Hi! My name is Charles, and I'm going to be your CPA today!
This is the time of year when people begin thinking about seeing their accountant (from a Sioux Indian word meaning "Dances with Calculators") to find out what they should have done about their taxes before it was too late, which it is.
Let's face it -- taxes are just too complicated for the average citizen to fathom. Which pretty well explains why you hardly ever hear of large groups of people getting together for an evening of tax fathoming any more.
That is why we here at Accounting Outreach are committed to providing tax information as a public service. You can't just read the IRS instructions and start filling out forms. The last guy who actually read the entire IRS instruction booklet for his Form 1040 was heard shortly thereafter to talk crazily about seeing "a thousand points of light."
Remember that these instructions were written by an agency whose commissioner rides around Washington in a limousine with license plates that read, "Taxes Happen."
So, as I see it, you are pretty much on your own, and will fail miserably without the sort of low-sodium, fat-free, fiber-enriched Tax Information Column that I am providing today. I have decided to structure this lesson in the popular "question and answer" format, because I have found that it is much easier to answer questions when I have made them up myself.
Q. My husband has his own business and sometimes uses our car for business purposes. He is driving me nuts keeping track of every lousy trip in his automobile log, and now he is making me record my mileage also. I'm thinking of having him killed. What do you think?
A. Whoa, there! That may be too drastic at this point. I'd suggest that you have him beaten up first to see if that does any good. Then, if you still want to have him killed, and I completely understand, I recommend that you wait until after year-end so that you can still file jointly for 1992.
Q. My banker wouldn't let me open an IRA account because he says that I don't have any "earned income." As if bankers know squat about earning anything these days. What is "unearned income" anyway?
A. The IRS defines unearned income as earnings from interest, dividends, rent, etc. Benjamin Franklin did say that a penny saved is a penny earned, but he was probably just drunk again.
Q. I am a director of a failed S&L.; After the government closed us down, all I got was a measly $750,000 profit. Now the IRS is auditing me. What do you say about that?
Q. Do you see any benefit to putting money into trusts for our children's education?
A. Yes. Whatever money your children earn now will probably be wasted on stupid purchases, such as Nintendo games or Wrestlemania video tapes. They can't do that if their money is held in trust funds. Through the miracle of compounding within a trust the small sum of only $10,000 could grow so large that by the time your child is 18, he could afford to purchase a modest Central American nation, or a year of college, whichever.
Q. My wife and I are both over 65 years old, and I am left-handed. We just sold some stock that my wife got from her father when she got out of college. Her father received the stock when another company acquired the company whose stock he obtained by gift from his first wife, who got the stock from her older brother after he liquidated a partnership and transferred some of the assets into a trust for her benefit. The trust loaned the proceeds to a start-up company which later converted the debt into equity. What we want to know is, do we both have to sign our return?
A. I put your very interesting question to a friend of mine who is a highly regarded tax attorney, and he sent me a bill for over $400. So if you think that I'm going to answer your question in a newspaper for free, you are a silly goose.
Q. My company accidentally got our payroll records all messed up. Now the IRS is getting ugly with us. Can you help us?
A. Yes. In my experience with this sort of problem the easiest solution would be to liquidate the company tomorrow and have all the officers shot. You'll never regret it.
Q. You sound like a complete goof-ball to me. How can you possibly market your services?
A. A few years ago I had the brilliant idea of appealing to a select clientele, so I put an ad in the Yellow Pages which said, "Practice limited to the sophisticated taxpayer." I spent the following tax season playing gin rummy with the Maytag repairman. So I changed my strategy a little. Now my office has a huge arrow painted horizontally on the wall about three feet off the floor, with a sign that reads, "In order for you to have your tax return prepared here, you must be THIS tall."
Q. What do you think of the Revenue Reconciliation Act of 1990?
A. You must mean the latest hit from the Tax Reform of the Month Club, a.k.a. the Congress. Well, it has good rhythm and a nice beat, but the words are jumbled and it's hard to dance to. I give it a six.
Charles T. Allen is a CPA whose practice consists of preparing financial statements, tax returns and other humorous works of fiction.