The Annual Tax Extenders Legislation Addressed by the Senate

Tax Extenders, Again

The annual annoyance which is the Tax Extenders legislation (aka AMT patch) is passing through the Senate.  Finance Chairman Max Baucus (D-MT) points out why provisions were either retained--or in few cases, eliminated--as part of the Finance Committee report.  Expected extensions were granted to K-12 teachers paying for their own school supplies, deduction for home mortgage insurance premiums and deduction for either sales or income taxes at the state level.  Among credits not extended were energy credits of up to $25 for dishwashers and $175 for clothes washers.  Three Republican Senators, Burr, Coburn and Kyl, wrote a minority report criticizing the legislation for not cutting enough tax incentives, with wind power incentives getting special ire.

The annual patch seems to be an annual rite of passage for the U.S. Congress, but after about five years of one-year fixes, one wonders when the House and Senate will ever get their act together and make long-term decisions on these provisions.  Nevertheless, I unenthusiastically guess that the annual patchwork approach is better than letting the unpatched AMT mow through the wallets of unsuspecting middle-class taxpayers.

Leaving Time--Unless You Want to be a CPA Partner

Three-Year Itch?

The Coenen brothers employment recruiting firm in Minneapolis concluded that CPAs not on track for partnership should leave their firm after 3-6 years or during the first two years as a senior accountant.  Former Big 4 Manager Andy Dahl said that he learned the most during his CPA experience during the third to sixth year and very little new after that.  Terry Schweigel of General Mills concurs, saying that GenMills hires about three seniors per year but only one manager per three years; in part because the seniors are considered more flexible.  The Coenen brothers recommend developing a relationship with a recruiter shortly after becoming a senior to maximize the number of available opportunities.

I did not stay in public accounting long enough to reach the "sweet spot" for the Robert Halfs of the world--but can point out that for non-international (middle-sized or small) CPA firms that best opportunities are more likely based on relationships with specific clients rather than the amount of time worked in the CPA firm.    Conclusion: as important as knowing when to leave a CPA firm is knowing why you are willing to leave and what you want to do next.

"And Uncle Sam and his IRS Revenue Agent Buddy Step to the Podium"

Yahoo Olympics Tax Story

Congratulations to the US medalists--but be ready for a tax bill of $3000 to about $9000 on the medals (which come with cash prizes of $10,000 to $25,000) as calculated by the Weekly Standard.  While taxes saved are at best cold comfort to bicyclist Taylor Phinney (fourth in two separate events), the basis for the taxation comes from IRC Section 74 on prizes and awards.  [Today's s[n]ide comment--When the White House does the customary post-Olympic recession, will the President tell the medalists that they did not "win those medals" because they learned competitive skills at public school athetic teams and used state highways and local roads to get to practice facilities?]  The net result: stalwart Olympians such as Ryan Lochte and Missy Franklin could be looking of tax bills in excess of $20,000 (though to be fair, Ms. Franklin as a incoming college student probably will not have a lot of income other than the medal prizes).

Snide comment above aside, taxation of such prizes is consistent with the Internal Revenue Code.  Nonetheless, Senator Marco Rubio (R-FL) may have a POLITICAL winner in his proposal to exempt Olympic earnings from taxation.

UPDATE on Ms. Franklin: Based on a Wall Street Journal editorial from Tuesday, Ms. Franklin is actually a "rising" high school senior.  Additionally, she is attempting to maintain amateur status for college; thus she will not be signing lucrative contracts to endorse products and may even forswear the cash prizes associated with the medals.