The Tax Attic with Jerry Coon — September 16, 2010

Tax school begins

I may end up buying my salmon this fall at Meijer or D&W. In past years, I could depend on going fishing a few times throughout the summer and catching a few fish each time. Then, to finish off the summer, over Labor Day, my brother-in-law Don and I could always count on coming home with some nice salmon fillets. We are far from experts, but we have good equipment and we are persistent.

Jerry Coon, Enrolled Agent

That strategy got off to a slow start this summer. Every time I had plans to go Lake Michigan fishing, it was either raining or there were small-craft warnings on the big lake. I did convince Deb to go once, but there were two-to-three-footers with white caps and, under those conditions, it’s tough fishing. The boat can take the waves, but it’s tough to steer a boat when it’s rocking and rolling that much. It also takes about twice as much time to get the lines into the water.

We stuck it out for a while and did catch one small one, but that’s not exactly what I envisioned when we left Rockford.

As of Friday morning on Labor Day weekend, I still had great hopes for catching our self-calculated quota—after all, we had never failed on Labor Day. Those hopes went by the wayside when we drove into Muskegon State Park and took one look at Lake Michigan. You have all seen the pictures; seeing those huge waves in person was truly impressive. Fishing in Lake Michigan was out of the question and would remain out of the question for the entire weekend. We still had the channel and Muskegon Lake. Being an optimist, in my mind success was still possible. I was wrong. There were white caps on the channel off and on, gale warnings much of the time, and white caps on Muskegon Lake most of the weekend. We fished for about two hours the whole weekend and caught no fish. The weather was so bad we went bowling on Saturday. We had fun bowling, but pulling in a 15-pound salmon would have been fun, too.

We always have a great time camping and, despite the lack of fish, this Labor Day was no different. Plus, we need something to look forward to in the future. Next year will be that much better, as long as those pesky Asian Carp haven’t taken over.

School started for kids last week, and school starts for tax professionals this week. The tax organization I belong to, the National Association of Tax Professionals (NATP), kicks off the seminar season on the 17th in Lansing with an all-day event.

This year’s predominant topic is “All about Homes.” Eight hours on tax laws dealing with

homes sounds like a lot of hours. It’s not. It could be a 60-hour seminar.

The instructors will spend an hour on the First Time Homebuyer Credit program. We have been applying for those credits throughout the last tax season and this summer. However, now we will get to deal with taxpayers who received the credit but have now sold the home and will have to potentially pay back some of that credit. Those recapture rules have a few quirks that are worth going over. Unfortunately, we all know taxpayers who have lost a home to foreclosure or have suffered through a short sale.

Needless to say, an indefinite amount of time could be spent on the tax implications of foreclosures and short sales. The instructor will do his/her best in two hours to hit the high points.

Michigan allows us to claim a property tax credit on our principal residence. All laws written by our Michigan legislature seem to be quirky and this

one is no different. We will spend some time on

those quirks.

Over the years, it has become fashionable to refinance a home to pay off credit cards or to buy a vehicle or to send a child to college. Ordinarily, the interest due on a mortgage is deductible, but is there a time when a mortgage or home equity loan interest is not deductible? There is and we will go over those rules on Friday.

Finally, many taxpayers have purchased vacation homes in the past. Now many of those homes are being rented. There are some very special and very detailed rules for vacation homes. I need that refresher in particular, so I hope they don’t go over them right after lunch. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent. He owns Action Tax Service in Rockford. Contact Jerry at

www.actiontaxservice.com.

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