Dear taxpayer ... from IRS

Jeff Quinn
Special to the Bonanza
March 21, 2008

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Yes, you may very well become the recipient of a "greeting" from the Internal Revenue Service, bearing this very salutation, within the next few weeks.

And at no small cost to the government - more on that below.

Any old fat way, we hear the IRS will be sending out letters to some 130 million households, whose inhabitants filed returns for the 2006 tax year, later this month. The letters will remind folks that they need to file 2007 returns as well, denoting their eligibility for a rebate check.

After the "Dear Taxpayer" pleasantries are exchanged, your rich old Uncle Sam will inform you that President Dubyah has signed into law a plan that will provide payments of up to $600 for qualifying individuals, or $1,200 for married couples filing jointly. The "rebates" (translation: refund of tax dollars already paid) cometh forth as an element of a $168 billion "economic stimulus package."

But the thing which down right rankles some folks is the notion that the mere preparation and mailing of these notices will cost we and thee some $42 million greenbacks! According to the IRS' own estimate!!

We must say that have to agree with an unlikely ally, Sen. Schumer (D-NY) who was heard to wail that "There are countless better uses for $42 million than a self-congratulatory mailer that gives the president a pat on the back...."

Just send out the dough, and quit proclaiming the virtues of taking from one class of taxpayers and giving to another! Jeesh!

On the other side of the ledger, the recently passed "stimulus" legislation does have some redeeming taxpayer value.

And that would be the enhancement of depreciation deductions for many business taxpayers, including real estate lessors and lessees.

If certain conditions are fulfilled (regarding original use, timely acquisition, and timely placement in service) some new "bonus" depreciation deductions could prove most attractive when it comes to "qualified leasehold improvement property." This term is defined as any improvement to an interior portion of a building which is nonresidential real property if three conditions are met:

1. The improvement is made under or pursuant to a lease, either by the lessee, sublessee or lessor of the building;

2. The building is to be occupied exclusively by the lessee (or any sublessee); and

3. The improvement is placed in service more than 3 years after the date the building was first placed in service.

The terminology gets a little tricky, but the tax savings can be significant in the

right situation.

CONSULT YOUR TAX ADVISER - This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He is also a contributor to the recently published eleventh edition of Tax Savvy for Small Business, published by Nolo. He can be reached at (775) 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.