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Sandra Bullock Some Tax Advice and the DUH Factor

By Stacie Clifford Kitts, CPA

Everywhere I turn someone is talking about Sandra Bullock and how Jesse James done her wrong. Boy, I do understand her pain and there is no doubt that the situation sucks. But really, should we all be this shocked?

I think a More Tax Tips reader put the situation into the proper perspective when he said there really is no surprise about how [the marriage] turned out. If you marry a bad boy, you shouldn’t be surprised when he acts badly. 

Moreover, Sandra is old enough to know that she should not have latched onto a fixer upper. After all, he was married to a porn star; this might have been a clue that his take on the whole monogamy thing was a little different from say America’s Sweetheart. DUH

Anyway, I’m just sayin’.

So on to the tax part of this post. 

If you are headed for divorce court here are a few things to keep in mind for tax time. 

  1. Your marital status on the last day of the year determines your marital status for the entire year.
  2. Single filing status generally applies to anyone who is unmarried, divorced, or legally separated according to state law.
  3. A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
  4. A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately. This would be the proper election if you did not want to be tied to your spouse’s tax return particularly if you thought that he or she was evading taxes.
  5. You may qualify for head of household status even if you are still legally married at the end of the tax year. 
    • You are unmarried or “considered unmarried” on the last day of the year.
    • You paid more than half the cost of keeping up a home for the year.
    • A “qualifying person” lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the “qualifying person” is your dependent parent, he or she does not have to live with you. See Special rule for parent , under Qualifying Person.

Check out IRS Publication 501 for more information

Keeping my Promise to Patrick Byrne and how Overstock.com Has Qualified for my DUH Factor

By Stacie Clifford Kitts, CPA 

If you are a regular reader of Stacie’s More Tax Tips, you know that Patrick Byrne CEO of Overstock.com (or at least someone claiming to be Patrick Byrne) commented on my post, They Wield Their Personal Knowledge of Criminal Activity Like A Superpower .   

Since I can’t verify that the person who wrote the comment was really Mr. Byrne CEO, in this post I am going to refer to the commenter as “PB.”  

Now, the purpose of PB’s comment was to clarify some of the stuff I discussed in the post I mention above. The following is what he wrote: 

 Stacie, 

Thanks for the story and the link. There are, however, some minor suggestions I’d make. You say: 

“and a purported owner of a website called Deepcapture.com.” 

Actually, for much of its existence we just put a big bubble on the upper right hand corner of the home page explaining that I am indeed the funder of DeepCapture.com; later, we added a whole page about it and who we are . So there is nothing “purported” about it. (In one more example of the Bad Guys’ mendacity, any time I mention this in an interview they write blogs pretending that it is some huge matter that I had previously kept hidden, presumably because they think suggestible people will fall for it.) 

“The purpose of Deepcapture is to expose the short sellers who are trying to make money off the decline in value of Overstock.com.” 

No, the purpose of DeepCapture is to expose the stock manipulators who are ruining our capital markets (most of whom have never had anything to do with overtock, as far as I know). 

“But really, what could be more interesting and telling than this disclosure from Sam Antar…” 

Here’s one thing that is more interesting about Sam Antar 

 

I hope that the information provided by PB clears up any confusion about Deepcapture and its purpose. – so there ya go. I don’t suppose I need to make any more comments on the subject. 

 Before I move on, I would like to point out one thing about PB’s comment that did provide some amusement.   

It seems clear that PB wants to make sure that my readers and I are aware that Mr. Antar is not a nice guy.     

If you click the link at the end of the last sentence you will be taken to an article written by Patrick Byrne describing Mr. Antar’s recent and past behavior. Basically we are told that Mr. Antar is a very bad, and maybe even an evil, guy.    

This article and PB’s reference to it just struck me as funny. Frankly, I was LMAO. Yes folks, Sam Antar a former Crazy Eddie fraudster is a bad guy. For havens sake this is not news. Given the opportunity Sam Antar admits he would still be a bad guy, he would still be committing fraud, and the only reason he stopped is because he got caught.  

Hello – these are exactly the reasons why I think Sam Antar and other former fraudsters have a powerful fraud spotting superpower.  

Honestly, if I found out that Sam was guilty of recent crimes, my answer would be – so what. That would not negate his ability to spot his own kind or the signs of possible fraud.     

Besides, I keep asking myself, what the motivation for the attack on Mr. Byrne is. Patrick Byrne does not give any reasons why Sam Antar might have targeted him. Maybe Patrick can enlighten me to his thoughts as to that point.  

My take is pretty simple – it might just be because he could. After all, Mr. Byrne has made himself quite an easy target.  

Case in point – have you read any of the recent information coming out about Overstock.com and an apparent lack of internal controls?  

If I understand this correctly, an investigative reporter Roddy Boyd got his hands on some internal Overstock.com documents that had been part of the discovery process related to a lawsuit initiated by Overstock.com. These internal documents supposedly imply that Overstock.com’s internal controls were not effective. This is a real problem because Overstock.com indicates in its SEC filings that the internal controls are adequate.  

What does this mean? Well, basically if you have established proper controls, your internal processes, including things like supervision, flow of paperwork, accounting systems, how things are tracked and recorded- heck -basically every aspect of your financial process is set up to ensure the accuracy (so to catch or prevent mistakes) of the financial information. Therefore, in auditor terms, if you find that your controls are working – that is they are catching or preventing errors – you might report, “internal controls are adequate to meet control objectives.”    

Obviously lying in an SEC filing is a NO NO. If this is determined to be the case (i.e. controls are not working and management knew it), Mr. Byrne may have some explainin’ to do. 

*** 

Here is a lesson on making yourself an easy target, lie to the SEC and then file a lawsuit where your internal company documents will expose the lie. DUH 

***

 

If you want to read more about this check out these posts:

 

Overstock.com Litigation Update 2010

 

My Reporting of a Financial Statement Manipulation Scheme at Overstock.com is Vindicated by Latest Company Announcement 

America’s Nastiest CEO

The Duh Factor: This One is Filed Under How Stupid Can You Be

This article was taken from the FTB’s Criminal Corner – I think this is right up there with one of my favorites.

“On November 19, 2009, a Sunland interior designer was sentenced after pleading guilty to one felony count of state income tax fraud and one felony count of insurance fraud.

According to court documents, Ronald E. Hunt, 56, continued working as an interior designer from 2003 to 2006, including an appearance on an HGTV home improvement show during the time he claimed to be disabled. An employee with the private insurance company paying Hunt’s disability saw the show and alerted the California Department of Insurance (CDI). An investigation confirmed Hunt intentionally and knowingly concealed his secondary employment from his disability insurance company by falsifying written statements and deceiving a company field representative. During the time Hunt claimed to be disabled, he collected more than $400,500 in income as an interior designer while also collecting $147,600 in disability benefits. Hunt also failed to report this income on his state income tax returns for these same years.

Hunt was ordered to pay $151,700 restitution to the private insurance company and $31,000 to us, representing the unpaid tax, penalties, interest, and the cost of the investigation. He was sentenced to 200 hours of community service and 60 months of probation.

Judge David M. Horwitz handed down the sentence on Tuesday, November 17, in Department 50 of the Clara Shortridge Foltz Criminal Justice Center. Los Angeles County Deputy District Attorney David Berton prosecuted the case. This was a joint investigation between the CDI and us.”

Is it really necessary to say Duh here?  I mean really.

The Obama Administration’s New Financial Crimes Taskforce, H.R. 4172 and the DUH Factor.

By Stacie Clifford Kitts, CPA

The announcement of a new financial crimes task force by the Obama administration has inspired a new installment of the DUH Factor.

The DUH Factor is my take on events, or laws (generally tax) that are so obviously absurd that they fall into the DUH category.

Among the reasons why this new task force qualifies for my DUH Factor is Treasury Secretary Timmy Geithner’s involvement. Of all the people who could have been selected to announce a new financial crimes task force, I think Geithner would have been a little lower on my list.

Why?

Lets begin with this quirky post Has Properly Paying My Income Tax Prevented Me From Getting A Job In the Obama Administration? In this post, I mention that Geithner did not calculate and pay the proper amount of self-employment taxes on income that he received. The unpaid taxes as it turns out were related to self employment compensation received from the International Monetary Fund (IMF).

Because of Geithner’s tax oops, some interesting legislation is proposed, H.R.4172 or the Geithner Penalty Waiver Act. Here is what has been introduced:

111th CONGRESS

1st Session
H. R. 4172

To provide the same penalty rate for taxpayers who voluntarily disclose
unreported income from offshore accounts as was afforded Timothy Geithner with
respect to his failure to pay self-employment taxes with respect to his
compensation from the International Monetary Fund.

IN THE HOUSE OF REPRESENTATIVES
December 2, 2009

Mr. CARTER (for himself, Mr. WESTMORELAND, and Mr. BURGESS) introduced the
following bill; which was referred to the Committee on Ways and Means

A BILL
To provide the same penalty rate for taxpayers who voluntarily
disclose unreported income from offshore accounts as was afforded Timothy
Geithner with respect to his failure to pay self-employment taxes with respect
to his compensation from the International Monetary Fund.

Be it enacted by the Senate and House of Representatives of the United States of
America in Congress assembled,

SECTION 1. ZERO PENALTY RATE FOR OFFSHORE VOLUNTARY DISCLOSURE PROGRAM.

The penalty assessed under the Internal Revenue Service special voluntary
disclosure program for unreported income from hidden offshore accounts shall not
exceed the penalty imposed with respect to Timothy Geithner’s failure to pay the
tax imposed under section 1401 of the Internal Revenue Code of 1986 on his gross
income derived from employment with the International Monetary Fund.

Now granted, we, the public are not privy to the specifics behind exactly why the penalties were waved. Maybe it was perfectly legit.

But come on, the guy who has inspired “fairness” legislation, because it “appears” that he has received special treatment concerning his financial dealings and the incorrect application of certain tax laws, is probably not the right guy to be introducing a new financial crimes task force. DUH

For some more interesting coverage of this proposed legislation, check out the Wandering Tax Pro’s blog.

American Express Has Qualified For My Duh Factor – Busy Season Re-run

By Stacie Clifford Kitts, CPA

What’s the deal with American Express sending me letters stating they have a gift for me? A leather bound day planner of all things. All I must do to get this “gift” is to send them some money.

Huh? Are they serious? I have to say, this ticks me off just a tad.

Besides the fact that some poor cow died to bind up the slaughtered trees, who the heck uses a paper day planner anymore? Moreover, how does American Express define “gift.” News flash – If I need to send money to get it, it’s not a gift – discounted maybe, but not a gift – duh.

For American Expresses benefit specifically CEO Kenneth Chenault, I have included Webster Dictionary’s definition of a gift “2: something voluntarily transferred by one person to another without compensation.”

How about this Mr. Chanault, rather than sending me a day planner, why don’t you reduce the interest rate on purchases by some percentage points, then maybe I would be tempted use your credit card.

Now that would be a real gift!

The "Duh" Factor – Some Credit Card Companies Just Suck!

By Stacie Clifford Kitts, CPA

Credit card companies are suddenly and drastically raising interest rates on people who have not had any credit problems, who are paying their balances on time, and who signed up for a card based on certain agreements which included a specific interest rate. How sucky is that?

Okay, we know that the “fine” print on a credit card application allows changes to the terms which includes interest rates. However, as indicated in this CNN article, Some Credit Card Companies Rush to Act Before New Law , some of these companies have doubled the payments for some cardholders. By the way, these cardholders have done nothing that would justify such an egregious increase in their monthly payment.

It would appear that this rate hike is in response to a new consumer protection law, which will prevent credit card companies from doing just what they are doing now – sudden and irrational rate increases on existing balances.

Do you suppose these company executives where sitting around the conference room table thinking of ways that they could “get even” with lawmakers for regulating their industry? What better way than to screw over their own cardholders. Sounds like the answer to me. Let’s mess with the cash flow of a few million consumers. Seems like a sure fire way to solve the country’s financial problems.

This business strategy is not about dealing with consumers who have been fiscally irresponsible – no indeed. It is about greed!

Well, I guess I should feel sorry for these executives. Why? Because they are sad little people who have implemented a business strategy to punish cardholders for a law that was a direct result of their inability to regulate themselves.

Obviously if these companies were not acting like credit vultures, then we would not be looking at new regulations. DUH

American Express Has Qualified For My Duh Factor

By Stacie Clifford Kitts, CPA

What’s the deal with American Express sending me letters stating they have a gift for me? A leather bound day planner of all things. All I must do to get this “gift” is to send them some money.

Huh? Are they serious? I have to say, this ticks me off just a tad.

Besides the fact that some poor cow died to bind up the slaughtered trees, who the heck uses a paper day planner anymore? Moreover, how does American Express define “gift.” News flash – If I need to send money to get it, it’s not a gift – discounted maybe, but not a gift – duh.

For American Expresses benefit specifically CEO Kenneth I. Chenault, I have included Webster Dictionary’s definition of a gift “2: something voluntarily transferred by one person to another without compensation.”

How about this Mr. Chanault, rather than sending me a day planner, why don’t you reduce the interest rate on purchases by some percentage points, then maybe I would be tempted use your credit card.

Now that would be a real gift!

Is The Concept of Team Play Dying Along With the Economy?


By Stacie Clifford Kitts, CPA

Throughout my years in the business community, I have heard of employees getting fired because he or she was not a “team player.” The underlying issues varied from self promotion which damaged the company to a general disregard for the job.

For whatever reason, employees who are not team players, do not have the company’s best interest in the forefront of their activities. In contrast, company’s who are successful in promoting team play, or a common attitude regarding the goals of the company, often see higher performing employees and as a consequence a bigger bottom line.

But has the notion of team play fallen away with our current economic crisis?

That seems to be the case at American International Group or better known as “AIG”. Today the New York Times reported that the company will pay out over 165 million dollars in bonuses to executives who work in the company’s financial products unit. The same division of the company that generated record losses and was the driving force behind the government bailout. Despite the objection of treasury secretary Geithner and other lawmakers, the payments will go forward because the company is contractually obligated to pay.

But with all this talk about the company’s obligation to pay, who is asking if the exec’s are obligated to take it? The fact that the company is going through with these bonuses suggests to a reasonable person that the executives are pushing for them.

Although it may be in the best interest of the executive, it certainly is not in the best interest of the company. And it certainly is not in the best interest of the taxpayers who are financing these bonuses for the same people who caused the problem in the first place.

I have to admit, I think this sticks.

In this particular case, the exec’s at AIG who are forcing the company to honor their contracts despite the economic instability of the organization certainly don’t come off as team players. But maybe that explains the company’s current predicament . Company Executive + greed – team player = government bailout

Too bad we can’t ask them to wear sandwich boards that say “I am an executive at AIG and I’m not a team player”. Yes I know that won’t solve anything, but it would make me feel a tiny bit better.

Has Properly Paying My Income Tax Prevented Me From Getting A Job In the Obama Administration?

By Stacie Clifford Kitts, CPA

Nancy Killefer today withdrew her nomination to become Chief Performance Officer, a new post in the Obama administration stating unspecified tax problems.
But, I’m not surprised.

Failure to properly calculate and pay income tax appears to be a job requirement of the Obama administration. In addition to Nancy, Timothy Geithner, Treasury Secretary paid $43,000 in back taxes and interest claiming that he accidentally forgot to the pay the proper amount of payroll taxes on his self-employment income. And, Tom Daschle, the former Senator Majority Leader and nominee for secretary of health recently paid more than $100,000 to the IRS for back taxes and interest related to the use of a car and driver lent to him by a wealthy Democratic friend.

Although I am not surprised, it does make me wonder who is preparing these tax returns. Just who are our lawmakers relying on to advise them as to the proper application of the laws that they themselves created. Mind boggling.

Okay, in defense of the accountants, I understand that some tax laws can be hard to understand. And I don’t expect everyone to know the intricacies of every rule, or even the complete intricacies of their clients lives, but come on. Self employment taxes? Screwing that up is the equivalent of not being able to add 2 + 2. Which equals 4 by the way if Mr. Geithner happens to stumble onto this blog.

Although it appears that Mr. Geithner tried to blame Turbo Tax, the tax preparation software he used for the mistake on his self prepared tax return, Turbo Tax has insisted that the problem is not with their software. Good try though Timmy.

Well, that’s it, I guess I finally know why I haven’t been nominated to any posts in the Obama administration. I don’t have the right qualifications. That is, I have been properly calculating and paying my income tax.

But I would like to take this opportunity to officially offer my services to the Obama administration and to any other lawmaker who would like to step it up and file his or her tax returns properly.

Fannie Mae – Duh Factor

By Stacie Clifford Kitts, CPA
I’m confused about why Dan Mudd CEO of Fannie Mae isn’t in jail. After all – it appears that he has been breaking the law since October.

The – oh my gosh – 700 billion dollar – Emergency Economic Stabilization Act – the bailout bill – which passed in October requires Fannie Mae, and other government associated organizations including Freddie Mac, to allow tenants residing in foreclosed properties who continued to pay their rent and who have a valid lease to remain in their homes – “where permissible.” However, despite this requirement Fannie Mae has continued to evict tenants who are paying their rent and who have valid leases.

CNNMoney.com reported that Fannie Mae will implement a policy in January 2009 which will finally comply with the requirements of the Act. This announcement followed New Haven Legal Assistance Associations accusation that the company was not allowing renters in good standing to stay in foreclosed properties.

Um – maybe it’s me, but if Fannie Mae is not abiding by the law, then isn’t the company breaking the law? Has our government gone completely wacky? Why aren’t I reading about some sort of an inquiry or something?

Doesn’t the whole thing make you wonder just how incompetent one must be to screw up the requirements of a multibillion dollar handout? I mean come on ….do you think that if someone handed you a million dollar check with a list of rules to follow, that you would take a minute to read them over and then to follow them.

DUH!

John Thain CEO – Duh Factor

By Stacie Clifford Kitts, CPA
The wall street Journal reported today that John Thain CEO of Merrill Lynch asked for a 10 million dollar bonus from his struggling employer citing his ability to keep Merrill’s losses under 12 billion dollars – Wow good job – and for the work he did arranging the merger between Merrill and Bank of America.
Mr. Thain wins today’s Duh factor award for withdrawing his request once the Wall Street Journal made it public.
But really, what’s a few million more or less when we’re talking about billions.
The request isn’t so unbelievable is it? After all, the loss could have been worse and he did arrange the sale to Bank of America.

But, on the other hand, the company is struggling and people are losing their jobs.

So I guess the moral here is: if you want a 10 million dollar bonus, you should probably go to work for a company that isn’t loosing its a-s.

Otherwise you’re going to have to settle for what’s available – which in this case is nothing.

In this economic environment, its probably enough to just have a job. I’ve got a feeling that many Merrill employees aren’t going to be so lucky.

Bail-Out Duh Factor

By Stacie Clifford Kitts, CPA

With the constant chatter about the big three auto makers financial bail-out , I find myself getting more ticked off with each whiny – save me from my excess – sorry I ran the company into the ground –palm up hand out – shoved in the face of the American public – it has me asking – are we living in a Democracy or what? Cause I’m not sure anymore.

Honestly, I’ve been reluctant to write something about this topic simply because I felt that I needed to research the facts in more detail. Like: Who are these company leaders? Where did they come from? What mistakes have they made? How is the economy being affected? What will happen if our lawmakers don’t bail these guys out? What will happen if they do?

But then I thought- what the heck, there is a huge DUH factor here and I don’t need to do a bunch of research to identify it.

Here are some pretty obvious “Duh’s”.

Duh factor 1. If your company is in trouble, do ya think it’s a good idea to carry on the excessive lavishness that you engaged in prior to the trouble?

Hello, private jet for safety purposes. Pul-eez .

Here’s a thought, why not spend some time in a TSA screening line and then decide whether commercial airline flight is safe enough for ya. I’m willing to bet that it is.

Duh factor 2. Nobody, and I mean nobody’s performance is worth a multi-million dollar pay check when their company is asking for government handouts.

And if you are going to make the argument that good performance should be rewarded, then it follows that poor performance should be punished.

After all, if these executives are going to claim the glory when things are going well and demand multi-million dollar salaries, then shouldn’t they also own the blame when things go awry?

Duh factor 3. As a tax payer, it ticks me off that these same exec’s who ran their company’s into the ground will keep their jobs and get to decide what happens to my hard earned tax dollars if this bail-out is approved.

As a mother, I have learned that you don’t reward bad behavior. And why is that? Because rewarding bad behavior and protecting people from their poor choices just perpetuates the behavior.

If we’re going to bail out these companies, then our lawmakers should not allow these same company exec’s who made poor choices in the past the privilege of spending my money.

As a matter of fact, if the big three exec’s had any balls at all, they would admit defeat; give their prior salaries back to the company and just go away.

Duh factor 4. Here’s another thought, why don’t we take that 50 billion dollars – give or take – and spread it among some successful well run businesses.

You know – reward the good behavior and help out some companies that are doing – oh… I don’t know – a good job. Then those healthy companies can grow and create jobs and stimulate the economy instead of maintaining a few sick losers.

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