I just completed another class for my CFP (Certified Financial Planning) certificate. The wonderful world of income tax planning. After purchasing the 600 page Income Tax Planning book and the 8 mini books from Kaplan one fact was confirmed. People should hire a competent accountant!
Did I learn anything else? Yes, I spent 10 weeks looking at tax forms and trying to figure out the consequences of a person’s actions. Example here’s Bob’ and all of his financials now figure out his total income. What is the amount of Robert’s AGI? (Adjusted gross income), allowable itemized deductions. Oh by the way he owns a company and he’s using LIFO. Now calculate his deductible business expenses for federal income tax purposes. Hey did we tell you he sold some property in Question 8 above, for a net return of $140,000, how much Section 1250 recapture would he have? And all of this happened in the first two weeks. But nothing opened my eyes like the section on tax penalties. Question #2 in review - describe the calculations you would use to determine the following penalties. Yikes, can we discuss this? It seems the answer is no.