Wednesday, April 11, 2012

April Fools

Since I am a self-employed performing artist who owns an Alternative Fuel Vehicle Refueling Property and also produces Cellulosic Biofuel, and my registered domestic partner is an Indian Coal Producer who also has healthcare expenses related to black lung, and we have both been receiving Ottoman Turkish Empire Settlement Payments, needless to say, our taxes were a little complicated this year.

Filling out my federal Form 2106 for the special handling of my performing artist expenses was easy. The problems arose when I tried to figure out if I could claim a deduction for my registered domestic partner’s health insurance costs. Since he is an Indian Coal Miner, I am unclear on whether California recognizes the fact that I am self-employed and paying his insurance premiums since he is also self-employed. Kind of vague there.

We also got a little confused about what to do with the interest we have received from our Ottoman Turkish Empire Settlement Payments. The federal government lets us deduct them, but California won’t. Does that mean that we have to give the money back? Believe me, I don’t want to give those Ottoman Turks another inch!

Figuring out my Alternative Fuel Vehicle Refueling Property Credit was no picnic, either. I read Form 8911 in its entirety, but I’m still confused. I produce and sell biodiesel mixed with ethanol, natural gas, hydrogen and wheat grass juice specifically formulated for today’s greener vehicles, and today’s less discerning alcoholics. The fact that I own the only vehicle that can actually run on this fuel is a moot point as far as I’m concerned, and the IRS agrees.

The problem is that Form 8911 says that the following are alternative fuels.
-          Any fuel at least 85 percent of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen.
-          Any mixture which consists of two or more of the following: biodiesel (as defined in section 40A(d)(1)), diesel fuel (as defined in section 4083(a)(3)), or kerosene,  and at least 20% of the volume of which consists of biodiesel determined without regard to any kerosene in such mixture.
-          Electricity.

Now, my special blend is only 75% ethanol, natural gas and hydrogen, but it contains biodiesel. Just not diesel or kerosene. You can see my obvious dilemma. I tried to read section 40A(d)(1), but I fell asleep. I don’t know if I qualify for the credit. If only the federal government were more specific on the treatment of wheat grass juice with respect to taxation, I would have some clear direction here.

Then there is Form 6478 – Alcohol and Cellulosic Biofuel Fuels Credit.
I need to determine where my cellulosic biofuel ranks from the following options:
- Alcohol 190 proof or greater and alcohol 190 proof or greater in fuel mixtures
- Alcohol less than 190 proof but at least 150 proof and alcohol less than 190 proof but at least 150 proof in fuel mixtures
- Qualified cellulosic biofuel produced after 2008 that is alcohol (see instructions for election)
- Qualified cellulosic biofuel produced after 2008 that is not alcohol (see instructions for election)

You can see my dilemma here, again. I know my cellulosic biofuel is alcoholic, because when we drink it, we get plumb tore up! But I’m really not sure what proof it is. Every time we think to test it, we end up passing around the Mason jar and forget again.

Also, the IRS has informed me that before claiming a credit on Form 6478, the alcohol fuel mixture credit must be taken against any section 4081 liability on Form 720. Any credit in excess of the section 4081 liability can be taken as a claim for payment on Form 8849 or an income tax credit on Form 4136. Clear as a bell.

Also, figuring out my registered domestic partner’s Form 8835 - Renewable Electricity, Refined Coal, and Indian Coal Production Credit has been no walk in the park. I do know that Indian coal means coal which is produced from coal reserves which on 6/14/05 were owned by an Indian tribe or held in trust by the United States for the benefit of an Indian tribe or its members. I also know that resources means wind, closed-loop biomass,  poultry waste, open-loop biomass, geothermal energy, solar energy, small irrigation power, municipal solid waste, hydropower production, marine and hydrokinetic renewables, refined coal, and Indian coal.

What I can’t figure out is how Form 8835 relates to Form 990-BL - Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons. We know that my registered domestic partner’s black lung issues are a direct result of both his Indian Coal mining activities and also his excessive intake of my cellulosic biofuel.

Should we try to combine Forms 8835, 990-BL and 6478 to give the IRS a clear picture of the predicament we find ourselves in?

Oh, forget it. Where’s that jug of biofuel?

If you ever get the impression that the tax code has anything to do with revenue collection, you need to think again.

April Fools Day is not April 1st. It’s April 15th!

See you soon,

Copyright © 2012 Marc Schmatjen

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