Taxes and Investing

The Master Archive!

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The Power to Do Evil: The Ethical Dilemma

By Keith Taxguy / March 12, 2018 / 21 Comments

As a society we think of certain people as more prone to ethical lapses. This might be the result of the professions involved. Police officers make repeated ethical decisions every day. Judges, prosecutors and even jury members must deal with their personal ethics and that of others. But law enforcement or military personnel aren’t the only ones thrust into serious choices. Attorneys and doctors are forced into making decisions that might not seem ethical at first, but they are often forced to make a choice and fast. No choice is an ethical choice all too often with serious consequences.

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It Never Pays to be a Bear

By Keith Taxguy / March 9, 2018 / 13 Comments

Bulls make money. Bears make money. Pigs get slaughtered! —Old Wall Street Adage

Back in the early days of my career the investment industry and the tax/accounting industry tried to merge. To be fair it was the investment industry’s idea. Tax offices were the perfect partner to sell securities (usually mutual funds with a respectable dose of insurance thrown in for good luck). Virtually every small accounting firm took the plunge.

Accounting offices are prime for solicitation. Tax professionals have a powerful relationship with their clients. Accountants also know a lot about their clients due to the data collected to file an accurate tax return.

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Tariffs, Stagflation and Stock Market Risks

By Keith Taxguy / March 5, 2018 / 11 Comments

What is so bad about a tariff? It raises money to pay for the recent tax cuts. It promises to raise prices for steel and aluminum manufacturers. Some laborers stand to benefit from higher wages and with less competition, more job security. At face value it sounds like a good idea!

Of course, it only works if the tariff takes place within a vacuum. The tariffs Trump promises this week are blanket, meaning they hit steel and aluminum from every nation. When such a draconian ax is taken to the playing field there will be a response.

Normally tariffs take a long process to change. Treaties and trade agreements go through a long process of negotiations before each member nation to the agreement presents the details to their legislative branch for approval. Passage isn’t guaranteed. Several safety nets are in place to encourage each nation to honor the terms of all trade agreements.

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Fixing an Incorrect or Erroneous Refund

By Keith Taxguy / March 2, 2018 / 0 Comments

A surprise refund in the middle of summer from the IRS quickly raises suspicions “this might not be a good thing”. However, refunds for less than anticipated are more common. Missing refunds top the list.

Before you panic, refunds have a general time table. If your refund is AWOL you might need to practice patience first. If it’s been less than three weeks since you e-filed (six week for paper filed returns) you need to wait a bit longer. Calling the IRS will waste a good portion of your day only to hear the friendly IRS employee say you need to wait at least 21 days before they can do anything.

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Church of FI

By Keith Taxguy / February 28, 2018 / 9 Comments

Back in the old days the FI (financial independence) community was a different place. Advice was simple and straight forward. King Solomon reminded us to avoid lending or borrowing. Nearly half the parables of Jesus have to do with money and wealth.

The simple message sold well. So well in fact it became ingrained in religious dogma. The goal was honest. Work hard, save and you will enjoy your old age.

The old school in the Church of FI made the most of a basic message. The advice and values were handed down generation to generation. It lasted for one simple reason; it worked!

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Problem Discovered in Tax Bill Will Leave Many Owing the IRS Big Next Year

By Keith Taxguy / February 26, 2018 / 27 Comments

A major tax bill late in the year followed by a bill of extenders February 9th and we have the perfect recipe for problems.

My initial reaction to the tax bill in December was that most of my clients would see some benefit since my clients tend towards the upper end of the income scale. I also have lower income and older clients who are not benefiting as I expected. Certain taxpayers are even seeing a tax increase, most notably, those with large unreimbursed employee business expenses like on-the-road sales people and rock band members.

The tax software used in my office estimates what the new tax rules will mean for clients if the rules applied to their 2017 return. This has been a powerful planning tool early in the tax season. But as an accountant I always look under the hood and when I did found a disturbing problem.

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How and When to File a Superseding Tax Return

By Keith Taxguy / February 21, 2018 / 2 Comments

There is no question the tax code is massive. No matter how knowledgeable or experienced you are, mistakes will happen. The consequences of such mistakes can be minor or they can cost serious amounts of additional tax, interest and penalties.

Filing an amended return is your only option after the due date, including extensions. An amended return solves most problems. Interest and penalties may apply. In some cases even an amended return can’t fix an error; you could lose entire deductions forever.

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Could We Get a Single Digit P/E Ratio?

By Keith Taxguy / February 12, 2018 / 8 Comments

Recent volatility and decline in the broad markets in the U.S has people wondering if the correction returned the market to typical valuations. There are several tools used to measure the market’s value. One of the most widely used is the price/earnings (P/E) ratio, derived by dividing a stock’s price by its trailing twelve months (TTM) earnings.

The P/E ratio on the S&P 500 stands at 24.46 as I write (February 11, 2018). The ratio has been above 20 since early 2015.

When you take long periods of market data and shake them together you end up with an average P/E somewhere in the mid-teens. There is no hard and fast rule stating what a fair or reasonable P/E should be though plenty of opinions exist.

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