TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

When a house is foreclosed, or there is a deed in lieu of foreclosure, some mortgage companies make a deal with the owner or tenant. Usually the deal works like this: the owner agrees to leave the property on a certain date and broom swept condition without taking any of the appliances, copper pipes, etc. If the  home was left in the promise condition, the homeowner or tenant will receive a certain stipend from the mortgage company. Sounds good, right? Nevertheless, the mortgage company than typically issues a 1099 for the cancellation of indebtedness income for the amount of the foreclosure and an additional 1099-MISC for the alleged miscellaneous income and cash for keys. The IRS has taken the position that the cash for keys income as ordinary income and should be taxed. In the case of Bobo vs. Commissioner , the US Tax Court determined that the foreclosure and the additional cash for keys payment were really one transaction. Since in that case, the taxpayer had an actual loss ...

Here we go again! It is campaign season and some candidates just cannot wait to say how they are going to penalize business. Hillary Clinton is proposing a new scheme where businesses that manufactured things will be tax differently than businesses that are "trading" items. I am not exactly sure what this means but it sounds to me like a tax increase on service businesses and for people who invest in business. Let us face it, manufacturing has been on a continual decline in this country for the past 60 years. The US is known for producing intellectual property and services that are the envy of the world. Hillary Clinton, as well as some of her tax and spenders just do not get it! If you increase taxes on something you will get less of it. Increase tax on business and you will have less business in the US. I have clients all over the world. Many times a client chooses to locate its business outside of the US because of the very high cost of taxation particularly on worldwi...

More Taxes – Time after Time Wake up and smell the coffee!  Its political season again and unfortunately it appears most candidates for State Governors and Congress are advocating a “tax the other guy” approach. “We need more money for the schools!”-Tax the Rich. “We need more money for the poor!” – Tax the oil companies. “We need more money for the seniors!”-Increase sales tax. “We need to fight Ebola!”-Tax the pharmaceutical companies. We need money for good clauses so therefore we need to increase taxes?  Does that really makes sense?  When a politician advocates increasing taxes they always try to make it sound like they are not going increase your taxes but somehow your taxes will be increased.  Has any country ever taxed themselves and prosperity?   The fact is if you tax something you get less of it.  That truth is immutable and is not difficult to understand.  Politicians just simply ignore that and try to get voters to forget abou...

Once again, New Jersey is being unnecessarily dragged through the mud. First, the unfounded attacks against Gov. Christie. Then, not correctly attributing the SuperBowl to the correct State (the Meadowlands is in NJ, not NY), and now Rob Andrews is getting the "tommy-gun" from the press in an attempt to ignore the real issues in our Federal Government. Rob Andrews is resigning from Congress under an ethical cloud.    This is unfortunate since he certainly has been a highly energetic and active Congressmen for Southern New Jersey.  Even though I disagree with many of his viewpoints, he certainly always had an open door to me and any other constituents. Years ago, I sponsored a dinner honoring James Corbett, a retiring member of the Camden office of the SBA.  Rob was gracious enough to come speak at the event, and lend his staff for event assistance. He was a hard-working Freeholder Director before he got into Congress and he never forgot how important local...

As unemployment climbs to new highs, President Obama is claiming credit for 640k new jobs "created" be spending taxpayer's money. The $1 trillion dollar stimulus went to big banks and union industries that are rapidly lowering their workforces and eliminating jobs. The money is taken from individuals and small businesses that increase productivity and sent to Washington and the big banks. No country has every taxed and spent its way to riches and it cannot happen now!

Today, President-elect Obama announced government "investments" on road and bridges and the like. What he means is he intends to spend, spend, spend and tax, tax, tax. "Investments" sound nice, but it takes money out of your hands (and your children, and their children's children...) and lets the politicians in DC tell you how best to live your life.

The Washignton Post reported on the International Economic Summit. The governments are "taking action" which means a government-induced economic disaster. If it is anything like the "help" of FDR's "New Deal" it will extend economic dislocations for far longer than a normal business cycle. Here are excerpts from the article : [T]he gathering in Washington of the nearly two dozen nations -- from every region of the world -- reflected the new balance of power emerging in the aftermath of a financial crisis that has devastated even well-run economies, a wrenching process that British Prime Minister Gordon Brown has dubbed "the birth pangs of this new global order." Under the plans outlined by the leaders, countries such as China, Brazil and India would gain greater roles and responsibilities as part of a restructuring of the international financial system, while European leaders won a commitment to new regulations and controls on banks, rating ...

2009 Social Security Cost of Living Adjustments Beginning January 1, 2009, the maximum earnings subject to social security tax withholding increases to $106,800. The earnings needed for one quarter of coverage is $1,090. The threshold for coverage for domestic employees increases to $1,700.

Due to rising gas prices, the IRS announced the mileage rate will increase by eight cents to 58.5 cents a mile for all business miles driven from July 1 through Dec. 31, 2008. The new rate for computing deductible medical or moving expenses will also increase by eight cents to 27 cents a mile. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile. Full Article .

IRS Drops Interest Rates The Internal Revenue Service announced June 2, 2008 that interest rates for the calendar quarter beginning July 1, 2008, will drop by one percentage point. The new rates will be: five (5) percent for overpayments [four (4) percent in the case of a corporation]; five (5) percent for underpayments ; seven (7) percent for large corporate underpayments ; and two and one-half (2.5) percent for the portion of a corporate overpayment exceeding $10,000.

Increasing Foreclosure Rates Foreclosures were up 57% from March of last year. Approximately 1 in 538 houses in the U.S. are in foreclosure. Nevada has the worst rate with 1 in 139 homes in foreclosure. California has a 1 in 204 foreclosure rate.Nevertheless, since the bulk of the ARM loans were made in 2005 and 2006, the market is clearing out the problem loans through foreclosure, selling, or walking away.

IRS is Increasing Audit Rates The IRS is greatly increasing the rate of tax audits on higher income taxpayers and businesses. The audit rate started dropping in 1998 because of restructuring at the IRS. It bottomed in 2000, when just 0.5 percent of individual tax returns were audited but doubled that rate by 2007, to 1 percent. Audits of the Wealthy. Audits of those who make more than $1 million a year jumped 84 percent from fiscal 2006 to 2007, according to IRS figures. Those taxpayers have a 9 percent likelihood of being audited. That's nine times as much as the average taxpayer. Small Business Audits. But when it comes to businesses, the IRS is stepping up audits on smaller and mid-sized firms. The IRS targets sole proprietorships that report income on Schedule C with a 6 percent chance of getting audited. "We have increased our focus on mid-market corporations - those with assets between $10 million and $50 million," the IRS said in a statement.

The Courier Post published my commentary about Ron Paul: Saturday, January 5, 2008 Re: "Republican Ron Paul offers a different choice and new ideas" (Perspectives, Dec. 28). U.S. Rep. Ron Paul, R-Texas, is the only candidate running who actually represents the America of our founding fathers. He promotes more individual choice, the right for you to control your life, not the government controlling you and taxing you into penury. Let's stop the "yes, but" Republicans and the "tax-and-spend" Democrats from overriding the Constitution in the name of "patriotism" or some favored social program. Paul represents a new freedom for all Americans from an overbearing federal government. That is why I am voting for Ron Paul in the Republican Primary. Thank you. RONALD J. CAPPUCCIO Cherry Hill Click Here for the full article.

Lottery Winners Lose! The 11th U.S. Circuit Court of Appeals in Atlanta ruled Dec. 19 that Bertucci and the others around the country who sold their winnings to investment companies must pay income taxes on the lump sum they received instead of lower capital gains taxes. Click Here for more details.

Here is a video of Ron Paul Summarizing some of his positions: Click Here... Remember to Contribute to Dr. Paul's Campaign onm December 16, 2007 Click Here...

Why I Support Ron Paul for President Taxes First, Ron Paul is the only limited government, lower taxes candidate. He has never voted to increase taxes and desires to cut government spending and taxes needed to support the spending. You cannot increase government (whether it is "infrastructure" as used by the Big Spenders, or transfer payments and subsidies,) and expect to lower taxes. Free Trade Ron Paul supports real free trade not more governmental organizations such as NAFTA, GATT, CAFTA, etc. Free trade is simple... we won't tax imports and other countries do not tax our exports. War and Foriegn Policy The war in Iraq was sold to us with false information. The area is more dangerous now than when we entered it. We destroyed a regime hated by our direct enemies, the jihadists, and created thousands of new recruits for them. We have no business making "regime changes" and trying to knock down or prop up other governments. We are not and can never be the police...

The New York Times reported today that State tax revenues are declining as a result of the slowdown in real estate home sales. This lowers real estate transfer tax revenues as well as income taxes. The article stated: New home sales nationally fell in February to the lowest rate in seven years, and homeowners who tapped into plentiful home equity and spent extravagantly during the real estate boom have started to cut back. Those events not only threaten revenue streams for things like building materials and labor, but also affect spending on big-ticket items like cars and furniture, which many homeowners financed with home equity lines of credit. This will result in pushes for higher tax rates