jainen

>>It makes you wonder if they are working on it.<< It does NOT make me wonder that or anything else. There are changes and updates and new laws and discontinued laws every year. If they didn't put all the new stuff in, obviously the IRS wouldn't certify the software. This particular change has been done before, so it really isn't that big a deal for the programmers.

>>CA taxation being based on his worldwide income<< What I mean is that his tax is calculated on world-wide income as if he were a California resident. Only after you do that is it prorated for the ratio of California-source income.

>>I had a client like this about 12 years ago, a non-resident.<< It's hard to accept this assertion without a lot more detail. California has a complex tax system that does not always immediately conform to federal changes and updates. Out-of-state preparers are often confused as to what is currently the law. Furthermore, even on the federal level passive loss rules are sometimes mixed up with at-risk rules, filing status, and many other matters. If the client's rental activity produced a net operating loss, for example, California would indeed have limited carryforwards during that time period. Add some non-resident basis issues, and you could end up way out on the edge of reality.

>>Hope this helps you guys<< Thanks, but I still don't understand #2. Especially that last part.

>>for CA purposes. Any suggestions?<< What purposes do you have in mind? California passive losses work very much like the federal. You could probably take your numbers from the federal Form 8582 if you haven't been separately tracking California losses as such. It doesn't matter that he is a non-resident. Use exactly the same form as residents--Form 3801. Just be sure you understand that California taxation is based on his world-wide income, not simply his California rental.

>>My first computer... had two floppy drives<< I rarely hear this mentioned, and I understand why anyone would refuse to give the memory any life, but my first computer had a cassette tape drive.

>>from July 1 through Dec. 31, 2008<< Most of my clients keep their mileage log on my office ceiling. Now that they need TWO numbers, should I clear a space on my floor (which wouldn't be very easy) or devise some kind of split screen overhead?

>>The penalty is very steep for 2004, tax due is $108, penalties and interest push it up to $381<< The penalties total $127. The rest is interest or collection fees that FTB won't waive. Maybe FTB will let the $127 go if your client pays the balance in full. Otherwise, it's 25 a month and move on to the next pro bono client.

>>the medical reason seemed a little "thin"<< It is not a very direct benefit. In fact, it is conceivable that the generator would never be used for a medical purpose but have substantial use for non-medical purposes. By comparison, medications have to be stored but that doesn't make the refrigerator or cabinet a medical expense. Bandages and pads must be disposed of, but that doesn't make the garbage service a medical expense. On the other hand, courts have been pretty tolerant of deductions for home equipment with a medical purpose. What little you've told us is not enough to establish it, but with additional information about doctor's requirements, the likelihood of power failures, and other factors (including the client's desire to take an aggressive tax position on this), it might be possible.

>>Is this income like salary which would allow an IRA or like deferred compensation which would not?<< Pub 590 defines compensation on page 8. It includes anything reported in Box 1 (except distributions from a non-qualified plan earned in a previous year). Such income qualifies for an IRA contribution in the normal way.

>>the inspections were keeping him from starting the production of WMD, and he was just bidding his time until he could start up factories again<< The inspectors left in 1998. When they returned five years later they reported that the government was giving them unrestricted access to everything. They found that none of the previously sealed sites had been tampered with. They found no raw materials. They found no plans. They found no serviceable equipment. They found no updated scientific skills. They found no diplomatic, industrial, or commercial contacts that would lead to nuclear, chemical, or biological weapons. They also found no way to deploy such weapons even if they had existed. >>he stood on the pile of rubble at Ground Zero and promised to get revenge<< Revenge on whom? Nobody in Iraq had anything whatsoever to do with ground zero.

>>why will McCain not get nominated?<< Many reasons. I'll skip all the polls that are saying he can't even carry Florida. It's enough to point out that the Republicans want to win and need a strong candidate. First, John McCain simply doesn't have the stamina to campaign. He looks like a zombie and can hardly even read a teleprompter in front of supporters. That makes it easy to withdraw--health is the perfect excuse for a graceful exit. Speaking of zombies, we haven't even begun to explore McCain's skeleton closet. Did he make recordings for North Vietnam? Did he cause the Forrestal fire? Documents exist. Did he violate campaign financing (the law named after himself)? A court case is putting it all under oath. Another of the undead is Jack Abramoff. He gets sentenced on September 4th, so we'll find out what (and who) they've been investigating for two years. From Abramoff's confession we already know that it was high level corruption in Indian Affairs. John McCain was chairman of the committee. September 4th is the same day the GOP picks their candidate.

>>Republicans are the party... Dems are the party<< Well, kc, I guess you didn't really mean what you said about "ideas and solutions, not parties, on this board." Let me observe two areas where you are in complete agreement with others who have posted seemingly opposite views. You support mainstream Republican candidates, Paul and McCain, but since neither of them will get the nomination you'll have to protest mainstream politics with write-in votes in November. [i apologize for saying, in an earlier edit of this post, that Rick has supported any particular candidate.]

>>your broken one is being fixed<< Repo Blickin' When the dealer has to take back that piece of junk you refuse to pay for.

>>who moderates the moderators<< Umm, well, I do.... I read all kc's posts, which are pretty eloquent, and if I disagree then I say so, which is pretty often. And then anyone else can read those posts and chime in pro or con, and we all get an education. The thread you're looking at ["Interesting thoughts on the Unemployment news"] is typical of that process. I countered with a viewpoint somewhat like your own, but I dare say it didn't convince anyone. On the other hand, kc admits right in the original post that some of the basic argument was so objectionable it had to be edited out. I think that's fair. I don't understand your last sentence, rick, where you say you are bothered by kc's opinions because of some unspoken thing ultra-liberals did. I'm sure kc has done many unspeakable things, but I doubt any of them could be characterized as ultra-liberal.

>>Show me the document that establishes the rights to anything except the PURSUIT of happiness<< You got me there, Jack. Previously you just asked what the source of the idea was. The Declaration of Independence certainly doesn't establish any rights--it says they are endowed by the Creator. Of course in America you don't have to accept such a concept, but anyway that's where the idea came from. I was on about the right to life, though as you point out some other topics are in there too. In more legal terms, the U.S. Constitution is the document that establishes those rights. >>"That all men are equally free and independent...."<< You got me again, Jack. I don't remember that line at all.

>>I was in Germany last September and Walmart was there!<< Wal-Mart NAME, maybe. I guess Metro, the company that bought the losing division in 2006, hasn't been profitable enough to afford new signs.

>>Wal-Mart in Germany manages to pay their workers a decent wage, and all of the health, vacation & other benefits required by their government, and still remain profitable enough to want to open stores there.<< No, Joan. Wal-Mart FAILED in Germany and left the country years ago. Wal-Mart's most successful foreign markets are not where they had to compete to build a customer base, but where they simply BOUGHT out an existing company. >>it makes sense for the town, because not everyone can afford to pay extra just to protect a few businesses that don't want competition<< The problem, kc, is not that the town can't support the local businesses they have nurtured for generations. The problem is that earnings are depressed. Big corporations take profits out of the town so the money no longer has any multiplier effect there as it did when the small firms dominated the economy.

>>they hold the land for investment<< Although they used the word "investment," it was clearly a business activity. They filed as a business entity and deducted the expenses as necessary and ordinary costs of business. They were related to a group of dozens of partnerships that had developed real estate as a business for years. The court specifically noted that there was no question as to whether they were a business or not. So that is very different from joel's original post. Still, I'm impressed by the scope of the regulation which applies to capital assets as well as inventory, and I thank RoyDaleOne for bringing the court ruling to our attention. I was wrong concerning the development fees, which must be capitalized in any case. Only the carrying charges such as interest and taxes were deductible annually.

>>I must certainly live in a different USA<< Do you? In my USA of 2008 the employees are a company's most valuable asset. If they aren't, the company should invest in some who are. Maybe your opinion is another of your "self-evident" truths. That reminds me of the Declaration of Independence, which by the way is the source of the idea you asked about, that everyone has a RIGHT to the necessities of life. But that really isn't what I meant. Even an unskilled worker has time and effort to offer an employer, and is perfectly free to refuse to accept a low wage. He can look elsewhere or do without, the same choices the employer has.

>>the fees you mentioned have to be capitalized anyway<< I don't think you can call this a business since what he proposed to do was not legal (unable to get permits). At any rate, he didn't treat it as a business over eight years. That leaves it as an investment, which apparently is how he viewed it in the first place. Investment costs must be claimed annually unless you make this election we are talking about, which (as far as we know) he didn't. This case involves a construction project, so I guess the Master Tax Guide serves us better after all.

>>Some things are so very self-evident<< Let's talk some more about Henry Ford. The average wage on auto assembly lines was $2.34 for a nine-hour shift. Ford bumped it to a minimum of $5, and cut the work day to eight hours. The Wall Street Journal called it an economic crime. (That was in 1914, when the mainstream solution to economic troubles was "let's have a war.") Later wages went up to $10 a day on the theory that such earnings would expand the customer base, but originally all Ford wanted to do was make sure he could motivate workers (the factory job wasn't much fun) and prevent turnover with costly retraining. His assembly-line system had reduced overall manufacturing costs so much that he could afford a higher payroll. That's an important point, because back then labor wasn't all that big a thing. The real investment was in land, buildings, and new machinery--that's why it was called capitalism. Nowadays our industrial base has substantially moved overseas, and we are left with "intellectual capital" and data in a service economy. Capital costs have been vastly reduced, so labor IS worth correspondingly more. Yet we still hear moans about how "workers have the ability to refuse to work in the available jobs unless the wages increase." Well, duh!

>>a grammar checker<< I used to hate that, but I'm beginning to think a bit of standardized grammar might be helpful. Here's a monster double negative, a multi-uple negative, from one of our national leaders, Ben Bernanke, just this morning saying the Fed "will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation." I think he means that inflation is a good thing because it controls inflation, but I'm not sure.

>>This is basic economics.<< No, it is NOT basic economics. It's an interesting theory, but it is not reality anywhere in the world. After WW2 American corporations tried to force that kind of model, but even they gave up because it doesn't work in an international labor market. The BASIC economics of labor is that if you offer $1400 but housing and transportation costs $1500, I CAN'T take the job even if I want to. Lots of good, hard-working people simply can't afford to take that job. That's what was wrong with the welfare system before Congress passed the disastrous reforms that made so many children homeless. As Tom points out, there is still support from government and family members. The main beneficiaries of that are the employers who can get away with paying what would otherwise be less than subsistence wages. As for the power of the customer, what I said about General Motors was that their PRODUCT was not acceptable. American consumers are not particularly cost-conscious, as the recent 100% increase in gas prices proves. That is because they can generally command whatever wages they need. THAT'S the way the American economy has stayed strong ever since we abandoned indentured servitude and slavery. It was, for example, one of the keynotes of Henry Ford's success. Pay your workers well, Tom, and you won't have to worry about finding new people to take your three months of training. (I don't know why public works should cost more than private ones, except when I served on a school board I learned that the state architect requires far higher quality than your average homeowner.) Jack, I have no experience on the hiring side. But I know why workers turn down crummy job offers; I do have experience with that.

>>If I am reading the instructions correctly<< I'm not sure it is possible to read the instructions correctly. It's a complicated question that has been in the courts for years, and the law changed starting in 2007. Part of it depends on what kind of income the company has and what its relationship to California is. I recommend you contact Spidell at www.caltax.com and subscribe to their California newsletter with a back copy of December 2007.