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The October 15th tax extension deadline is quickly approaching, which means it’s time to finish up that tax return you have been avoiding all summer. There are many benefits to filing an extension if your tax return is not quite ready in April, but there are no additional extensions available for the upcoming October 15th deadline. When you filed your extension in April, it did not extend the amount of time to pay, it just gave you an extra 6 months to finalize and file your tax return. 
You still had to pay the amount of tax you owed or the best estimate of it by April 15th. This might have people questioning why they need to get their returns in by October 15th if they already paid in April. The reason is to avoid possible penalties.
Depending on whether you owe money or are due a refund from the IRS will determine the consequences of not filing on time.
For individuals that will receive a refund, you will not be assessed any penalties. This is because the penalties are based on a percentage of the amount owed to the government. If you owe $0, any percentage of zero is still zero. However, the sooner you file, the sooner you’ll get your tax refund so it’s not a bad idea to get your tax return filed as soon as possible.
If you are one of the unlucky individuals that do owe, you could be subject to penalties. The IRS imposes two types of penalties; the failure-to-file penalty and the failure-to-pay penalty. The failure-to-file penalty is 5% per month on any unpaid taxes and the failure-to-pay penalty is .05% per month on any unpaid taxes. If you filed an extension in April the failure-to-file penalty is deferred until October 15th. However, if you do not file by October 15th the failure-to-file penalty begins that day and will be assessed until you file your return. 
If you did not file an extension in April, the failure-to-file penalty started April 15th and will continue until your return is filed and the amount you owe is paid. In general, the maximum penalty is 25% of the amount you owe. You will also have to pay interest on the amount of tax unpaid by April 15th.
In order to avoid these penalties be sure to file your tax return by April 15th or if you filed an extension, by October 15th, and pay the total amount you owe when you file your extension in April.
How do we bring innovation into the world of Public Accounting?
The Truth About Marissa Mayer: An Unauthorized Biography by Nicholas Carlson popped up in the recommended news section of my Linked In account this weekend. Thinking I would just scan through it, I later found it was a lengthy but intriguing article which I read in two sittings. Two areas really resonated with me. 
The first was listening to Marissa speak to a Stanford class about the lessons learned at Google around Innovation .
Google’s 9 Theorems on Innovation
So how do we apply these conceptions in public accounting?
Ideas can come from other industries. What models can we change?
I want to know what you know! Engage in conversation. Contribute. There is so much information available today that we can get swept up in information overload. Share what you have found.
Surrounding yourself with smart people has always been a business axiom. I love being challenged to rethink.
Google provides the opportunity of using 20% of your time to work on anything you want. I have always thought that public accounting for me was a great forum to pursue dreams. Find your path. Find support. And then go for it.
Develop new products, methods of delivery, packaging. Throw them out in the marketplace. They don’t need to be perfect. Adjust as you go.
So we are accountants. I know. The numbers have to be right. The law has to be followed. I’m a stickler for getting it right. But there are so many other ways we can be creative and innovative.
The second area of Marissa’s bio that intrigued me was her work philosophy. She said it, “I like to work.” Now this is something I can really relate to. Marissa said she has been called a workaholic. I’ve been called the same. But it’s that I really like the work. I like being challenged and learning and relationships… it goes on and on. So here is an excerpt from the article relating to her transition into Yahoo:
“Some of the people in the room were growing frustrated with the pace, but others began contributing. Among those who contributed, Mayer learned who to trust. Those trusted people began to grow in confidence and they started to contribute even more. Once we learned how to operate on that level of intensity with her, she softened and it became more of an interaction.”
“She was pushing the pace…She was teaching…She was creating…She was using data to empathize with hundreds of millions of people all at once, as she had learned to do at Google.”
“I’ve never seen anybody like [her],” says someone from those meetings. Mayer, he says, was “somebody who could see a whole collection of possibilities and could just talk about her experiences and principles.”
One Yahoo executive said that before Mayer arrived, “what was missing was leadership from the very top, which was able to cut to the chase and get some tough decisions made, get focused in the right places, get the sense of urgency, and also somebody who could really be the chief quality control leader of the company.”
Quality control a must. What goes out is what everyone sees.
Another stickler for quality…Steve Jobs. So as if I hadn’t read enough on technology leaders, I decided to check out the new Steve Jobs movie. Similar philosophies? Yes. Surround yourself with smart people. Make quality products. Steve also had the same attention to minute detail as Marissa. Think, what does the consumer want? Steve wanted to be Different not Better.
So how do we do that in the accounting world? Be Different? Find innovative ways to engage the consumer. Make accounting their world? Make the numbers matter for them? Make them simple and understandable?
What do you think? Ideas come from everywhere.
I’m going to talk a little baseball today. It’s been on my mind since hearing about it and then watching a recap of the eventful New York Yankees/Boston Red Sox game on Sunday, August 18. I know most everyone hates Alex Rodriquez, public enemy number one in the baseball world, but just indulge me.
For those unaware, Alex Rodriquez and twelve other players were suspended by Major League Baseball in early August due to their connection with Biogenesis, a Florida “anti-aging” clinic, and for their alleged (and now admitted) use of performance enhancing drugs (PEDs). 
Rodriguez was given a 211 game suspension, while the twelve others were all given 50 game suspensions, effective immediately. Rodriguez’s suspension would have taken him all the way through the 2014 regular season. Simple enough. He may very well deserve every game he is suspended. However, under the collective bargaining agreement (CBA) between the players and Major League Baseball, players have the right to appeal their suspension and continue playing until the appeals process has finished. Alex Rodriguez has appealed and has returned to playing for the Yankees. I know people hate this; I know players hate this. But let the man have his due process. The CBA lays out the rules of how contracts work in MLB. Deal with it and stop complaining. (Yes, you can have an opinion, but I’m done listening to those who think he shouldn’t be playing.)
So, what about that “eventful” game from Sunday, August 18? Well, the starting pitcher for the Boston Red Sox, Ryan Dempster, apparently doesn’t approve of Alex Rodriguez. In the second inning, Dempster plunked Rodriguez on the fourth pitch. This was after he pitched behind Rodriguez on the first pitch and then threw two more pitches inside. It seemed pretty obvious to me that this was an intentional hit. The sportscasters calling the game agreed it was, too (give a watch and listen; those Red Sox fans sound horrible cheering when A-Rod gets hit). 
Okay, players get intentionally hit for all sorts of reasons, but come on, four pitches! He made his intentions beyond obvious, even though he is not admitting to it. I would have thought this obviousness would have gotten Dempster an ejection, but no, the home plate umpire Brian O’Nora simply gave warnings to both dugouts. Yankee manager Joe Girardi stormed onto the field and let O’Nora have it (rightfully so) and was subsequently ejected from the game. Rodriguez took his base and then exacted his revenge in the fifth inning when he cranked a solo shot. The Yankees ended up coming from behind and winning, so Dempster may have just ignited a third place Yankee team at the wrong time of the season (Red Sox slugger David Ortiz agrees with this idea).
Luckily, MLB decided to suspend Dempster, but unfortunately for only five games. Five games for a pitcher is no problem. He doesn’t pitch every night and by the time the five games go by he’ll be fresh for his next start. It’s like no suspension happened. The suspension is weak and should have been for more games. At least there was a suspension. No action from MLB would have implied approval that it is okay to hit Alex Rodriguez. The suspension makes some kind of statement and says there are consequences for your actions. Alex Rodriguez will most likely suffer the consequences of his actions soon enough, but let him have his due process. In the mean time, how about you just pitch to him and strike him out to show that you don’t respect him.
There are so many good things going on in Reno right now, and you don’t have to look far to find them!
When you ask the question, What makes a neighborhood great?, the answers include “It’s always a bunch of individuals coming in who think the potential for their community is bigger.” And “A great neighborhood usually evolves organically with its residents.”
MIDTOWN is a prime example of this. Check out the latest edition of Reno Magazine’s profiles of 17 Midtown pioneers who invested in Midtown, whether 17 years ago or six months ago and are fueling its renaissance. This group believes and is totally invested in “Buying Local” and caring about local business.
Sam Sprague, Micano Home and Garden: “When people starting thinking about buying locally, it will help Reno out so much – that’s when the sidewalks will change, the economy will change, the money will be going back into our community.”
Christian and Kasey Christensen, SÜP Restaurant: “The couple envisions Midtown as a spot reminiscent of San Diego’s Gaslamp District with its destination feel and dense population of businesses.”
Bernie and Tim Carter, Carter Bros Ace Hardware: “What Midtown has developed into is a philosophy: To develop that old-town center core in Reno,” Bernie describes. “That’s why we’re involved with mom-and-pop type stores.”
Next project up for the Carter Brothers…the historic, 81 year old, former downtown Reno post office designed by famed architect Frederic DeLongchamps. Can’t wait to see that one!
Arthur Farley, Brasserie St. James: “…all my favorite neighborhoods aren’t downtown, they’re right at the edge of downtown.”
Other Midtown owners and businesses include Hillary Schieve, Plato’s Closet & Clothes Mentor; T. Duncan Mitchell, Chapel Tavern; Eloy and Rachel Jara, Midtown Wine Bar; Eric and Monique Baron, The Melting Pot; Esther Dunaway, PolyEsthers; Christopher Costa, Reno Public House; Peter Burge and Laura Conrow, Wedge-A Cheese Shop; Tammy Borde, Chocolate Walrus; and Amber Solorzano, The Creative Coalition of Midtown.
What makes a great neighborhood? Just ask the Midtown folks.
And while you are reading through Reno Magazine catch the interview with Monica Harte, General Director of the Nevada Opera Association. Monica is bringing a fresh new perspective to Nevada Opera with a goal of introducing opera to new audiences in our community while maintaining exceptional productions for seasoned opera fans. I’m now one of those new to the opera fans!
Finally, if you haven’t heard the new bustle about town, check out the Biggest Little City Campaign. 
This is another grassroots project that’s all about showing the good things in our community. Go to their website and read stories of why people live in Reno. Share your story. What’s your Big…and Little?
So what’s happening in Reno? Plenty to be proud of. Pioneers are paving the way. Jump on board.
In order to have your “hobby” considered a business, you must be pursuing the activity with the intent of making a profit. If this is not the case, the activity will be subject to the IRS hobby loss rules, which provide that such losses are generally deductible only to the extent of income produced by the activity. 
Furthermore, hobby expenses (only to the extent of hobby income) are deductible as a miscellaneous itemized deduction and are subject to the two-percent-of-adjusted-gross-income floor.
Referencing a recent article in The Tax Adviser, the determination of whether or not your hobby can be classified as a business involves a number of considerations.
These and other relevant facts and circumstances must all be considered in determining whether any particular activity is a hobby or a business.
But to end on a positive note, an activity is generally presumed NOT to be a hobby if net profits result in any three of five consecutive tax years ending with the tax year in question.
There are two types of IRAs that individuals can create themselves, with extremely different characteristics. One is a regular IRA, for which the contributions are deductible.
A regular IRA will put you ahead if you’re in a high tax bracket when you make the contributions and expect to be in a lower bracket when you retire and take the distributions. For instance, if you are single and your taxable income is greater than $183,250, this contribution of up to $5,500 isn’t taxed at 33%. Assuming you take the distribution after you’re 59 1/2 years old and withdraw this $5,500 when your taxable income is less than $36,250 you are only taxed at 15%. This yields a tax savings of 18%, or $990.
The other type of an IRA is a Roth. With a Roth IRA, you can contribute up to $5,500 per year after tax. After you reach 59.5, you can withdraw any amounts you wish tax free. 
This is advantageous if you, or your spouse, will have significant pension, investment or other types of income when you retire. The contributed amount and all the gains are tax free. I may be pessimistic, but I think that by the time I reach 59.5 the government will have raised tax rates to pay down the deficit. A Roth IRA will protect people from this scenario. It is also a useful retirement vehicle if you are in the 15% tax bracket, as I can’t envision taxes for a single person making over $15,000 a year ever getting below this tax rate.
Another reason that I am fond of a Roth IRA is that it isn’t subject to the same harsh early distribution penalties as a regular IRA. With a regular IRA, if somebody ever becomes destitute or needs money for emergencies they will be penalized 10%! (There are exceptions for medical insurance premiums for the unemployed, qualified higher education expenses and up to $10,000 for a first time home purchase).
This takes away the whole tax savings of a regular IRA as outlined above. I for one don’t like the idea of the government having a certain level of control over when I can take out my money. On the other hand a Roth IRA’s early distributions are only penalized above the contributed amounts. This means that the 10% penalty will only kick in after all the contributions are withdrawn first, the earnings are the only portion that could be penalized. So if I put in $50,000 over 10 years and that money has grown to $100,000, I could take out the $50,000 of contributions with no penalty and no tax. This I like as it gives me more control over my money in addition to not worrying about unknown future tax rates.
Another rule to keep in mind is that contributions can only be made if the taxpayer makes under a certain amount. For a Roth IRA, the $5,500 contribution limit is $110,000 in adjusted gross income for single people and $173,000 for married couples. 
For a regular IRA, and for active participants in an employer retirement plan, the contribution limit is $59,000 for single people and $95,000 for married people. People not involved in an employee retirement plan have no income limit in order to contribute to a regular IRA. So, especially if you’re invested in a 401k at work which has the same withdrawal characteristics as a regular IRA, put some money into a Roth IRA!
It’s my turn again. The dreaded blog is due. What to write always seems to drive the “dreaded” part of a “blog is due.” So, I fired up Google News and started reading away. 
There was definitely much to write about, but I wanted something local. Clicking on the News Near You section didn’t highlight any particularly interesting articles, but it did remind me to take a peek at the Reno Gazette-Journal’s website (yes, sometimes there is more than just pictures of events). Since I don’t actually have an RGJ subscription, I was limited by the number of articles I could read. So, I proceeded carefully and looked for an article about something local to click on. I was intrigued when I stumbled across the title “Reno Rebirth: Could downtown Reno be a home for students?” I clicked away and was happy to discover a blog filled with all things Reno. (Oh, and the blog isn’t limited by having a subscription or not.)
Reno Rebirth is a blog “devoted to Reno’s economic recovery.” Reading that tagline would make one primarily think about business, but economic recovery relates to all aspects of life and Reno Rebirth makes that clear. 
Blogs are posted a few times a week from a variety of writers with topics ranging from Reno being a city where people are active and exercise to the number of arrests made at the 2012 Santa Crawl. The blog does allow for comments via Facebook login, so people are adding their opinions to the blog as well. There is also a Twitter feed on the main page where you can catch some additional local information. Here are a couple of blog posts I found interesting:
With food, nightlife and easy access to campus, downtown living looks like it could be a nice addition to student housing options.So, if you have some time, take a peek at the Reno Rebirth blog and don’t forget to keep an eye out for Barnard Vogler’s weekly blog, too.
Recently, in Windsor v. U.S., the Supreme Court made history by striking down a key provision in the Defense of Marriage Act (DOMA). Although DOMA wasn’t typically viewed as a tax law, it carried significant tax consequences for married same-sex couples who have traditionally been unable to do things like file a joint return or take advantage of a number of favorable estate-planning provisions. 
The Supreme Court’s decision means that the federal government, including the IRS, must now treat same-sex couples who are legally married in states that permit same-sex marriage the same as their heterosexual counterparts. However, the Court’s decision also raises a number of unanswered questions, including whether and to what extent it will apply retroactively, and how conflicts between state laws will be resolved.
in 1996, Congress enacted, and President Clinton signed into law the Defense of Marriage Act. Section 3 of DOMA defines marriage for purposes of administering federal law as the “legal union between one man and one woman as husband and wife.” It further defines “spouse” as “a person of the opposite sex who is a husband or wife.”
The Windsor Case based on the taxation of an estate of a same-sex couple from New York challenged Section 3 and prevailed in the district court and again in the Second Court of Appeals. In a majority opinion delivered by Supreme Court Justice Kennedy, the Supreme Court held that DOMA Section 3 was unconstitutional deprivation of equal protection. It should be noted that Section 2 of DOMA, allowing states to refuse to recognize same-sex marriages performed under the laws of other states, wasn’t at issue in this case.
Although there was difficulty and confusion in applying tax law for same-sex couples prior to this decision, it has not eased the complexity encountered in reporting and complying with federal and state tax laws with regard to same-sex couples. While the decision makes clear that the federal government must recognize a lawful same-sex marriage, a number of issues remain unanswered including the following:
The following are among the tax breaks newly available to legally married same-sex couples:
As with almost all new complex tax law, these new provisions bring about a great deal of confusion and uncertainty as to application. I am sure that as these new provisions come into practice, many cloudy issues will be resolved. I am also sure that just as many new issues will arise. Stay tuned…I will keep you posted.
At the request of Senators Carl Levin (D-Michigan) and Tom Coburn (R-Oklahoma), the Government Accounting Office (GAO) recently conducted a study of the actual tax rates paid by companies that had $10 million or more in assets, a recent article from The Hill has reported.
The subsequent report revealed that in 2010 these large, profitable corporations paid an effective federal tax rate of 12.6% in spite of the fact that the statutory rate was 35%. 
Even when adding in local, state and foreign taxes, the rate paid climbs to only 17%.
How can that be, you ask. The answers lie buried in the Internal Revenue Code, which happens to be about 10 times the size of the Bible. Therein, savvy tax professionals find plenty of exemptions, deferrals, tax credits and other incentives which enable large corporations to dramatically reduce the actual taxes they must pay to Uncle Sam. 
Of course, the tax burden thus avoided gets shifted onto hardworking families and small businesses, many of whom at that point are paying a higher effective rate than the big boys.
According to Coburn, “giveaways and loopholes” bolster the case for comprehensive tax reform. I, for one, am skeptical whether any meaningful reform will ever see the light of day, but one never knows.
http://thehill.com/blogs/on-the-money/domestic-taxes/308781-gao
In a few days, Reno will host the 2013 Triple-A All-Star Week at the Reno Aces stadium. This is an opportunity you won’t want to miss. Triple-A teams from across the country bid to host this event, and the Reno Aces Baseball Club was the one chosen. Hundreds of former Triple-A All-Stars have gone on to the Major League, and many have even played their way to the Major League All-Star Game.
Triple-A All-Star week will begin with the All-Star FanFest held on Saturday, July 13 and Sunday, July 14. Fans will have the chance to test their batting and base-running skills, get autographs from MLB alumni, JT Snow, Robb Nen, and Jack Clark, and much more.
The 2013 IGT Triple-A Home Run Derby will be held on Monday, July 15, and is set to begin at 7:05, but the entertainment will start at 6. 
The Home Run Derby will showcase six of the top hitters in Minor League Baseball, and one top hitter from a local high school. Prices range from $10-$30.
The 2013 Dolan Auto Group Triple-A All-Star Game will be held Wednesday, July 17 at 6:05 p.m. The best players from the Pacific Coast League and International League will compete for the win. 
The Pacific Coast team will be managed by Brett Butler, the Reno Aces manager, and will include three Reno Aces players. Prices range from $12-$36.
Not only are these great events to attend, it is also a great benefit to our local economy. According to the RGJ’s article, “Betting on Reno: All-Star game’s economic impact will be measured by national exposure”, the event is estimated to bring in approximately $1 million from traveling baseball executives and staff members. This amount does not include family, friends, and fans travelling to see the event. The 2014 host of the event, Durham, N.C, expects to receive an estimated $3.3 million in visitor spending. This event will be nationally televised on the MLB Network and will be great exposure for Reno and all of Northern Nevada. The MLB Network broadcasts to millions of households, and will allow Reno to not only showcase the Reno Aces, but also show all that Northern Nevada has to offer.
Tickets are still available for all of these events, so don’t miss your chance to support our community and see these major league prospects in action!
