News On The Tax Front--The latest tax news.
IRS Provides Relief from Mid-Quarter Convention--As a result of the September 11 attack, the IRS has suspended the mid-quarter convention for 2001. This could be a big benefit for many taxpayers.
IRS Allows Redesignation of Estimated Tax Payments--Because of the September 11 attack, the IRS is allowing taxpayers to redesignate estimated tax payements and apply to them to other required payments.
In Brief:--Tax, business, and personal finance tips.
Previously Reported In Daily Update
In Notice 2001-64 (IRB 2001-41) the IRS reported that it was considering issuing proposed regulations under Sec. 707(a)(2)(B) relating to disguised sales of partnership interests.
The IRS has reported (Announcement 2001-107) that the Martinsburg Computing Center (MCC) Information Reporting Program Call Site now has a toll-free telephone number. The Information Reporting Program Call Site answers both magnetic media and tax law questions relating to the filing of information returns (Forms 1096, 1098, 1099, 5498, 8027, W-2G, and W- 4). The Call Site also answers magnetic media questions related to Forms 1042-S, and tax law and paper filing related questions about Forms W-2 and W-3, as well as handling inquiries dealing with backup withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers. The new toll-free number is 866-455-7438. The Call Site can also be reached via e-mail at mccirp@irs.gov. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to 4:30 p.m. Eastern time.
Keeping different business interests and personal finances separated is often tough for a small business owner. But it's essential. Not doing so can result in increased accounting costs and tax nightmares. In Jerry J. and Susan N. LeBouef (T.C. Memo. 2001-261) the taxpayers claimed that some $244,000 of gross receipts reported by their sole proprietorship really belonged to another entity. Their accountant zeroed out the amount by claiming an identical amount for cost of goods sold. The IRS and the Tax Court didn't buy it. The Court found the taxpayers did not overturn the original amount of income reported and accepted the Service's proposed adjustments to their sole proprietorship income. It didn't help that the taxpayers claimed the sole proprietorship had no activity yet they checked the box stating they materially participated in the activity.
The IRS has taken a number of steps to assist victims of the September 11th terrorist attacks. Basically, taxpayers who qualify can redesignate payments they made for estimated taxes to cover employment tax deposits and payments. Taxpayers caught in a cash squeeze who clearly will be getting a refund of income taxes, will be able to essentially get the refund at least several months earlier than they could using conventional procedures. It is not clear from the announcement who would qualify for this treatment. Announcement 2001-112 is reproduced in full in our Special Report section
Failure to keep good records can result in a tax nightmare. In Kenneth Lee and Margaret Ihlenfeldt (T.C. Memo. 2001-259) the IRS convinced the Court that the taxpayer had unreported self-employment income. The Court did not believe that certain deposits to his bank account were loans (rather than taxable income) because the taxpayer had no documentation that would support the claim. On the other hand, the Court let the taxpayer to deduct more expenses against that income than the IRS allowed. The taxpayer was not able to deduct the bulk of his expenses because he could not produce any evidence supporting his claim.
One of the problems with doing business as a regular (C) corporation is the likelihood of double taxation. You may escape while you're operating the business, but then there's a good chance you'll get hit when you sell out. One way of limiting the damage is to ascribe substantial value to a consulting agreement and/or a covenant not to compete where you, the shareholder, is the recipient, not the corporation. In Bemidji Distributing Co., Inc. (T.C. Memo. 2001-260) the purchase and sale agreement put the value of a covenant at $1 million, about half of the total selling price of the business. The IRS claimed the covenant was worth $121,000. The taxpayer's expert felt it was worth $2.2 million. The Court rejected the claims by both parties, assigning it a value of $334,000. This can be tricky area. Mistakes can be costly. Get expert advice.
The IRS has issued the new high-low pre diem rates for the fiscal year starting October 1, 2001. There's not much change. The per diem rate for any high-cost locality is now $204; for all other areas it's $125 per day. The M&IE (meals and incidental expenses) rates are $42 (high cost) and $34. For workers in the transportation industry the rate is $38. The revenue procedure makes some additions and deletions to the areas considered high cost. We'll be publishing the new list on October 30. For more details see Rev. Proc. 2001-47, IRB 2001-42.
In Internal Revenue News Release IR-2001-92 the IRS reminded reservists called to active duty and new enlistees in the armed forces that they might qualify for a deferral of taxes owed if they can show that their ability to pay the taxes is impaired because of their military service. The deferral is not automatic. When applying for the deferral, the taxpayer must prove both an inability to pay the tax and that this inability resulted from military service. A taxpayer must have received a notice of tax due, or be on an installment agreement with the IRS, before applying for the deferral. For more information, get IRS Publication 3, Armed Forces' Tax Guide.
The House passed, by a 216 to 214 vote, H.R. 3090, the economic stimulus package. The bill would provide tax relief to both individuals and businesses. The vote was along party lines. Democrats have their own proposal and reconciliation in the Senate will undoubtedly result in substantial changes. Here are some of the most significant provisions:
In In re David B. Jones and Linda S. Jones, Debtors (2001-2 USTC 50,638; U.S. Bankruptcy Court, Md. Dist. Fla., Tampa Div.) the taxpayers argued that a $4 million settlement they received for a breach of contract when a Toyota distributor failed to deal with their Toyota dealership should be excluded from income on account of personal injuries or sickness. The Court did not agree. The settlement agreement did not allocate any portion of the payment to personal injury claims.
The Social Security Administration has announced the cost of living increases for 2002. For wage earners, the maximum amount of earnings subject to the social security tax will increase to $84,900 in 2002 from $80,400 (2001 amount). For social security beneficiaries, the average monthly benefit amount for all retired workers will increase from $852 to $874. The maximum federal SSI monthly payment to an individual will rise to $545 from $531; for a couple it will increase to $817 from $796. The benefit increases are based on a CPI increase of 2.6%.
The Internal Revenue Service will hold a Problem Solving Day on Saturday, November 3, especially for taxpayers who need to resolve federal tax issues and can't take advantage of weekday problem-solving service. Nationwide, 43 IRS Taxpayer Assistance Centers will be open from 9 a.m. to 3 p.m. local time, so that taxpayers or their representatives can meet individually with IRS experts dedicated to resolving long-standing problems. IRS decision-makers will be on- site to expedite solutions. For the Saturday event, taxpayers are encouraged to schedule their appointments as soon as possible by calling toll-free: 1-800-829-1040. However, taxpayers without an appointment are welcome to attend.
The IRS has issued final regulations with respect to cafeteria plans that reflect the Family and Medical Leave Act of 1993 (FMLA). The changes related to required coverage under a group health plan while an employee is on FMLA leave and when he or she returns from such leave.
In Announcement 2001-77 (IRB 2001-30), the Service described changes that were being made to simplify its application procedures for determination letters on the qualification of pension, profit-sharing, stock bonus and annuity plans under sections 401(a) and 403(a) of the Internal Revenue Code. Part of the simplification of the application procedures described in Announcement 2001-77 involves the revision of the determination letter application forms. The IRS has now reported (Announcement 2001-109, IRB 45) that revised forms are now available. The forms include 5300, Schedule Q (Form 5300), 5307, 5309, and 6406.
In announcement 2001-106 (IRB 44) the IRS described, in question and answer format, information on the new "saver's credit," an income tax credit that is available to eligible taxpayers who contribute to a retirement plan or IRA. The announcement includes a sample notice that employers can give to employees explaining the credit. The saver's credit is a nonrefundable income tax credit for certain taxpayers with adjusted gross income that does not exceed $50,000. It is equal to a specified percentage of certain employee contributions made to an employer-sponsored retirement plan or of certain individual or spousal contributions to an individual retirement arrangement (IRA) for taxable years beginning after December 31, 2001, and before January 1, 2007. The saver's credit was added by the Economic Growth and Tax Relief Reconciliation Act of 2001.
The IRS has released Publication 1854 on "How to Prepare a Collection Information Statement (Form 433-A)." The publication tries to clarify some of the confusion regarding the collection information statement, including bank accounts, living expenses, and income.
While the Financial Anti-Terrorism Act (H.R. 3004) has only passed the House, it has done so by a vote of 412 to 1. The bill would tighten the rules with respect to money laundering and strengthen reporting of cash transactions, among other things. The bill would increase the penalties against businesses that don't file Form 8300 following the receipt of more than $10,000 in cash.
Congress has failed to act on a bill that would have extended the moratorium on taxes on internet transactions. It's more than likely Congress will extend the moratorium for another two years, but when the bill will pass isn't certain. It's unlikely any states will act to impose taxes before the direction Congress will take becomes clear.
President Bush has indicated he wants a stimulus package composed pretty much solely of tax breaks in the $65 to $75 billion range. Congress appears to have gone off in multiple directions. Getting a bill passed hasn't been helped by the anthrax scare.
Sometimes the line between some extra deductions or missed income and fraud is difficult to find; sometimes it's easy to spot. In James F. O'Connor and James A. Geisler (2001-2 USTC 50,634; U.S. District Court, East. Dist. Va., Alexandria Div.) the taxpayers were engaged in a EB-5 program visa scheme (under the EB-5 program aliens can obtain resident status if they invest $500,000 in a new commercial enterprise in certain areas of the U.S.). Among other things, the Court found the taxpayers significantly underreported their income, failed to file tax returns, engaged in bankruptcy fraud, wire fraud, money laundering, immigration fraud, engaged in sham loan transactions, tax fraud and that they created false evidence.
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) increased the dollar limitation for qualified pension and profit-sharing plans. Many of these changes go into effect January 1, 2002. In Rev. Rul. 2001-51 (IRB 45) the IRS provided guidance on the changes in a question and answer format.
While it's hardly news, some taxpayers still haven't gotten the message. They continue to transfer assets to trusts without relinquishing control. That was the situation in James D. and Rita K. Snyder. The Court found that they continued to carry on the same business and controlled the operation of the trust. The Court disregarded the trust, finding it a sham and held the taxpayers' liable for the income from the business. (Note, you can create a valid trust and have the income taxed to the trust or the beneficiaries. But you have to give up control.)
Many cases end up in court that shouldn't. Sometimes taxpayers go to court because someone convinces them they can win; sometimes it's because of their on convictions. But if you have filed a petition and decided to go to court, follow through. In Timothy John Patton (T.C. Memo. 2001-256) the taxpayer lost his case when he didn't appear for the trial and introduced no evidence.
The general rule is "timely mailing is timely filing". That means, if the return, election, etc. is considered filed when mailed. If mailed on time, it's considered filed on time. There are some rules. Only an official U.S. Postal Service postmark counts, foreign ones don't. That's what the Tax Court held in Ervin Michael Sarrell (117 TC--, No. 11). The taxpayer was living in Israel and the IRS notice was sent there. The taxpayer argued that because of holidays and slow mail delivery the notice was delayed in arriving. The postmark indicated the taxpayers Petition for Lien or Levy Action was mailed back within 7 days of receipt and in time. However, the Tax Court didn't receive the petition within the 30-day period. Because it was a foreign postmark, when the petition was received, not when it was mailed, counted.
Settlements received for personal injury or sickness are not taxable. Most other settlements are. In Jack and Janet Freeman (T.C. Memo. 2001-254) the Court held that a settlement received for a breach of an implied covenant of good faith and fair dealing was not on account of personal injury and the amount had to be included in the taxpayers' income. In the same case, the Court held that the full amount of the settlement had to be included in the taxpayers' income, not the net amount after deducting the attorney's contingent fees. (The fees can be deducted as an itemized deduction.)
A merger can be structured as a tax-free or taxable event. (Tax-free mergers aren't always the best approach.) In Rev. Rul. 2001-46 (IRB 2001-42) the IRS looked at the tax treatment where, pursuant to an integrated plan, a newly formed wholly owned subsidiary of an acquiring corporation merges into a target corporation, followed by the merger of the target corporation into the acquiring corporation. The IRS held that the transaction will be treated as a single statutory merger of the target corporation into the acquiring corporation that qualifies as a tax-free reorganization under Sec. 368(a)(1)(A).
The IRS has announced (Internal Revenue News Release IR-2001-86) its Data Book for Fiscal Year 2000. It's Publication 55B and available from the Government Printing Office. You can also get statistics on-line by going to the IRS web site and then to "tax stats". Or, go directly to http://www.irs.gov/tax_stats/index.html.
The House Ways and Means committee has reported out a bill that would provide significant tax cuts for businesses and individuals. Because it's still very early in the process, we won't give you the details. In fact, President Bush thinks the bill goes too far and has indicated he'll veto it. However, since some of the provisions could eventually pass, here's a short list:
If you switch from C corporation to S corporation status and have assets that have appreciated in value since they were acquired, any gain on the sale of those 'tainted' assets is subject to a special 'built-in gains' tax, basically a second tax on top of the regular capital gains tax. The taint remains on the assets for 10 years from the date of conversion. The IRS has just issued Rev. Rul. 2001-50 (IRB 2001-43). The ruling holds that an S corporation's gain recognized under Sections 631(a) (the cutting of timber), 631(b) (the disposal of timber), or 631(c) (the disposal of coal or iron ore), during the 10-year recognition period is not recognized built-in gain (under Section 1374(d)(3).
Don't trust your accountant (or lawyer, or anyone else) to mail your tax return or other documents to the IRS. That's what the taxpayer in Cardinal Textile Sales, Inc. (2001-2 USTC 50,630; U.S. District Court, No. Dist. Ga., Rome Div.) did. The IRS claimed they never received the claim for refund. By the time the taxpayer asked about the claim, the time for filing had expired. The claims were not sent by registered or certified mail so there was no record and testimony by the taxpayer's accountant that he filed the claims were not considered. (Note. This case was a motion for summary judgment.)
IRS Provides Relief from Mid-Quarter Convention
What's the mid-quarter convention? The depreciation rules for most property specify that you can take a half-year's depreciation on an asset in the year of acquisition. (That's not true for real property.) Thus, it doesn't make any difference whether you bought the property January 1 or December 31 (calendar-year business). You take the same amount of depreciation. It simplifies accounting and can be made to work to your advantage. But, to prevent you from waiting till the end of the year to buy most of your property, Congress came up with the mid-quarter convention. If you place more than 40% of your total assets acquired during the year in service in the final quarter, you've got to use a mid-quarter convention on all the assets placed in service during the year. That makes depreciation accounting more complicated (in both current and future years). You'll have to track the date you placed the asset in service by quarter. Assets placed in service in the first quarter will have a different depreciation percentage than those placed in service in the second, etc. It also means you'll almost assuredly have less total depreciation for the year. (We've published the depreciation tables at Depreciation Tables, Section 179 Expense Election)
For small businesses there may be a way out of the dilemma. Any assets on which you make the Section 179 expense election are taken out of the calculation base. For example, Madison Inc. is a calendar-year corporation and makes only two asset purchases during the year. The first is a computer for $10,000 in March and a lathe for $15,000 in November. If you decide to depreciate both assets, you'd have to use the mid-quarter convention. But if you elected the expense option on even part of the lathe, say $10,000, your total asset purchases subject to depreciation would be $15,000 for the year ($10,000 for the computer and $5,000 for the lathe). That would put assets placed in service in the last quarter below the 40% threshold.
Many taxpayers time the acquisition and placing in service of property within a taxable year to avoid application of the mid-quarter convention. The Treasury and the Service have been made aware that, as a result of events related to the September 11, 2001, terrorist attacks, many taxpayers have encountered difficulty completing the acquisition and placing in service of property in accordance with plans developed earlier in the year, and certain taxpayers would choose to delay acquisition and placing of property in service during the last quarter of their taxable year if failing to delay would result in application of the mid-quarter convention.
Accordingly, the IRS has decided to provide relief from the rules. If the third quarter of your 2001 taxable year includes September 11, 2001, then you may elect to apply the half-year convention to all property (other than property described in Section 168(d)(2), i.e., real property) placed in service during your 2001 taxable year for purposes of Section 168(d), despite the fact that the mid-quarter convention might apply.
To make the election under this notice, a you must write "Election Pursuant to Notice 2001-70" across the top of your Form 4562, Depreciation and Amortization, for the taxable year that includes September 11, 2001.
The Treasury and the Service intend to amend the regulations under section 168 to incorporate the guidance in this notice. Until the regulations are amended, taxpayers may rely on this notice.
IRS Allows Redesignation of Estimated Tax Payments
The IRS has taken a number of steps to assist victims of the September 11th terrorist attacks. Announcement 2001-112, reproduced in full below, is the latest attempt. Basically, taxpayers who qualify can redesignate payments they made for estimated taxes to cover employment tax deposits and payments. Taxpayers caught in a cash squeeze who clearly will be getting a refund of income taxes, will be able to essentially get the refund at least several months earlier than they could using conventional procedures. It is not clear from the announcement who would qualify for this treatment. The best approach is to call the IRS for assistance.
Announcement 2001-112
Many taxpayers have informed the Internal Revenue Service (IRS) that their income for the current year will be substantially less than previously expected because of economic disruptions resulting from the September 11, 2001 Terrorist Attack. Some taxpayers who made estimated income tax payments now believe their tax liability for their current taxable year will be lower than the sum of the estimated tax payments they have already made. Several of these taxpayers have asked whether the IRS will permit them to redesignate their estimated income tax payments, in whole or in part, as deposits to satisfy their obligations to deposit employment and withheld income taxes.
This announcement clarifies that the IRS will permit the redesignation of estimated income tax payments as tax deposits to satisfy obligations to deposit employment taxes imposed by chapters 21, 22, and 23 of the Internal Revenue Code, and income taxes withheld under chapter 24. To make this redesignation, a taxpayer should contact the IRS through its Disaster Relief toll-free telephone number 1-866-562-5227.
Taxpayers who wish to redesignate their estimated tax payments should keep in mind their estimated income tax obligations. If, as a result of the redesignation, the amount of estimated tax payments is reduced below the amount required to satisfy the taxpayer's estimated income tax obligation, the taxpayer may be liable for additions to tax under Section 6654 or 6655.
Previously Reported In Daily Update
Control your records . . . On more than one occasion we've stressed the importance of generating good records. This is one of the primary areas where small businesses get in trouble. But after you've recorded your income, expenses, etc. there's another step--safeguarding those records. While it's not necessary to keep all your documentation on computer, it helps. Making a copy of a computer disk is fast and easy. That way you can give a hard copy to your accountant without fear of losing your records. But what if you don't use a computer? If you keep a listing of income and expenses, you don't need to give your accountant copies of receipts, etc. unless there's a question on a particular item. What if you do give him your primary documentation? Make sure he gives it back quickly. Unless he's reconstructing your books from scratch, he shouldn't need it for long. The longer he's got it, the better the chance he could lose it. You can't trust the IRS with your records either. In one case some years ago, the IRS lost the company's accounts receivable listing. Without it the company didn't know who owed what. The IRS said it wasn't responsible; a court sided with the IRS.
Breaking a contract . . . How hard is it? It can depend on the type of contract and the way it was written. For example, most agreements to buy a business specify any number of contingencies that could allow at least the buyer to have a strong position in court should he or she try to void the contract. On the other hand, that's much less true for contracts involving the purchase or lease of real property. Often, such documents use existing, time-tested language and contact few, if any, means of escape. While you should always read the contract carefully and discuss anything you don't understand with your attorney, that's especially important when it comes to real estate.
What's the fair market value of a new car? . . . The question isn't academic. The value is important if you're an employer and provide a car for an employee's use, if you lease a car, etc. You can use the cost of the vehicle as the fair market value, as long as the purchase is in an arm's length transaction. There are two safe harbors. You can use the manufacturer's suggested retail price less 8% or the manufacturer's invoice price plus 4%. Add sales tax and title fees to the price.
Junk e-mails may violate the law . . . A number of states have laws regarding unsolicited e-mail. The rules vary, but in some cases it's unlawful to falsify the routing information that would provide the source of the e-mail. Check the rules in the states you e-mail into. Avoiding problems may be as easy as providing a way to opt-out or labeling the e-mail. Even if you don't e-mail, you may be sending a message with a partner that does.
Partnership terminated . . . Doing business as a partnership or LLC may sound advantageous, but there are many tax rules unique to partnerships. In recent field service advice (FSA 200132009) two individuals owned an LLC which in turn owned a partnership. The LLC sold its 50% interest in the partnership to an S corporation wholly owned by one of the LLC owners. The IRS held that a partnership was terminated on the sale of the interest. The general rule is that the sale of 50% or more of a partnership interest terminates a partnership. There was a second issue here. Since the partnership terminated, it should have filed a short period return for the portion of the year before the termination and another return for the second half of the year. The question was, even though a full-year return was filed, would that start the running of the statute of limitations? The IRS held that the full-year filing would start the running of the statute for both short years.
Interest free financing . . . It's not the first time its been offered to induce customers to purchase, but this may be one of the first times all three major auto companies have done so at the same time. The companies have indicated that the promotion is not sustainable. Most programs will terminate at the end of November. How great are the savings? If you're financing $22,000, you'll probably save just over $4,000 on a 0% compared with a 9% rate on a 4-year loan. That's significant. But before signing, evaluate all your options. If you've got the cash and you'd just invest the amount you would have paid for the car in a fixed rate investment such as a bond, you may want to reconsider. Even if you earn 5% (that's high in today's market; a money market fund may earn you only 2.5%!) on the $22,000, you'll have only about $3,000 after taxes (27.5% federal bracket). You might be better off paying cash and trying to get a discount on the vehicle.
Mutual fund distributions . . . If you're an investor, dealing with gains and losses is almost certainly a vital part of your overall tax planning strategy for the year. If some of your investments are in mutual funds, that can be made more difficult by year-end distributions. Even a year with a down market can produce large capital gain distributions. While such distributions depend on actions particular to each fund, two fund families have announced that distributions this year will generally be much less than in prior years. Because of the declines in most funds for the past two years, small distributions will probably be the rule. While it's still early for many funds, it won't be long before you should receive information about actual or potential distributions. If not, check with your fund.
Applicable federal rates at multi-year low . . . Each month we publish the applicable federal rates (AFR). These are the lowest interest rates you can use for loans between you and your business, for loans to relatives, on installment sales, etc. For November 2001, the short-term rate will be 2.73%; the mid-term rate 4.13%; and the long-term rate 5.31%. That's the lowest it's been in some time. If you're going to set up a loan, now may be the time to do it. If you have a loan outstanding between you and your business, etc., you might want to consider restructuring. If you're restructuring, talk to your accountant or tax adviser. Some special rules could apply. Can the rates go even lower? Yes, there's a good chance some of the rates might drop further in the next month or two. You could hold off a little longer. Watch the rates carefully.
Marital deduction denied . . . The estate tax is still very much alive, at least until 2010. And, despite many changes, until it's totally repealed, the marital deduction could prove very important for taxpayers with substantial estates. The law allows you to pass an unlimited amount of your assets to the surviving spouse and those assets will escape the estate tax. If you've got a valid marriage certificate, you're all set. But what if you have only a common-law marriage? The issue isn't nearly as clear. In recent technical advice (TAM 200132004) a man and woman cohabitated for some 33 years. The IRS held that the marital deduction could not be used. The facts were actually more complicated and the IRS noted that the outcome could depend on state law. Since the marital deduction could be worth hundreds of thousands of dollars, or more, if you're not legally married (or there is any question of your status) contact your estate adviser. You want to make sure there's no question as to your estate's entitlement to the deduction.
Penalty for not filing partnership return . . . There's a penalty of $50 per partner, per month (but no more than 5 months) for failing to file a partnership return. Thus, if your partnership or LLC has two partners and is 6 months late in filing, you could be hit with a $500 penalty. But small partnerships may be able to avoid the penalty. You might be able to do so if you can answer the following questions affirmatively:
The IRS may assess the penalty automatically, but you can ask for an abatement. See Rev. Proc. 84-35 for more details.
Write off of unused facility . . . If you sell an asset used in business, you can take a loss on the sale if the selling price is less than your adjusted basis (generally, cost less depreciation). The law also allows you to take a loss if the property is abandoned or scrapped. If that's your situation, taking the loss is more complicated. Clearly, if you ask a scrap dealer to pick up a machine and you can no longer retrieve it, you've abandoned it. The IRS may also allow an abandonment loss if the property has no or only nominal value and you put it in the scrap pile. (However, you'll probably be better off is you give it to a scrap dealer and get a receipt.) In recent field service advice (FSA 200141026) a taxpayer abandoned a condominium facility it used for its computers. The space remained vacant for some time. An appraisal showed the market value to be much less than the taxpayer's adjusted basis, but the value was still significant. The IRS held that, since the property did have some value, the taxpayer could not take a deduction for the reduction in value until it was sold.
Quantity discounts . . . Sometimes they're not worth it. For example, 1 for $50, 3 for $140. The savings are minimal, and probably don't make sense unless you intend to use all 3 pretty quick. But there are other times when opting for the larger quantity is almost a no-brainer. Buying relatively small quantities of printing is a good example--2,500 4-color business cards might cost you $115; 5,000 cost $145. Why the small percentage increase in price for double the quantity? Much of the $115 cost is fixed; only a small portion goes for paper, ink and press time. You should always price larger quantities just to check, but it's particularly important when ordering something that's custom made or has a relatively high setup cost.
Copyright 2001 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject.--ISSN 1089-1536