• Deduct Entertaining Spouses
• Payback Agreement
• Do What You Do Best
• Points to Ponder
• Why Do I Need a CPA?
• Another Blonde Joke
• A Word to the Wise
• Earned Income Credit
• Succession Planning for Family Businesses
• Features Wanted
• Internet Access
• Tax Tip of the Week
• Deduct Bad Loans
• New Business Pointers
• IRS Visits
• Certified?
• We Need Your Support
• What is Long-term Care Insurance

You can deduct entertainment expenses that are associated with your trade or business, which directly precedes or follows a bona fide business meeting. Anyone with whom you can reasonable expect to have business dealings can qualify as a "business associate" including customers, clients, suppliers, employees, partners, agents and advisors. Of course, if your spouse is an active employee of your company, the cost of his or her business related meals and entertainment would be deductible.

Remember, under current law, only 50% of the total cost of meals and entertainment is deductible.

Whether you're saving to buy a house, send your children to college or secure your retirement, you need a member of the Massachusetts Society of CPAs to assist you. Roger A. Kahan is an active member of the Massachusetts Society of CPAs.

The captain goes back and tells the woman that her assigned seat is in coach. Again, the blonde replies, "I'm young, blonde and beautiful, and I'm going to sit here all the way to New York." The captain doesn't want to cause a commotion, and so returns to the cockpit to discuss the blonde problem with the co-pilot.

The co-pilot says that he has a blonde girlfriend and that he can take care of the problem. He then goes back and briefly whispers something in the blonde's ear. She immediately gets up, says, "Thank you so much," hugs the co-pilot, and rushes back to her seat in the coach section. The pilot and flight attendant, who were watching with rapt attention, together ask the co-pilot what he had said to the woman. "I just told her that the first class section isn't going to New York."

Thanks to SA of Florida for this one. Yes, all blonde readers can blame her.

The solution? Request to swipe the card yourself. Merchants in growing numbers will be happy to accommodate you. Although it may be an inconvenience to both you and the merchant, it may save you from being a victim of identity fraud.

Think about it!

I was wondering if I could still file separately this year. My husband and I got married at the end of August. I have one child that I claim and based on my salary I qualify for income earned credit. I figure for almost 9 months out of the year I was supporting myself and my child. Can I do that and how would we file? Thank you. Tricia

Tricia: You are now married and may not comply with the limitations for the earned income credit on a joint income tax return with your husband. Married persons must file a joint return in order to claim this credit.

TAX TIPS AND FACTS will appear on our World Wide Web page, at http://www.rak-1.com making it available the WORLD.

If you choose to use the cash method of accounting, you report income and earnings when they are actually received. Businesses using the accrual method report income in the year it is earned, whether or not it has been received. Similarly, accrual businesses deduct or capitalize business expenses when they receive the goods or services, regardless of whether they are paid for at that time.

Businesses that use the cash method of accounting have a certain amount of flexibility in timing when the income is received and when expenses are paid. Most business owners look to push income into the next year in order to delay the payment of taxes on that income, while they accelerate the payment of expenses into this year so as to take current deductions. Those owners who anticipate being in a higher tax bracket next year may choose to reverse this strategy and accelerate income into this year when it will be taxed at a lower rate, and defer deductible expenses into next year when they will be worth more.

If your business involves inventory, you must use the accrual method of accounting. Those businesses faced with a choice should consider consulting with a CPA for advice on selecting the most advantageous accounting method.

Remember, the first year of a business is critical. Choices and elections must be made with the first income tax return and will remain with you for the life of the business.

If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters?

If your accountant isn't a CPA, it's time to seek professional help.

TAX TIPS AND FACTS is published periodically by Roger A. Kahan, CPA. Subscription is free to clients, prospective clients and friends of Roger A. Kahan, CPA. If you know of someone interested in a subscription to TAX TIPS AND FACTS allowing him or her to obtain valuable comments on national, Massachusetts or local tax issues, call (781) 963-RAK-1.