September, 2011

Message from Nelson & Company, P.S., CPAs

CDs? Savings? Stocks?--- Take advantage of 2012 Tax Rates

With interest rates so low on CDs and savings accounts, consider purchasing high-grade dividend paying stocks such as utility companies and/or major Dow Jones industrials.

With low prices in the market, many of these stocks are paying effective yield of better than 5%. The tax rate for 2012 on qualified dividends will be 15% no matter your tax bracket. However, if you are in or under the 15% tax bracket, there is no tax on qualified dividend income.

This is what Warren Buffet is talking about - Go to: http://www.usatoday.com/money/perfi/taxes/story/2011-09-20/buffett-tax-millionaires/50480226/1 for the story.

David S. Nelson, CPA, CTRS
NELSON & COMPANY, P.S.
Certified Public Accountants


IRS Times & Inquirer

Inside This Issue...

After Tax Issues, 'Survivor' Winner Says He's Broke
Connecticut Businessman Faces Up to Three Years in Prison
Think Cash is Invisible? Flea Market Seller Learns Lesson


After Tax Issues, 'Survivor' Winner Says He's Broke

Richard Hatch, the winner of the first season of CBS's hit reality show Survivor, hasn’t survived the Internal Revenue Service. Claiming he's "destitute", Hatch has asked for a court-appointed lawyer to appeal a nine-month sentence for failing to settle his tax bill in a tax-evasion case. Hatch, 50, of Newport, R.I., was sent back to prison after violating one of the terms of his release - to pay taxes on his $1 million in winnings from his appearance on Survivor. Hatch now claims he does not in fact owe taxes to the U.S. government. Instead, he said, he has evidence showing that he owes taxes to the government of Malaysia, where the reality television show was filmed 10 years ago. For now, Hatch remains behind bars in West Virginia.


Connecticut Businessman Faces Up to Three Years in Prison

The president of a Connecticut manufacturing company pleaded guilty to one count of filing a false federal tax return.

David Bohn, 46, of Redding, Conn., is the president of Danbury-based Preferred Utilities Manufacturing Corporation (PUMC). From 2004 to 2007, Bohn charged PUMC for personal expenses for him and his family. Bohn categorized these personal expenses as legitimate PUMC business expenses, and he also failed to report the personal benefit he received on his individual federal tax returns.

For tax years 2004 to 2007, Bohn failed to report a total of $228,959.45 in income, resulting in a tax loss of $75,899 to the IRS.

Bohn faces up to three years in prison and a fine of up to $100,000. Bohn also is required to pay back taxes, as well as penalties and interest, to the IRS.


Think Cash is Invisible? Flea Market Seller Learns Lesson

A Tallahassee, Fla. man whose business involved selling CDs and DVDs at a flea market was convicted of four counts of tax evasion from his failure to file personal tax returns for the years 2005 to 2008.

From 2005 to 2008, Lennie Fulwood Jr., 42, made cash deposits totaling more than $1.7 million, which he placed into multiple bank accounts established in Tallahassee. The majority of the cash deposits were made into accounts in the name of Fulwood's brother. Fulwood used the money in the accounts to purchase $683,000 in commercial and residential properties, each of which he titled solely in his brother's name.

Having used his brother as nominee to conceal his assets, Fulwood then failed to file personal tax returns when they became due. The IRS determined that Fulwood had a taxable income of $1.1 million and owed more than $300,000 in taxes.

When questioned by the IRS about his failure to file, Fulwood claimed that he had no taxable income and that his cash deposits were attributable to "gifts from friends."  Fulwood declined to identify these friends. Fulwood faces up to five years in prison.


 

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Nelson & Company, P.S., CPAs Since 1979

====NOTICE REQUIRED BY IRS====
Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that (i) any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

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