Thursday, April 13, 2006

Tax Time Is Very Taxing ...

Dear Internal Revenue Service:

There are several reasons why I am requesting a deadline extension for filing my 2005 income tax return. It seems that the deadline is looming and my tax forms still are blank. The reason my forms still are blank is because I determined that this year, I would prepare my own taxes and save the $75.00 fee.

Perhaps that first mistake led to these remaining mistakes. You see, I decided to read your Title 26 --Internal Revenue Tax Code (yes, the whole thing) so that I would know how to proceed. I intended to order a copy of this statute from the U. S. Government Printing Office. However, upon learning that the document was 13,458 pages in twenty volumes at a total cost of $974, shipping included, I decided not to read the whole thing. Then I went online with the intention of printing out just the Table of Contents of the tax code. However, this table was 113 pages and I didn’t have enough paper.

At this point, it seemed expedient simply to go to the public library and read the particular paragraphs of the code that I needed. By the way, did you know that one of the dictionary definitions of the term “code” is, “An arbitrary system of symbols, letters, and words used for … secret messages?” Reading this definition helped me to understand why they call it the, “tax code”. Also this helped me to understand why I didn’t understand what I was about to read.

First, I tried to determine my charitable contributions. Your very own IRS Code reads, “Beginning in 2005, you may be able to deduct as a charitable contribution the reasonable and necessary whaling expenses paid during the year. To claim this deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain.” You know, I have always enjoyed reading magazines from back to front. That doesn’t work with your tax code. At any rate I failed to register with the AEWC so there’s no need beating a dead whale to death.

Moving right along, I researched the “special depreciation” paragraphs to see how my computer might qualify for this deduction. I was greeted with, “If the property is eligible for the 50% special depreciation deduction and you claim this 50% depreciation, you cannot claim the 30% special depreciation deduction for the property. However, you can elect to deduct the 30% (instead of 50%) special depreciation for property eligible for the 50% special depreciation.” I was really relieved to get that cleared up.

Then I bumped into an answer to a question that I had not even asked, “The 90% limit on the ATNOLD does not apply to the portion of an ATNOLD attributable to qualified GO Zone losses. Such portion can be applied to offset up to 100% of alternative minimum taxable income (figured without regard to the ATNOLD and the domestic production activities deduction).” The writer of this paragraph would be very successful at writing newspaper bridge columns.

Then I needed to know about my stock trading expenses. Your code states that “… trading expenses should be reported on form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship) instead of Form 1040, Schedule A (PDF), Itemized Deductions and that gains or losses should be reported on form 1040, Schedule D (PDF), Capital Gains and Losses, unless an election is filed to change the accounting method.” Your tax code is loaded with elections. Will these show up in the primaries? Will I need my voter’s registration card?

Please grant my request for an extension. I’ll go see my accountant first thing Monday morning.


Winston Hamby


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