Tax Day JOW

            Today is Tax Day, and more importantly, the date that marks the end of my daughter Tiffany’s youth; yes, she is thirty years old now.  However more people are concerned about paying taxes.  We once had a revolution based on ‘no taxation without representation’ but taxation with representation ain’t so hot either.  Actually there is one tax I think we should have: a tax on those who misuse the English language.  I would call it a ‘syn tax’.

Some tax quotes:

 

"Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund."
                           —F.J. Raymond

"There's nothing wrong with the younger generation that becoming taxpayers won't cure." 
                           —Dan Bennett 

“A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform.''
                           —Russell B. Long, former U.S. Senator

"Income tax returns: the most imaginative fiction written today. "
                           —Herman Wouk

“What's the difference between a tax collector and a taxidermist? A taxidermist only takes the skin.”

                              -- Mark Twain

"The present tax code is about 10 times longer than the Bible, a lot more complicated, and, unlike the Bible, contains no good news."
                          —Don Nickles, former U.S. senator

And anonymously

 

“When you look at ‘THE IRS’ it is actually ‘THEIRS’”

"There is nothing more permanent than a temporary tax."

"Optimist: Someone who sets aside two hours to do his income tax return."

“A fine is a tax for doing wrong.  A tax is a fine for doing well.”

Dave Berry had a great idea for reforming the tax code.

“What can we, as citizens, do to reform our tax system? As you know, under our three-branch system of government, the tax laws are created by Satan. But he works through Congress, so that's where we must focus our efforts.

Here's my proposal, which is based on the TV show Survivor: We put the entire Congress on an island. All the food on this island is locked inside a vault, which can be opened only by an ordinary American taxpayer named Bob.

Every day, the congresspersons are given a section of the Tax Code, which they must rewrite so that Bob can understand it. If he can, he lets them eat that day; if he can't, he doesn't.

Or, he can give them food either way. It doesn't matter. The main thing is, we never let them off the island.”

Stephen Willis, author of “Masks, Magic, and Games: the Use of Tax Law as a Policy Tool." wrote some amusing comments about actual verbiage in the tax code.  I am *so glad* I do not have to make my living reading this stuff.

1. Schedule J for Form 1118.
The title to this form, which must be important to someone, reads:

Separate Limitation Loss Allocations and Other Adjustments Necessary to Determine Numerators of Limitation Fractions, Year-End Recharacterization Balances, and Overall Foreign Loss Account Balances

According to IRS estimates, recordkeeping for this form should take approximately 89 hours and 15 minutes, learning about the form should take 1 hour and 5 minutes, and preparing the form should take 2 hours and 15 minutes.
Heck, it took that long to read the title.

Section 509(a).

The flush language to this important section, which defines private foundations, reads:
For purposes of paragraph (3), an organization described in paragraph (2) shall be deemed to include an organization described in section 501(c)(4), (5), or (6) which would be described in paragraph (2) if it were an organization described in section 501(c)(3).
President Reagan included this sentence in his speeches as as example of the Code being undecipherable. During his and subsequent administrations, we've seen 121 tax bills pass Congress. At least a dozen involved "simplification." However, the above sentence remains.
I guess they spent their time on the really complicated stuff.

Mother-in-law rule.

Frequently in tax law, the behavior of one person affects the tax consequences of family members. we are our "brother's keepers" so to speak.
For purposes of section 4946 - dealing with private foundations - a person's family includes:
his spouse, ancestors, children, grandchildren, great grandchildren, and the spouses of children, grandchildren, and great grandchildren.
That means you are a member of your mother-in-law's family, but she is not a member of your family. Sound OK? It also means that what she does taints you, but what you do cannot affect her!

Luxury Automobiles.

We hear alot about how the tax system should tax the rich more than others. People should pay according to their ability to pay. Appropriately then, section 280F limits depreciation on "luxury" automobiles. That sounds fair, until you learn that, pursuant to section 280F(a)(1)(A)(iii),
a "luxury automobile" is one costing over $12,760.41.
Where did the 41 cents come from?

Charitable Contributions.

Section 170 allows deductions for charitable contributions. Computing the amounts can be difficult stuff. Luckily, the Treasury Department issues regulations helping to explain the Code, which is sometimes difficult to read.
Thank goodness for the fellow who helped draft Treasury Regulation section 1.170A-12(e)(2) to explain the "special factor" used for "the valuation of a remainder interest following two lives":

And finally, Mr. Willis closed with this”

An unorthodox, but to the point summary of my message is that these many games we play amount to a form of tax masturbation: sure they can be fun and exciting - even seductive - but, ultimately, are we not just abusing ourselves?