select a different accounting method. Capitalizing repairs lets you deduct more depreciation in later years (when you may need deductions more) or stop wasting net operating loss deductions or exemptions. Internal Revenue also may audit high repairs more than high depreciation. 

In addition, no law says you must claim all legal deductions on your company or personal returns. Not claiming some is often better. Therefore, the best way to stop wasting deductions may be not to always claim them.

All this makes us do tax returns over several times each, so we see the exact way various taxes and credits interact and you stop wasting deductions. I would not do this if it did not pay many times over.