Action Tax Service

THE TAX ATTIC with Jerry Coon

May 24, 2012 // 0 Comments

How to calculate depreciation on inherited property One of my favorite movies of all time, “Midway,” will undoubtedly be shown this Memorial Day weekend. The 1976 war movie has a tremendous cast of characters with Glenn Ford, Henry Fonda, Charlton Heston, Hal Holbrook, Cliff Robertson, Edward Albert Jr., and other stars telling the story of the June 4-7, 1942 battle of Midway Island. It was the largest battle ever fought exclusively between aircraft carriers and fighter planes. Throughout history, there had been many maritime battles where the ships of one nation fought close-up with the ships of another power. This one was different in that the ships of neither power ever got close to each other. The aircraft of the United States Navy successfully sank four aircraft carriers of the Japanese Navy. We lost one carrier. Perhaps we got a bit lucky in that our planes found their ships before their planes found our ships. But we needed some good luck. The Japanese had ruled the Pacific Ocean from December 7, 1941, as President Roosevelt famously said “a day that will live in infamy,” when the dastardly Japanese surprised and decimated our fleet at Pearl Harbor. That rule lasted a grand total of seven months. This may be the greatest example of what goes around, comes around. It usually happens. It doesn’t usually happen in seven months. They got lucky when we were surprised by the sound of Japanese dive-bombers, torpedo planes, and fighters filling the skies over Pearl Harbor. We lost over 2,000 soldiers and sailors. We got lucky at Midway a mere seven months later when our dive-bombers, torpedo planes, and fighters filled the skies over the Japanese carriers. They lost over 3,000 soldiers and sailors. From this battle on, we ruled the Pacific Ocean and the Japanese steadily were beaten back and ultimately defeated. Granted, it took a few years, but it started at Midway. I love this story because it illustrates American perseverance and courage. Being the underdog only made them fight harder. We are fortunate today to live in a country that can celebrate these accomplishments. My heartfelt “Thanks” goes out to all of those who have served or are serving now in the military so that we can continue […]

THE TAX ATTIC with Jerry Coon

May 10, 2012 // 0 Comments

Doing business in Michigan Our Michigan State Senator Mark Jansen came to town last week to meet with concerned Rockford residents and business owners over a topic of concern. That topic was fairness in our sales tax system. I know that seldom are the words “fairness” and “tax” used in the same sentence, but it is appropriate in this situation. Allow me to explain. Michigan assesses sales tax of 6% on purchases of most types of goods. The tax is collected by the retailer and the money is submitted to the Michigan Department of Treasury in Lansing. A total of approximately $8 billion dollars in collected. About $5.4 billion of those dollars go the school aid fund and the rest goes into the general treasury. The City of Rockford gets a small part of those remaining dollars and we are thankful that for what we do get. Where the fairness issue comes into play is that only retailers with a physical presence in Michigan are required to charge sales tax and pay it to Lansing. Retailers without a physical presence, like Web-based companies such as Amazon and Dell, are not required to charge sales tax and most of them don’t. This is patently unfair to the retailers in Michigan, such as brick-and-mortar businesses like Great Northern Trading Co. and Kimberly’s Boutique in downtown Rockford, Rockford Ace Hardware, or even larger companies like Meijer, that are trying to compete with the Web-based companies of the world. The Michigan businesses previously noted spend substantial amounts of money on their physical location. They pay property taxes, utilities and upkeep on that physical location. By employing people in Michigan, they keep the economy going. Currently, over 406,000 Michigan residents are employed in the retail industry. That means one in 10 of every person working is employed in retail trade. Where it all becomes unfair to the Michigan retailers is that the Web-based retailers may not only undercut the Great Northern Trading Co. businesses of Michigan based on not having a physical retail location, but also because they don’t have to charge the 6% sales tax. Not having to charge the 6% sales tax is what is unfair. When the sales tax was instituted, the physical presence test was a […]

THE TAX ATTIC with Jerry Coon

May 3, 2012 // 0 Comments

Early tax-saving tips As many of you know, last Tuesday the Environmental Protection Agency (EPA) held a meeting at Rockford Public School’s ninth-grade facility to discuss their involvement in the potential cleanup of Wolverine World Wide’s Tannery property. This is a wonderful and valuable piece of property along the Rogue River directly north of downtown and along the White Pine Trail. There is a question, however, as to whether the property will require an environmental cleanup or how much cleanup will be required before it can become a factor in the future success of downtown Rockford. The answer to that question was not answered last Tuesday night. I work in the income tax system. That system of laws can be very confusing and the numbers within that system can tend to make the system even more confusing. Basically, I make a living by being able to interpret and apply those laws and numbers. However, I have to admit that Tuesday’s presentation via the liberal usage of charts, test result numbers, and the accompanying explanations, at certain points, was able to confuse me. The presenters were masters at not tipping their hands, so to speak. Glen Blackwood of Great Lakes Fly Fishing Co. tried his level best in an attempt to get the EPA presenters to give an answer on a 1-10 scale of where the property stood. Even Glen, who is also a very good auctioneer, couldn’t get any type of commitment. They did pass on a ton of information, however, and listened to many people provide their opinions. The opinions varied from supporting Wolverine as a good corporate citizen, to not trusting Wolverine because it is a big corporation citizen, to just trying to get the presenters to clarify the volume of information they were presenting. I happen to support Wolverine as a good corporate citizen and feel they will do what is proper to allow Wolverine and the public to use the property. My opinion is to let Wolverine and the Michigan Department of Environmental Quality put together an appropriate plan of action with the EPA having oversight approval. It appears, however, the bottom line is this: the EPA has until June 21 to make a decision as to how they will deal […]

THE TAX ATTIC with Jerry Coon

April 26, 2012 // 0 Comments

Two complicated tax topics Things are really heating up in Lansing concerning reforming the Personal Property Tax (PPT). Governor Snyder and the legislature are hot on the trail of reforming the entire PPT system. I wrote a few months ago in a column that the complete elimination of the PPT will mean a reduction of revenue to the City of Rockford of approximately $280,000, which equates to over 10% of its budget. In addition, other entities such as Rockford Public Schools and Krause Memorial Library will see potential funding cuts of approximately $400,000. I’m beginning to wonder if Governor Snyder and the legislature have something against municipalities and school systems like Rockford. In all fairness, the package of eight bills introduced into the Senate would create a PPT Reimbursement Fund that would return approximately 81% of the lost revenue, on a non-guaranteed basis, to most local governmental units like Rockford. The good news is that the Michigan Treasury Department will have a fund called the Personal Property Tax Reimbursement Fund. The bad news is the Michigan legislature and the Treasury Department will control the payouts from the fund, hence the non-guaranteed basis. It appears they will be able to put conditions on the payouts to control who gets what and the conditions that must be met before they get the amount. If the legislature determines, however, that money is needed somewhere else, it can go somewhere else. Based on previous experience, this might not work out well for Rockford. The PPT system is being reformed because the assumption is that the businesses that save taxes will then hire employees and our economy will take one more step in the right direction. Great assumption, however, the debatable part of reforming the PPT system is whether those businesses that save taxes will actually hire new employees or just add the savings to their profits. Rockford will have to jump through certain hoops in order to receive their share of the PPT Reimbursement Fund. None of the businesses saving taxes, however, have to jump through any hoops to receive their share of the PPT savings. Let’s get some equality into the system. Let’s have all involved parties meet some pre-set requirements in order to realize the pre-set savings. […]

THE TAX ATTIC with Jerry Coon

April 19, 2012 // 0 Comments

Emancipation Day extends tax deadline This is always one of the more enjoyable articles that I write. The tax season has just ended. That sentence says it all for people like me, who make a living in the world of preparing tax returns. We all get a chance to take a deep breath and see exactly what has happened in the surrounding world in the last three-and-one-half months. While it’s true that Action Tax Service does more than prepare tax returns, a good percentage of our business for the year occurs in the period of January 1 through April 17. We did get three bonus days this year. First, it was a leap year so we received February 29 as our first extra day. Second, April 15 fell on Sunday so that was our second extra day. Finally, our third extra day occurred because April 16 is Emancipation Day in Washington, D.C. Since the IRS’ national headquarters is located in Washington, D.C., they are closed. And if they are closed, all IRS offices are closed. Emancipation Day occurred on April 16, 1862. It’s easy to confuse Emancipation Proclamation Day with D.C.’s Emancipation Day. President Lincoln issued an Executive Order, the Emancipation Proclamation, on September 22, 1861. Throughout history, it appears that many presidents have issued controversial Executive Orders and not just presidents Bush and Obama. Lincoln ordered the 10 states of the Confederacy to cease rebelling by January 1, 1863 or their slaves would be set free. Of course, they didn’t quit rebelling for another two years or so, but their slaves were technically set free on January 1, 1863. However, on April 16, 1862, slaves in D.C. were set free. Actually, their owners were paid the value of the slaves in exchange for their freedom. Lincoln’s Proclamation, by contrast, did not provide compensation to the owners of the slaves, it didn’t outlaw slavery, and it didn’t make the ex-slaves citizens of the USA. Those items did not occur until the 13th Constitutional Amendment was passed in December, 1865. It seems that in 1862, Washington, D.C. was on the cutting edge of things. We might even go as far as to say they were progressive back then. When we look at Washington today, another word, […]

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