Scholl & Company, LLP
Certified Public Accountant

1418 S. Main Street
Salinas, CA 93908
(831) 758-5966

243 Foam Street
Monterey, CA 93940
(831) 649-5643

Toll-Free All Offices
(888) 758-5966

 

Wednesday
Mar262014

The verdict is in... Bitcoin will be taxed as property, not as currency

We have had more than a few clients this past year ask about Bitcoin and trading in Bitcoins from an income tax perspective.  There has been a lot of urban legends out there that claim, since the IRS has not given any formal guidance, that income taxes don't apply. Like most urban legends, that is simply wrong and making that assumption can land you in some real tax trouble.

When we delivered that news it was sometimes not what our client, or prospective client, wanted to hear. We've had to remind everyone that the primary premise of the U.S. Tax Code, Section 61, is pretty simple. It says that "gross income means all income from whatever source derived." So, unless there is a specific exclusion from taxability for the income source, you're on the hook for taxes.

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Monday
Mar242014

Fast Track to the Presidency

Last week, we talked about the IRS Criminal Investigation unit's Fiscal 2013 annual report. We told you about four of the 2,812 offenders who drew prison sentences for their efforts: the drag racer who applied for $83 million in fraudulent gas tax refunds, the surgeon who "operated" on his tax bill using foreign trusts and shell companies, the Japanese restaurant owner who hid receipts in boxes marked "seasoned octopus," and the prisoner who filed false tax returns for his fellow inmates and sent the refund checks to his mother. But the IRS report detailed over 100 such stories — so, at the risk of beating a dead horse, we couldn't resist sharing just a few more:

  • They say everything is bigger in Texas. Apparently that includes public corruption, which is an IRS priority. Abel Limas was a former police officer and state judge in Brownsville who discovered he could supplement his government salary by turning his office into "a criminal enterprise to enrich himself and others through extortion." In 2008, Limas issued a series of pretrial rulings in a case involving a helicopter crash. Later that year, he joined a law firm working on behalf of victims in that same crash. It turns out the law firm had promised him a cool hundred grand, plus a share of their fees, in exchange for those rulings. Now Limas is spending six years in a federal prison camp.

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Friday
Mar212014

Largest IRS Phone Scam Spreading

It is tax preparation season and the scammers our there know that taxes are weighing heavy on the minds of many taxpayers. The scammers are relying on the fact that you are thinking about taxes and the IRS right now.

Yesterday the Treasury Inspector General for Tax Administration (TIGTA) is warning all taxpayers to beware of phone calls from individuals who claim to represent the Internal Revenue Service, but in reality are trying to defraud you, in what it is saying is the largest ever scam it has seen to-date.

“This is the largest scam of its kind that we have ever seen,” said TIGTA Inspector General J. Russell George in a statement. He commented that TIGTA has thus far received reports of over 20,000 contacts and is aware of thousands of victims who have collectively paid over $1 million (and climbing) as a result of the scam.

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Wednesday
Mar192014

Seasoned Octopus

Most of the Internal Revenue Service's 90,000 employees are financial bureaucrats, working to collect the taxes that finance our government. But the Criminal Investigations unit, or IRS-CI, is an elite division of 3,700 financial crime fighters dedicated to protecting those taxes. Last month, they released their Fiscal 2013 annual report. And business sure is booming! In 2013, IRS special agents initiated 5,314 investigations (up 3.7% from 5,125 in 2012) and recommended 4,364 prosecutions (up 17.9% from 3,710 in 2012). There were 3,865 indictments and 3,311 convictions (the IRS doesn't take someone to criminal court unless they're pretty sure they can win). And 2,812 miscreants won themselves the proverbial "three hots and a cot" for terms averaging 25 months.

Most of IRS-CI's targets are plain old crooks. But some of them are just so awkwardly entertaining, we had to share their stories:

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Tuesday
Mar042014

I'd Like to Thank the Academy . . . .

Sunday night, millions of movie fans across the globe tuned in as the Academy of Motion Picture Arts & Sciences presented the 86th Academy Awards. Viewers were amazed that Adruitha Lee and Robin Mathews spun a $250 budget into a Best Makeup award for Dallas Buyers Club. They held their breath and wondered how much Kim Novak had to drink before she stumbled her way through the animation awards. And they thrilled as first-timer Lupitsa Nyong'o won Best Supporting Actress for 12 Years a Slave. But there's one award we didn't see — and it's a key to getting any movie made. We're talking, of course, about the coveted award for Best Original Tax Planning.

When we think of movies, we immediately think of Hollywood. But most movies aren't

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