The Labyrinth

Have you ever tried to do your taxes without software or an accountant. I have done it a few times, but it has been years. I figure the price for the software is more than worth the time it takes to figure it out by hand.

When I went into business, I went and hired an accountant to keep track of stuff. I went with a guy that was recommended to me, but whose price was really low.

You know that saying "You get what you pay for."? Well, I got what I paid for. Not real thorough. Cut too many corners. Ran the place like a clinic where most of the work was done by college freshmen with a high turnover.

So, this year, I don't have enough $ to pay for taxes. I have to figure it out. Plus, we are shutting down the biz. Turns out, we have a whole bunch of assets on the books that have to be disposed of. The problem is, some of those, well, most of those, should never have been listed as assets. Some of them were paper plates and snack food for the breakroom. One of them was an item that was listed as a piece of equipment that was purchased to pay a vendor (he wanted an XBOX and his wife would have stopped him if we had paid him in cash). We had entries on our books on that very day that showed we had used it to pay for services. But, somehow, they accounting clinic monkeys never noticed that it came in. At the very least, they should have asked us about it.

Anyway, so now, I have all this old stuff on the books, and more specifically in past years of tax filings, that now has to be taken care of. Into the Labyrinth of IRS tax code I go. And this one really gets bad. First he used something called Section 179 to take all the depreciation at once on this "equipment". Now, I have to figure out how to split all that out. Well, no, you can't do that. You have to sell it to your owners, and then take the cash and figure profit, after you have rolled back the Section 179 depreciation and replaced it with regular depreciation. Then, once you have converted everything to cash, then you can distribute the cash. But wait, that would be too simple. Now you have to go get Fair Market Value on everything. Well, how do you determine Fair Market Value. Well, sell it for the going rate, or find the same thing and see what the going rate is. Well, fortunately there is craigslist, or I would be forever just tracking what Fair Market Value is on all this.

Once I have my fair market value, now I have to figure out where to report it. Oh, happy joy, you can only report 4 items per form. So, I figure, probably attach a statement with the rest of the info in it, right? Wrong. You have to use multiple copies of form 4797 but I don't see anywhere to aggrigate multiple forms. Then, somehow, I have to get that amount reported as normal income, but I also have to report the whole thing (enter the statement that I couldn't use before) when I do the K-1's for each partner. But, I can't do it the same way. Anyway, when all is said and done, I have spent about 100 hours on this so far, and it will probably make about 2 dollars difference in my taxes, if any. There are so many ways to make this better. I guess it is time for another Fair Tax plug. Yeah, there will still be taxes and forms, but there would far fewer complexities to deal with. Either something is taxable, or it isn't, and it is taxable once, at purchase. Period.

Really, if you don't know about it, look it up. Fairtax.org.