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Table of Contents

• The "home stretch"
• Dawn Gray is "Toastmaster of the Year"
• Tax payment woes
• Extensions are morally OK
• Have you started tax planning for 2001?
• Thank you!
• Subscribe to the ESOAA Option Alert
• Visit our new articles.
• Subscribe/Unsubscribe from Michael Gray, CPA's Tax and Business Insight.

The "home stretch".

April 16 will soon be here. For those who are planning on having us prepare their income tax returns, please get us your extension information as soon as possible.

Can you believe this year is already one-fourth over?

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Dawn Gray is "Toastmaster of the Year".

Our webmaster and key team member, Dawn Gray, was selected as "Toastmaster of the Year" by the Saratoga Toastmasters. Dawn has grown a lot through participating in Toastmasters and has also been a real asset to her club, including setting up the club web site and holding two officer positions. I'm very proud of her. She certainly makes a huge contribution to our CPA firm, too, including getting these newsletters to you.

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Tax payment woes.

It appears those who were hoping for a market recovery to provide the funds needed to pay their income taxes are going to be disappointed. The market is looking rather "bearish" right now, and will probably take some time to recover. Installment payment plans and offers in compromise are alternative ways to postpone paying taxes or to seek a reduction.

The most important step for "damage control" is to FILE ON TIME. The penalty for late filing - five percent per month to a maximum of 25% is very onerous and can be avoided by simply filing your tax return by April 16. MAIL YOUR TAX RETURNS CERTIFIED MAIL.

Sadly, due to budget cuts, the post office has reduced its operating hours. Plan on going during the day to mail your returns, and bring some light reading with you to occupy your time in line.

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Extensions are morally OK.

Many people are obsessed with the filing deadline, April 16 for this year. But if you don't have all of the information yet -- such as that K-1 that never arrives on time -- it's simple to extend the due date for your income tax returns. Just mail Form 4868 by April 16. Remember the extension doesn't extend the due date for paying the tax, so make a deposit for the estimated tax due with the form. Since you don't know the "final answer", send in a little extra as a "cushion". This year, you can even file the extension form electronically.

The federal due date is automatically extended to August 15. No approval is required.

For California, you don't even mail a form unless you are making a tax deposit. The extension deposit form is Form 3519. The California automatic extended due date is October 15.

Mail your extension forms CERTIFIED MAIL.

For tax return preparers, extensions are a "safety valve" that enables us to survive tax season and spread our workload throughout the year.

What about your audit risk? I read somewhere that, statistically speaking, people who file extended tax returns are less likely to be audited. My experience is there is no difference. The issues on the tax return are a more important indicator of the likelihood of an audit.

So, if your situation justifies it, get an extension. It's no big deal.

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Have you started tax planning for 2001?

Looking back, many people would have been in much better shape on April 16 if they had done some tax planning throughout 2000. Why not make an appointment with your tax advisor today so you'll be better prepared next year?

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Thank you!

Craig Martin referred David and Barbara Lazarony, Robert Temmerman, Jr. referred the Dennis Orten Living Trust, Irene Miano referred Dennis Murphy, Dan Hanley referred Audrey Goldberg Trust, and Richard Lambie referred Linda Vaugn Thank you for your thoughtfulness.

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If you have employee stock options, have you subscribed to the ESOAA Option Alert?

To subscribe, go to http://www.stockoptionadvisors.com. You can review past issues at http://www.stockoptionadvisors.com/optionalert/

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Visit our new articles!

• "Successful Direct Marketing Methods" Book Review
• Are You Directing 100% of Your Marketing Effort at 15% of Your Audience?

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.