Tax Musings of a Burbank CPA: IRS Warning Taxpayers About “Phishing” Schemes to Steal Personal Information

The Internal Revenue Service has been warning taxpayers to watch out for phony websites and emails looking to steal personal information. The was a big spike in these “Phishing” schemes this last tax season, plus the IRS has seen email scams targeting tax and payroll professionals as well as human resources personnel and schools in addition to average taxpayers. In these scams, criminals pose as a person or organization the taxpayer trusts or recognizes, such as a bank, credit card company, tax software provider or government agency. There are websites that appear legit but have fake login pages so that victims will provide passwords, social security number s and other information that can be used for identity theft directly or can be sold to other criminals to use. Some of the scams are increasingly targeting tax professionals in an attempt to access their cleint list of personal and financial data. These phony emails and websites can also infect the victim’s computer with malware, giving the criminal access to the device so they can find sensitive information as well as track keyboard strokes, allowing access to login information. Just remember that Government Agencies don’t communicate by email but by certified mail. [...]

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Tax Musings of a Burbank CPA – Is Your Business Really a Business or a Hobby?

Now that tax season is over, I want to discuss the hobby loss rules a bit.  Is your small business really a business or is it a hobby (with the loss of any corresponding tax losses). The IRS has addressed the issue with a list of factors they use to determine if a business is a hobby or not.  Here is the list from the IRS website: Income & Expenses Question: How do you distinguish between a business and a hobby? Answer: In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. No one factor alone is decisive. You must generally consider these factors to establish that an activity is a business engaged in making a profit: Whether you carry on the activity in a businesslike manner. Whether the time and effort you put into the activity indicate you intend to make it profitable. Whether you depend on income from the activity for your livelihood. Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business). Whether you change your methods of operation in an attempt to improve [...]

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Financial Musings of a Burbank CPA: Letting your investment winners run and protecting your downside Part 5 (The Final Chapter)

This article concludes my five part newsletter series I published a couple of years ago on investments – Letting Your Winners Run and Protecting Your Downside. Part 5 0f 5 – How It All Works Together (The Final Exciting Chapter): Okay, now how does this all work together? First, select the investments you want, making sure you diversify between assets and across industries. Now pick somewhere between 20 and 25 investments and put equal amounts in all of them (keeping position sizes between 4 and 5 percent of assets.) Keep track of your stop losses – about 15% to 25% of the investment. The worst case situation – an investment drops below your stop loss. If you follow your stop and sell at the open the next day, with the position size of 4-5% your worst loss will be around 1 to 1 1/2% percent of your assets. A few of these will probably hurt a little, but you have small losses to deal with rather than big ones. If a couple of investments take off, you can let your winners run, using the stops to stay in the investment and then tighten your stop loss and when you sell you will [...]

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