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In this episode of the Dr. Friday Radio Show, Dr. Friday discusses various tax-related topics, including franchise excise requirements, inheritance tax, and the American Family and Work Act of 2024. Dr. Friday also provides advice on starting a business and maintaining proper documentation for tax purposes.
Topics covered:
- Franchise excise requirements and potential refunds for Tennessee businesses
- Business ownership information (BOI) filing deadlines and penalties
- Inheritance tax and step-up in basis for inherited property
- American Family and Work Act of 2024 and potential changes to the child tax credit
- Sales tax exemptions for farmers selling their own products at markets
- Tips for starting a business and maintaining proper financial records
- Importance of documenting expenses for tax purposes and audit-proofing
- Dr. Friday’s credentials as an enrolled agent and her ability to represent clients before the IRS
Notice: Please note that due to some technical difficulties during the recording, the audio quality may be slightly compromised towards the end of the episode. We apologize for any inconvenience this may cause.
Transcript:
No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your
financial woes.
She’s the how-to girl.
It’s the Dr. Friday Show.
If you have a question for Dr. Friday, call her now, 737-WWTN.
That’s 737-9986.
So here’s your host, financial counselor and tax consultant, Dr. Friday.
G’day, I’m Dr. Friday and doctor is in the house.
So if you’re thinking about working on taxes or you happen to be a small business owner,
not necessarily small, but franchise excise requirements.
Now, these are not going to be individuals that only pay the $100.
There’s no refund for them, but there was a change in the tax law that basically said
you can’t be taxing both schedule G and F and they were taking basically the highest
of the two.
Now they’re only allowed to request what is your schedule F, which is your debt ratio
or your income that you have.
So the only way to adjust this is first you have to go on to TINTAP.
I mean, every day we’re getting two or three people sending us a letter that the Tennessee
department of labor sent out.
The letter basically says you could be entitled to a refund.
But that’s such a lean, you know, I mean, I’m just being honest, a large number of clients,
even my big clients, many of them aren’t going to be in much of a refund so far.
I think we’ve seen like a $600 refund, which I’m not saying isn’t a purpose to do it.
Of course, go ahead and do the refund, but it just keep in mind that you have to file
to get the refund.
You have to first go in and file an amended return.
Then you can either attach a balance sheet or you have to give them a report of debt
if your refund is over $200.
So you’re theoretically going to go through an audit with the state, which again, isn’t
the end of the world.
It’s just one of those situations where you’re like, well, do I want to have to go through
an audit to get my own money back?
So, you know, just be in mind that this isn’t something that’s going to happen fast.
Again, first thing you need to do is if you are a franchise excise filer and you don’t
just pay the $100, then you need to go and see about amending the last four years, 2021,
22, and 23.
And they say specifically on the year of 23, you have to file it the old way and then go
back and amend it.
They don’t want you correcting it yourself, in essence.
I don’t really understand that particular one because to me, if the law says you can
only do my net worth and that’s all I’m going to have to be taxed on, then why am I getting
you how much I have in inventory, what my asset value is, how much I paid in rent?
That doesn’t seem like that is going to be a perfect situation.
It basically eliminates the property measure for the franchise tax calculation starting
as of January 1st, 2024.
So there’s some things you need to know.
One, you only have until November to make these corrections.
The tax period in 2023, tax period ending on or before December 31st, 2023, must complete
both the schedule F and the schedule G as you have done always in the past.
You cannot, and then go back.
And then based on that alternative basis, you can amend the taxes and then go back and
correct it.
But again, why are they doing that?
Well, the only reason I can come up with is they want to be able to audit that information.
If they can’t see what’s on the schedule G in the first place and you’re only turning
in your net worth or the schedule F information, they don’t know.
And then they don’t want, they want to have to review you, right?
Because if you turn that in and then there’s no schedule G, then they theoretically could
come back and audit.
So you want to make sure that this is covering January 1st, covering the period ending or
on or after March 31st, 2020.
We encourage the records and the consultant taxes.
You should consult a tax expert.
You can go into appeals.
You do actually have to sign off that you will not sue the state, Tennessee Department
of Revenue or thereof if they don’t, by getting your refund back.
So again, I have a feeling there is some sort of action out there.
We’re not really being told.
They’re trying to make sure it goes away.
The standard claim for refunds will not work.
You have to go all through this process, right?
You have to put on the amended return specific verbiage, you know, appeal schedule G. And
then you have to go under the schedule G refund and it will pull up after you’ve amended,
it will pull up whichever ones of the years that you might have qualified for any refunds.
Then you can go through the refund process.
It isn’t going to be fast.
It’s going to probably be a little bit painful.
But it is November 30th, 2024 is the last day they will accept any of this.
So you actually have, you know, ranges anywhere between obviously $0 up to or more than $10,000
people are getting that according to the state.
But again, if you have that kind of situation and you’re going to be getting anything more
than a couple hundred dollars, you will have to provide additional documentation.
Basically they’re wanting you a balance sheet, which will prove your net worth.
Many small businesses don’t always have balance sheets and sole proprietor or single member
LLCs also don’t report it.
If you do a corporation, 1120, 1120S, a 1065, most of those returns, you’re going to have
a balance sheet already on it.
So it gives them that information.
But if you don’t, then you’re going to end up having to produce one of those forms to
make sure you have it.
If you’re not too sure how to do this, I will say 10TAP does have a live demo right there
on the website.
So if you want to know more before you decide to open that up, or if it’s even worth it.
I mean, we’ve went through and amended a ton of our clients.
And like I said, we’re not seeing very much in refunds in all honesty for a large number
of those clients because they took whichever was hired net worth or your schedule G, your
property.
And in many of these cases, it’s most likely the net worth was already higher anyway.
So it didn’t really change the taxes, but those letters that you’re getting, and I know,
like I said, guys, we are trying to get one almost every single day.
Someone’s taking a picture or emailing it or calling us about it.
It says that Tennessee Department of Revenue is, you could qualify.
And that’s the key words there.
You could qualify for a refund.
You know, I’m just, you know, not as many people I think are going to qualify for this
refund as you think.
So just not saying you shouldn’t do it.
It is a bit of time consumption, but there’s no reason you can’t do the corrections and
get it done.
Just be prepared.
They’re going to come back and most likely ask you for a balance sheet or whatever.
And then again, do not file the regular refund status.
You have to go under the one that specifically says refunds for schedule G once you have
already amended those returns, if you’re doing it on TINTAP at least.
So hopefully that gives you guys, if you’ve got any questions, sorry, I just want to get
that.
I’ve had a ton of questions and I really wanted to at least do a basic overview on that because
it’s again, everyone thinks that there’s money out there for their business or for themselves.
And it’s not going to be as simple as a PPP money or something.
All right.
The phone number here in the studio, 615-737-9986.
The other one that we’re working very hard on, and we have to have everything done by
January of 2024 of course, is the business ownership information, the BOI.
Again, you can do that.
And if you have started a new business, be that a sole proprietorship, I’m sorry, anything
that’s listed as a LLC, a partnership, a corporation, if you’ve started it now, you’ve only got like
60 days to file the BOI.
If you had filed, if you’ve been in business forever, like my company, 25 plus years, then
we have until January 2024 to do it.
If we don’t meet these deadlines, that particular one specifically says in the PAMP that they
sent out a $500 penalty per a day.
That’s right.
500 a day.
Now this other franchise, if you don’t want to amend, you don’t want to do anything, there’s
no penalty not to do it.
Really no penalty to do it.
Worst they’re going to tell you is no, you don’t qualify.
But on the BOI, it is a penalty and it’s very important.
If you run any type of entity via business, any kind of entity, and now there are a few
exclusions, insurance companies, CPA firms, some of those, they say they’re excluded.
I think it has to do with our licensing, but any way you look at it, it’s better to be
safe than sorry.
You do have to have driver’s license and this is being put out.
The BOI is not requested by the Internal Revenue Service, just to let you know.
They already have most of this information.
It’s being put out by the foreign banking.
And I believe it’s a way of trying to figure out how many people own or operate businesses
here in the United States that maybe don’t have a necessary green card or whatever, the
proper IDs, because you can’t do the BOI unless you have a passport or a driver’s license
or something to do that.
So they’re probably trying to figure out something along the four, outside my pay grade guys,
but that’s my guess.
And the most important part again of that conversation, if you run a business or you
work for a business and you’re the accountant, I mean, I know some of you guys, or you work
in that division, you might want to make sure it’s not based on just little companies or
big companies.
I mean, as far as I know, all companies have to file this information.
Now I’m sure if it’s over the 10 million, you fit into the large, there may be a different
situation you have to comply with, but again, it’s still a compliant situation that you
have.
Of course, if you’re on the stock market, those companies have already done this because
they have to have that before they can get registered to go public.
So a little different.
These are for basically private health.
So again, if you have a question or you want to join the show, maybe there’s something
you have that you want to say, 615-737-9986, 615-737-9986.
Also I think I said January of 24 guys, I meant January of 2025.
I am so sorry.
I got the wrong year.
I’m working on 23 taxes and I got the wrong year.
So business ownership information has to be filed by January of 2025.
Sorry about that error guys.
If you want to have questions or you have something you want to share, 615-737-9986,
615-737-9986, taking your calls, talking about all good things.
Other than that, when there’s not a whole bunch, I will say in the tax year of 2024,
the year we’re in right now, assuming nothing changes in tax law, which we have no guarantee
one way or the other.
As of today, if you go and buy a piece of equipment, you’re going to qualify for 60%
of the value for first year section 179 bonus depreciation, whatever.
You want to be able to know this because so many people, last year we were hoping the
hundred would go through, but it was only 80, right?
We got 80%.
It wasn’t too bad.
Now we’re going to be down to 60.
I think it loses the incentive for a lot of business owners to go buy bigger pieces of
equipment because a lot of times they use those savings to help pay off or pay down
that equipment.
But if you’re a person that likes to go and buy equipment and you buy a new car every
year or every few years, you’re not going to get that instant gratification that you’re
used to.
So you may need to rethink.
I mean, I have some clients that every two or three years they go buy a new truck.
They usually turn in the old truck, which means we have to recapture the depreciation
on the old truck for whatever value they got on it.
And then they put the new one on and it, at least if you’re doing the a hundred percent,
you usually end up spending more than what you’re having to recapture.
Therefore, at least we’re not paying taxes.
You know, you’re not have a lot of huge tax savings, but you’re not paying taxes.
That changes when we have the other side of it.
But you know what?
I’m going to take a quick break.
When I get back, we’ll get more into this.
Uh, phone number here, 615-737-9986.
We’ll be right back.
We are back here live in studio.
Again, you can join the show.
615-737-9986, 615-737-9986.
Talking about taxes.
So my favorite subjects in life.
And I realized, guys, it’s the holiday weekend and you’re not likely to be basically sitting
around probably looking, especially if you’re enjoying it, maybe you’re having a barbecue
or something.
It’s Saturday.
Most people do that on Sunday for Memorial Day, but who knows, you know, you got to live
on the wild side.
That being said, um, if you are listening, we’re, I’ll talk a little bit more about the
American family and work act of 2024.
This is going to be something that has not yet been approved.
It’s trying to be approved.
It’s working its way through the Senate and everything, but in it, um, some of you would
be happy to know that they’re trying to change the child tax credit.
If many of you guys remember back in 2021, 2020 and 2021, we had $3,600 for child tax
credit.
A portion was only refundable.
It’s now right.
The second is back down to 2000, which is what it was prior to that.
They’re trying to get it back up to the 36 per child.
Um, so that will be interesting to see if it passes.
There are a couple of other things, but that’s probably one of the most notable in this particular,
um, bill that is sitting out there to see if it’s actually going to work.
I got an, um, an email here just now with someone that is actually inheriting, um, some
property and they also are selling their primary home.
Not that that makes big, big difference, but the beautiful thing about this will be kind
of like a good news moment.
So you have a situation where you’ve sold your primary home.
And again, I don’t know this person, but I’m assuming let’s just make the assumption you
are married based on the email.
So you have $500,000 exclusion.
You do not have to go buy another house to get that exclusion.
You don’t have to reinvest nothing.
You just basically whatever you paid for plus 500,000, you can sell that house for and pay
zero tax.
Same kind of situation with the inheritance where there’s what we call a step up in
basis.
So it depending on when you inherited the basis happened at the time of inheritance,
you then turn around and sell it.
Your basis is going to be higher than it would have been for the person you inherited from.
So you know, just making sure you have that situation.
Hey, it looks like Joe might be on the same kind of situation I was just talking about.
Hey Joe, what’s happening?
We lose him.
We lost him.
Okay.
So if you, again, so if you inherit property in most cases, the inherited property is one
where you obviously whatever the date of that person passing away, it’s very important to
get at least comps if not an appraisal, depending on how much this property is worth.
I mean, you’ve got a couple of million dollars, even a million dollars worth of inherited
property.
So I would definitely suggest breaking the bank and going and paying less than a thousand
dollars probably to get a good appraisal.
That way then you have the value for everyone, whoever’s involved in the sale of that land.
And also what people don’t always, there’s a step up, there’s the next step and the step
up from there on, because you want to make sure you have that basis to keep going.
So again, if you’re selling your primary home, that’s one thing.
And then if you inherit, you have the other side of that to go with it.
If Joe’s on the line, guys, you can just connect it for me.
Hey Joe, what’s happening?
Yeah, lost you there.
I know a little typo on our side.
I can hear you though.
Thanks for calling back.
Yeah.
If you buy a house for a 99,000 years ago, and then you turn around and you sell it right
now for two 50 and you are a disability, will you be able to keep that money?
That’s a great question.
And unfortunately I, my understanding is this.
No.
I don’t mean that.
My understanding is it could go, they could take that money and apply it against your
future medical.
I don’t know.
They have a five year look back and you’re only allowed to have like 3000 in the bank
is my understanding of people.
So if you go and put 250,000 in the bank, now you’ve got more money than what, you know,
they would want you to live off that and then go back onto disability, which is very hard
to do.
Right.
Now what about if you’re just on, you’re just on social security because you’re 65.
Right.
That’s different.
If you’re on social security, it doesn’t make a difference if it’s a social security, the
only thing you would have that could kick in a, well, this is your primary home.
So no, there’d be nothing that that would be perfect.
You would not have any penalty for having, would you have to pay taxes on it?
If you decided to just go rent a house, you want to just keep the money.
That’s a great question.
And no, Joe, I mean, under your scenario, you paid 98, you sell it for two 50, you have
a $250,000 exclusion.
So you would have plenty of wiggle room to not have to pay any tax as long as you lived
in that house two out of the last five years.
Yeah.
So you don’t, wouldn’t have to go buy another house.
No sir.
Okay.
Well, I appreciate your help on that.
No problem.
I thank you for listening and calling today.
Well, enjoy your show.
You do a really nice job on the show.
You really appreciate it.
All right.
Thank you for calling.
All right.
I’m going to try to get this on the show.
You can 615-737-9986, 615-737-9986.
And I want to appreciate Joe for calling.
One of the reasons is because so many people still call.
And at one point back in the day, guys, there was the situation where if you sold a home,
you had two years to reinvest it in another home and you didn’t have to pay tax.
That is not on the table any longer and hasn’t been for quite a while.
And nowadays they just give you this exclusion and you can do whatever you want.
You can pay, you can go buy another house.
You don’t have to buy another house.
The money is yours free with this step up that they provide or this basis addition they
give you.
So the exclusion for single person, 250, married couple, 500.
Both people do have to have lived in the house two out of five years.
And if you’ve actually excluded a house in the last two out of the five years, there
are some other additional questions that do come in play.
And I also want to say, sometimes people don’t realize this, but theoretically, if you don’t
live in the house two out of five years, but let’s say you got divorced.
So you were forced to have to sell the house due to that circumstance or for other major
reasons.
There is some additional exclusions available out there.
A lot of times people don’t seem to know what that is, but it is something out there.
So if you have a situation like that, make sure you talk to a tax person.
You don’t want to be paying capital gains tax or at least less if that’s a possibility.
I’m not too sure how to say the person’s name.
Is it Pius?
We’ll see.
All right.
We got, I think it’s Pius in Hendersonville.
You want to have him join?
Thanks.
Am I saying that first name right?
– Yes, Pius.
– Pius.
Okay.
Hey, what can I do for you?
– Yes.
We had the home for the past 11 years or 12 years.
We moved from there about a year ago.
We bought another house.
It hasn’t sold, but it’s about to get sold.
So are we still qualified for the 250 I mentioned?
– Yes, you would.
– We lived in it for 12 years.
– Because you lived in it two out of the last five years, because you said you moved out
a year ago.
So you would be fine.
The last time you moved out, you were in the house for two years.
– Yes.
– So you’re still qualified.
– Yes.
– Okay.
– So you’re still qualified.
– Yes.
– Okay.
– So you’re still qualified.
– Yes.
– Okay.
– So you said you moved out a year ago, so you would be fine.
The old home, I’m assuming, is the one that sold, correct?
Not the new house that you just moved in?
– No, the old home.
– Okay.
Yes, you would qualify for that.
So whatever you paid, plus either 250 if you’re single or 500,000 if you’re married, that’s
where the exclusion.
So if you paid 200 and you’re married, you could sell for 700,000 or less and you pay
zero tax.
– Wonderful.
Great question.
Thank you, sir.
– All right, bye-bye.
Let’s hit Randy really quick.
Randy and Franklin, hey, bud, what’s happening?
– Hello, Dr. Freda, how are you doing?
– I am doing awesome.
– Good.
– What can I do for you?
– I am, just a quick question about my wife and her brother, they’ve inherited their mother’s
house.
– Okay.
– It’s gonna be about a year now that they’re finally getting around to settling everything.
But one sibling wants to buy the other sibling out.
Is there a tax consequence on that because one’s not getting the step up for the real
estate or how does that work?
– No, they’re still getting the step up.
So when mom passed away, assuming that they didn’t own the house prior to mom passing
away, but they inherited it, so they would get it.
And then let’s just say the house is worth 200,000.
If the other sibling is wanting to give one 100,000 or whatever, they agree, it doesn’t
have to be the same, but let’s just, for the assumption here, 100,000, that money would
be tax free to that person that received it.
And the new basis for the other partner would be 200,000.
– Got it, got it.
So as long as at the time that-
– Does it make sense?
– Yeah, it makes sense.
As long as at the time they inherited it, it’s still a half, then it washes.
– Exactly, yes.
So they’re just giving their share for the value of whatever the existing, and I’ve had
some where they’ve done it for less because of a lot of repairs, and maybe it doesn’t
actually appraise.
And there’s all kinds of different moving parts to that.
But as long as they don’t sell it for more than the 50% that they think it’s worth more
and the person’s willing to buy them out, then there’s no taxes you have to worry about.
– Outstanding, thank you.
– No worries, thank you.
All right, guys, we’re gonna take another quick break here.
This is the Dr. Friday Show.
You can join the show at 615-737-9986, 615-737-9986.
When we get back, we’ll get some more of your phone calls and emails.
You can also call the studio, 615-737-9986, or email friday@drfriday.com.
We’ll be right back with the Dr. Friday Show.
All righty, we are back.
We are live in studio on this absolutely beautiful Saturday.
So I’m glad that everyone’s still out here listening because the sun is shining where
I am at.
Let me tell you, again, 615-737-9986, excuse me, 615-737-9986 is the number here in studio.
And we’re taking phone calls, talking about taxes, talking about different situations.
I had someone that contacted me just recently about they are doing their own bees and honey,
and they’re taking them to the market.
They wanted to know if they had to charge sales tax on the honey that they sell.
And the answer is no.
If you make the product here, so for example, if you grow corn and you go down to a farmer’s
market and you sell the corn, there is no sales tax in the state of Tennessee on that
product because you actually grew it and sold it.
And that’s just one of those little loopholes in the tax system.
So if you have, you want to go and you want to start some little, you know, farmer’s market
or do something like that, then the answer is you just need to, you know, just pack it
up and go down there.
Like I told them, see what happens.
If you want to be able to make something like that and do it.
I think it’s awesome.
We’ve been looking at honeybees ourselves because I think bees, especially if you live
out and you know, you want to actually do grow corn or tomatoes or anything, they usually
have to be pollinated and that requires somebody to do it.
I actually did one year pollinate myself, my tomato plants, and that was a lot more
than it needed to be.
I think bees would do the job so much easier than me tickling every little vine.
So if you’re a person that enjoys that kind of thing, it’s not a worries, but if you want
to join the show talking about taxes or, you know, building businesses, if you’ve got a
new business and you’re trying to figure out what type of entity should even be an entity,
you know, so often I find that people jump right into starting LLC, starting corporations,
but they really haven’t even started the business yet.
I’m not an attorney.
Let’s clarify that right now.
I am not an attorney, but from the tech standpoint, once you’ve started something like that, you
know, you’re basically saying this is a business.
Hello, I’m doing a business.
And if that’s the case, there’s going to be business licenses potentially, or, you know,
even if it’s only 22 or $44, you’re going to have the F and E minimum, a hundred dollars
annual for, for an LLC.
The annual amount is $300 to the secretary of state, $20 if it’s a corporation, money
is going out the door, but yet you haven’t really started the business.
So my personal opinion is before you really get too far into it, let’s make sure you have
a viable business.
Let’s make sure you have a business in which you can do so, you know, start a business
and also good practice.
If you’re going to, if you’re going into business and I will say, I have had clients stumble
into business, meaning they never intended to be in business, but the next thing they
knew they were in business, they did one little thing here, did something else next thing,
you know, they’re doing it.
But if you’re planning your business, then start the simplest thing, start out with a
bank account, even if it’s just a separate bank account in your name, something that
you can then track all income out, all income, all expenses out, sorry, all income in all
expenses out.
Um, and, and you will then have at least the idea of a balance sheet and financial statement,
which would then help you when you’re doing your taxes.
Also let you know if you’re making money or not.
I, I’ve, you know, I’ve been doing this for a number of years, 25 plus years.
And one thing we see a lot of is sometimes people don’t realize how much money they make.
Uh, every tax season, I guarantee every single tax season, I have number of people that will
come in every time and say, I, um, I couldn’t have made that kind of money.
Where is it?
What’d you spend?
You know, where, what, as if the money just disappeared all on its own.
Then you go back through and you show them where the money went.
Oh, you did this, you did that, or you purchased this, or you’ve got more inventory, whatever
it might be.
The dollar amount is still there.
It didn’t disappear.
But if you need to be able to do that, if you have the ability to do now, QuickBooks
is a decent software, but wave is a good, cheap, inexpensive way to start.
Um, you may eventually want to move into QuickBooks depending again on the type of business.
I mean, even Excel is a good place to start.
You don’t have to be, um, an accountant to do the basics on a brand new startup business.
You really just want somebody that’s going to take the time to actually track the expenses.
Right?
So the important, I mean, you want to make yourself as audit proof as possible.
And to do that is really starting out the way you want to continue.
You don’t want to be the guy that used his own personal checking account.
And then, you know, you get so big and you’re like, Oh, I don’t really know where my expenses
because everything going, all the petro going through that bank is basically personal because
we have nothing to go.
All of the, um, meals or entertainment and stuff like that is all there because of the
same reason.
Um, you know, you have the same situation where you have that going on.
And so you have to be able to figure out what you want to do and how you’re going to do
it.
And so if you have a separate bank account that you can do it in, then it’d be a good
idea to be able to track and then you can say, Oh wait, these meals had to do with business.
These meals had to do with petro, um, or for, for miles.
And I use this cause it’s a lawn service.
Maybe I use this for just tracking my diesel or whatever else that was happening over there.
Um, so you have, you know, the tracking is so important.
If you really want to be audit proof guys, you have to have the documentation.
Now in QuickBooks and stuff, it is nice.
You’re able to scan the receipts, put them in behind the checks or the invoices, those
kind of things.
So you’re able to actually track all of those different expenses, not just, um, you know,
just cause people will say, well, I have it on my credit card or I use my debit card.
So here’s the information that’s not going to work.
In many cases, the IRS has no idea if you went to office Depot, unless you have the
receipt, they don’t know if you went and brought school supplies, personal supplies or business
supplies.
If you’re a contractor and you went to Home Depot, same thing, how do they know you didn’t
just fix up your own house or your kid’s house instead of fixing, um, you know, somebody
else’s for paid work.
Very important to have the additional documentation and then anytime possible, obviously on the
receipt itself, or if you’re like a Home Depot, there’s the pro service and stuff, putting
the PO, putting the name of each property that you’re working on.
So that way you can go back, run a report for this one client and be able to do something
on that as far as being able to track the expense.
So how much did I spend on this house?
I had the same problem again on rentals, rentals.
I get it.
I have rentals.
You guys all know that I love my rentals, but to track each rental separately is the
key.
If you’re going to do, especially if it’s a short term, in my opinion, cause there’s
a lot more expenses than longterm, but if you’re going to pay a utility bill, if you’re
going to run the Walmart, you’re going to get a hire someone to fix something, then
you want to be able to make sure that you have the documentation.
If you go to Home Depot and you say, well, I did this on my Sulphur Springs road, or
I did this for this, you had better have more detail.
For one, if you’re buying it here in Sulphur Springs and Knoxville, then you might be wondering
why you drove all the way up.
It’s not, you couldn’t, but it’s, I mean, it’s just that you want to document it because
if you don’t document it, the IRS comes back and they question you and you don’t have any
notes on there.
It’s going to be very hard for you to justify these expenses.
That’s all I’m saying.
Your job is to make sure every time you write off something on your tax return to be able
to say, Hey, was it a true actual expense?
Was it necessary for my business?
Not just because I want to, but the word necessary is actually in the tax law.
Is it necessary to run my business?
And that’s where it gets a little gray when people say, well, I need to drive a G wagon
or something like that.
And you know, your business doesn’t necessarily require you to drive that kind of vehicle.
There is tax courts that has been taken to tax courts cases.
And most of the ones I’ve ever seen win under those circumstances for having the nicer higher
end are people mostly in finance or real estate where they’re dealing and having to meet or
even have people in their car.
And they’re, you know, people are worth millions.
And then they, they have these kinds of vehicles because they want to be able to show that
they’re so good at what they do.
It represents them.
It’s like in the day when Rolex, apparently that’s no longer the top watch, but people
used to wear the Rolex same way to show that they had wealth and therefore you should invest
with me because I am so good.
I can afford a Rolex.
So if you want to join the show, you can 615-737-9986, 615-737-9986.
Taking your calls, talking about taxes.
Maybe you’ve got a situation, like I said, where you starting a new business, what you
should and shouldn’t do.
Keep in mind next year, the 1099K is going to also, which is what we’ve all been a little
feared at one point.
It said 600, then it went all the way up to 12,000.
It is $5,000.
So 200 transactions, $500,000 or $5,000, 200 transactions, whichever is closest to you.
Have a little eBay business of, if you’re selling something, it could be antiques.
It could be anything like that.
Any of those situations, you’re going to want to be able to backtrack.
We’re going to make a little change there, guys.
I’m so sorry, but we are good to go.
Let’s see some weather or something in the way, but we will work around that to make
sure it’s working good for us.
Again, you can join the show, 615-737-9986, taking your calls, talking about my favorite
subject, which of course is taxes, tax issues, taxes.
We’re going to keep things moving.
If you’ve got questions or you need to help, you can.
Otherwise, we’re going to keep you posted.
Where we’re at and what we have to do.
Let’s see, I think I’m hearing myself talk, so I’m just going to do that.
615-737-9986.
All right.
We covered today.
We talked about the franchise excise, again, getting a lot of letters.
You can go to 10TAP live demo if you are a person that works in the same industry, but
keeping taxes.
I need to make a call for you.
I’m going to walk you through.
There you go.
Anyways, if you have questions or you need to do something, just let me know, 615.
At this point, actually, let’s just go through talking a little bit more about what we have
as options coming up.
You do have deadlines coming up.
You have September 15th, obviously, for corporations or businesses.
You also have October 15th for individuals.
That’s when our extensions exile.
And also June 17th.
Remember, June 17th for anyone that was in the different counties, which are Robertson,
Wheatley, Cheatham, Gibson, Stewart, Davidson, Dixon, Montgomery, and Sumpner.
All of you guys had extensions until June 17th.
So if you happen to forget to file an extension or you didn’t pay your bill yet because of
having all the storms and all that, they’re giving you until that date to do what you
need to do.
So, again, that was Robertson, Wheatley, Cheatham, Gibson, Stewart, Davidson, Dixon, and Montgomery,
and Sumpner.
So, again, those are the ones that you have working on getting those extensions so that
way you don’t file late.
And if you haven’t filed — if you’ve already done your taxes and you live in those counties
and you haven’t quite paid it all off, now would be the time to try to come up with that
money so that you could actually do what you need to do because then you won’t have the
penalties.
And penalties are bad.
I mean, I can’t tell you how many times — I mean, obviously, we’ve been at this for a
while and every time someone will send something, you know, it’s $1,000, it’s $2,000, it’s $5,000,
it’s $11,000, and they don’t always know why.
I mean, they paid their taxes, but then they didn’t make proper estimates, filed late,
they — failure to file at all.
Just the penalties can keep adding up.
So it’s very important that you try your best to obviously meet those criteria so you don’t
get hit with those penalties.
Things will happen, and, you know, there are some ways of getting some of it waived.
There’s no guarantee unless you’ve never, ever had a case with the IRS because then
you always get that first or only time, get out of jail card free, as I call it, but basically
an abatement to your penalties.
But, you know, you just have to make sure you have what you need to have.
So moving to the fact that I’m an enrolled agent licensed by the Internal Revenue Service
to do taxes and representation.
Sorry, someone just emailed and I’m trying to multitask here.
So they asked who or what my credentials were, and my credentials are I’m an enrolled agent.
An enrolled agent is the only, the highest you can get from the Internal Revenue Service
as a tax professional.
We do taxes and representation.
That’s all I do.
And I can help you do deals with the IRS.
They do have the smart choice that you can actually use.
But keep in mind that a lot of the deals we make with the IRS, I mean, if you have money
in your house, this is something, again, we take a lot of phone calls on, but if you have
money in your house, equity, you have money, you know, in a 401k, in a savings account,
because a lot of times people will call and say, well, I can’t afford to pay the IRS.
And then of course, you know, you go through, well, I don’t want to have to, now the IRS
cannot make you sell your house.
They can’t force you unless they can prove that it’s fraudulent or whatever.
They can’t take the money out of your IRA.
They can take it from your paycheck.
If you have more than one property, which is often something, you know, if you have
a rental or just land or something else, then they can take it from that.
But they cannot take it right out of, I mean, they can’t just seize your house, seize your
properties.
The only reason that would happen is if they can prove fraud or, you know, basically you
broke the law.
At that point, sure, they can do like any other person.
They took Al Capone down for tax evasion.
So, you know, there are ways of them using that for good, I guess you would say.
But if that is the case in yours, the biggest things you have to understand is that it isn’t
always, I mean, I took a call on last Thursday and, you know, the gentleman was great and
he had been audited and the IRS had adjusted due to the audit because something that a
lot of times people forget is that you cannot deduct expenses on a hobby, right?
So if you’re a real estate agent and you work a full-time job somewhere else and you didn’t
make any sales in the last year, two years, three years or very minimal of sales, and
you’re still deducting all of your expenses or you’re a person that goes out and does
some sort of consulting and you have a full-time job, anytime you have first a full-time job,
I find it normally with investment real estate or real estate brokers or agents where if
they went to work somewhere else and they still have those licenses, then you are most
likely going to be labeled a hobby, especially if you’ve already had two or three years of
loss.
You’re not going to be referred to as a hobby.
The only way around that not being a hobby is plain and simple, documenting the fact
that you’re making the attempt to actually do real estate.
You’ve taken people on showings, you’ve had, you know, interest in different properties,
they just fell through, you know, why isn’t there a sale?
You know, and in the case of the gentleman I called, unfortunately, he really was only
doing real estate for either himself or family or friends, and then the loss got deducted
because you can’t claim that as a loss if that’s all you’re doing.
But if you are truly just not able to sell real estate, basically, you know, the market
isn’t your type of market, whatever, and you’re making the attempt, you’re still keeping your
CE credits, you’re doing everything you’re supposed to do, and it’s not happening, well,
you can’t prove to the IRS that you are making the attempt to be able to sell, you know,
to sell real estate, you just haven’t been able to get it to that point.
But you don’t want to leave it up to them to make the determination that there is or
is not an ability to be a hobby or not, because they would make every business almost a hobby,
especially anybody that is working a full-time job and then doing said other business, because
that’s obviously where it becomes a problem, is that they don’t have the ability to make
that work for you.
So if you have a question on that or maybe have some situation where you are in the midst
of your own audit or review or anything like that, then you can call us as an EI can represent
you in front of the IRS, which is really just, you know, it’s like anything else.
Would you want a mechanic?
Would you want somebody?
Yeah, you want somebody that actually understands the language and the terms and what the IRS
is saying to you.
It’s not that you can’t do it, but this is a prime example the gentleman that called
is, had he possibly had a representation and not talked directly to the IRS, it may have
been that the exclusion could have been continued.
It may not have been.
You don’t know the guy or his situation or any of that, but you do know that the situation
is going to be one of those where if you represent yourself, you’re most likely, I mean, the
IRS trains agents how to get around those questions, to make you feel like you’re your
friend, that they’re only doing their job.
And again, they are only doing their job and their job is to collect money for the IRS,
which means to audit you and make it sure that you don’t have any other situation where
you’re going to be able to pay less to the IRS.
I mean, I’ve had several audits that came out as no change or less than $50 one way
or the other.
But it doesn’t always happen.
Most of the time you hear about the guy that ended up with, I mean, one I know of, he ended
up owing like $300,000.
So it can be any direction.
So just be careful if you’re representing yourself.
All right, guys, we’re going to wind down this road, this show down the road.
Oh, goodness, my tongue is so not working today.
We’re going to wrap up the show.
If you want to, you can call our office at 615-367-0819.
Again, we’re closed on Monday, but Tuesday, 615-367-0819.
You can also email Friday@DRFriday.com.
That’s Friday@DRFriday.com.
Or if you have a question and you don’t want to email, you can go right to the website,
which is DRFriday.com.
Any direction you want to do on that one.
So that way you make sure you have everything you need on being able to handle.
If you’ve got love letters and you have an answer to them, you need help with back taxes,
you need the ability to get the IRS back on track.
Because that’s what we’re good at.
We’re helping people get their business back on track so they can get back to living life
and enjoying the things they want to be able to do.
Again, 615-367-0819 is the direct number to our office.
615-367-0819 or email Friday@DRFriday.com.
Also check us on the web, DRFriday.com.
Talk to you later.