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Farside: I agree with Admiral101, I sold a car with a nonfunctional transmission for scrap last year and got a check for something like $550. Even if you only get $300, if I can do arithmetic, you'd have to be paying a 60% marginal tax rate (which no one does) for a $500 deduction to break even with that cash. Not saying that's the best choice, but financially it's a no brainer.
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# ? Sep 11, 2012 03:23 |
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# ? May 10, 2024 10:27 |
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Admiral101 posted:Are you maintaining any kind of set of books? Or do you have some kind of gigantic shoebox full of receipts? You need to familiarize yourself with some kind of book keeping software, because you're dealing with non trivial numbers. There are entire threads that discuss which software is best, but in my experience quickbooks can do the most/is most common. You should also be tracking your mileage for picking up this inventory, assuming you use a personal vehicle as opposed to renting a U-Haul. Thank you I am going to purchase quickbooks and familiarize myself with it this week, right now I have a large, large box (garbage bag actually) of receipts. I have 2 vehicles and use one exclusively for workings, save every receipt (gas, maintenance, etc) Although I live in Philadelphia, I do not rent or own any property and have no physical "business" in Philadelphia. I was told it would be a good idea to open an S Corp in Delware- is that true? If so, do I need a physical address in Delware, and if so; would a PO box suffice?
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# ? Sep 11, 2012 03:48 |
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positech posted:Thank you I'm not seeing the advantage of opening the S Corp in Delaware. It could make sense if you were concerned about PA capital stock tax liabilities, but ultimately because you are a PA resident, all income you earn in the S Corp will be taxed on your PA-40. Regardless of whether the S Corp was formed/located in DE or not. You may want to speak with that person again and see what was on his/her mind. There's many tax reasons to eventually operate out of DE for larger (huge) companies, but that's beyond the scope of your business. To answer your question: DE, like many other states, requires that if you don't have a physical presence, you have to have some kind of registered agent. There are certain consulting firms that can act as a registered agent for you, if you choose to go this route. quote:Delaware law requires that every business entity have and maintain a Registered Agent in the State of Delaware who may be either an individual resident or business entity that is authorized to do business in the State of Delaware. The registered agent must have a physical street address in Delaware. You may view a list of Delaware Registered Agents on our web site. If the business is physically located in Delaware, then the business may act as its own registered agent. If the registered agent is other than the entity itself, please contact the selected Registered Agent used in your entity formation and inform them of your intentions. And Jesus, you have your work cut out for you. A garbage bag of receipts is actually a pretty impressive feat. At least you actually kept your receipts, which puts you in a better position than most. It'll also be easier for you (and necessary, if you intend to incorporate) to have a separate bank account for your business - assuming you haven't done that already. Do you have an accounting background (or at least an understanding of the basics)? I hesitate to recommend this, but this could actually apply here: but you may want to look into whether you qualify for having a home office. If you operate out of your house/apartment, and have space exclusively used for business, you may be able to deduct a portion of your utilities etc.
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# ? Sep 11, 2012 04:12 |
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Admiral101 posted:It'll also be easier for you (and necessary, if you intend to incorporate) to have a separate bank account for your business - assuming you haven't done that already. Do you have an accounting background (or at least an understanding of the basics)? I'll work on getting a PA S Corp and EIN going, and get a business account opened. I'm not 100% clueless, but I wouldn't say I know what I'm doing either. I have worked with quickbooks in the past to pay vendors, invoice, etc (not working for myself at that time) I had my receipts in a grocery store bag but about 2 months ago it was so stuffed that it burst on the bottom when I was stuffing more in.
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# ? Sep 11, 2012 04:30 |
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Admiral101 posted:I'm not seeing the advantage of opening the S Corp in Delaware. It could make sense if you were concerned about PA capital stock tax liabilities, but ultimately because you are a PA resident, all income you earn in the S Corp will be taxed on your PA-40. Regardless of whether the S Corp was formed/located in DE or not. You may want to speak with that person again and see what was on his/her mind. There's many tax reasons to eventually operate out of DE for larger (huge) companies, but that's beyond the scope of your business. It's my understanding that the legal system is very favorable to corporations in Delaware. But unless you're a huge business, why have the hassle?
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# ? Sep 11, 2012 16:37 |
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AbbiTheDog posted:It's my understanding that the legal system is very favorable to corporations in Delaware. But unless you're a huge business, why have the hassle? You will also have filing requirements in both DE and PA. While you may not owe tax in DE. You will have other fees/hassle that you just don't need for a business your size.
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# ? Sep 11, 2012 16:59 |
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Tyro posted:Farside: I agree with Admiral101, I sold a car with a nonfunctional transmission for scrap last year and got a check for something like $550. Even if you only get $300, if I can do arithmetic, you'd have to be paying a 60% marginal tax rate (which no one does) for a $500 deduction to break even with that cash. If you try to claim more than $500 it's now a pain in the rear end (since the prior method was abused badly).
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# ? Sep 11, 2012 17:19 |
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scribe jones posted:ah, there it is. Once the payor corrected and sent a 1099, the IRS computers eventually would have caught up with Bojangles. From the payor standpoint, the penalties now for not issuing 1099s are $250 X 2 = $500 per form, plus they could also go after the mandatory withholding of 28% of the gross payment. In 2011 the corporate tax forms now specifically ask "did you need to do 1099s" and "did you actually do them?" We did a heck of a lot more 1099 prep for our clients this year then we ever have in the past.
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# ? Sep 11, 2012 17:22 |
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Thanks for the quick replies. To the scrap yard it goes.Admiral101 posted:You're going to be better off financially selling it for scrap. Of course, some poor person somewhere gets screwed out of getting your free car. So the question becomes: how cold and frozen is your heart? 20 years in the great white north with salty roads has done a great disservice to the undercarriage of the car. Although it runs and drives and there isn't anything mechanically wrong with it my state has deemed the frame too rusty to pass inspection. Which is kind of funny because there weren't any holes in the sub frame where they said it failed (unless the state got stricter on the rules). I wasn't going to argue the matter over a car that wasn't worth that much. I probably could have taken it to a local repair shop with looser standards than the deanship I get my work done at but it gave me an excuse to buy a car with out the wife yelling at me. So unless it was going to a state with no/lax inspection standards it was destined to be parted out/sent for scrap anyway. So to answer your question, as cold and frozen as the weather is most of the year.
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# ? Sep 11, 2012 17:53 |
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Admiral101 posted:I'm not seeing the advantage of opening the S Corp in Delaware. It could make sense if you were concerned about PA capital stock tax liabilities, but ultimately because you are a PA resident, all income you earn in the S Corp will be taxed on your PA-40. Regardless of whether the S Corp was formed/located in DE or not. You may want to speak with that person again and see what was on his/her mind. There's many tax reasons to eventually operate out of DE for larger (huge) companies, but that's beyond the scope of your business.
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# ? Sep 11, 2012 21:59 |
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Everyone's brother/cousin/aunt/friend tells them to open a DE or NV corporation, and none of them understand why they are recommending it even a little bit other than that is just "what they heard". The state you live and/or do business in doesn't care what state you are incorporated in, they will tax the net income of the business earned in that state.
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# ? Sep 11, 2012 22:28 |
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furushotakeru posted:Everyone's brother/cousin/aunt/friend tells them to open a DE or NV corporation, and none of them understand why they are recommending it even a little bit other than that is just "what they heard". The state you live and/or do business in doesn't care what state you are incorporated in, they will tax the net income of the business earned in that state. For NV and Wyoming (IIRC) there is a wonderful level of confidentiality for corporations, so that's a great place to incorporate and hide who the owner is. Here in OR we had radio ads for a while touting the "tax benefits" of incorporating in "tax-free Nevada," they left off the "commit state tax fraud" part of the ads. Only ran for a couple years. Edit: Here is a site run by the lawyers of NY and CA discussing the issue. http://eminutes.com/form/nevada.html AbbiTheDog fucked around with this message at 23:17 on Sep 11, 2012 |
# ? Sep 11, 2012 23:08 |
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I'm trying to determine the tax implications of putting my girlfriend on my insurance as a domestic partner, and the 3rd party HR company based out of Mexico that we use sucks balls at answering anything more than rudimentary questions. I'm hoping you can help with this one: Basically, our "Summary of Tax Treatment of Coverage Provided for Domestic Partners and Children of Domestic Partners for Benefit Program for U.S. Employees" document states that: quote:Tax Consequences of Coverage for Domestic Partners and Children of Domestic Partners I bolded and italicized the bit at the end that interests me. Am I correct in reading that, so long as we meet the 5 bullet points, I can claim them as a dependent for health coverage purposes, and thus avoid taxation on their benefits, even if I do not claim them as a dependent for tax purposes (we file taxes completely separately)? Hillridge fucked around with this message at 17:46 on Sep 12, 2012 |
# ? Sep 12, 2012 15:23 |
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Hillridge posted:I'm trying to determine the tax implications of putting my girlfriend on my insurance as a domestic partner, and the 3rd party HR company based out of Mexico that we use sucks balls at answering anything more than rudimentary questions. I'm hoping you can help with this one: That is correct. However, make sure you read the bit about "change of status is year and retroactive application". If your girlfriend were to ever move out mid-year, you would retroactively be required to include all of the cost of her health-benefits in YOUR W-2 for the year and pay tax on it. Also, check on your company's policy for making changes to your enrollment. If your girlfriend moves out mid-year (i.e. you break up) would they consider that a "qualifying event" to let you drop her from your insurance or would they make you wait until the next open enrollment period? If it's the latter you might end up having to provide health care benefits for someone who you're no longer with, and personally pay tax on it. Normally a divorce would be a "qualifying event", but so much of US Tax law is written specifically for married people that there might be different rules for domestic partnerships here.
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# ? Sep 12, 2012 17:45 |
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Thanks. For now we're just looking into adding dental, since she is covered on her parents' plan medically. I think that may make it so that bullet point #4 isn't true though, since she is probably a "qualifying child" on her dad's plan. Paying tax on the dental wouldn't be a big deal since it's so cheap ($88 out of pocket and $260 of extra income a year) it would still work out to overall savings. She'll age out of her dad's medical soon enough and then it becomes more of an issue since it would be hundreds of dollars a month in additional "income" if I put her on my medical. Hillridge fucked around with this message at 19:25 on Sep 12, 2012 |
# ? Sep 12, 2012 19:18 |
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Recently, I purchased a second house to allow my in-laws to live in so they could retire. My mother in-law has cancer and is unable to work. My father in law is needed to support her, and therefore unlikely to be able to handle a full time job. The program I bought the place under (Suntrust Mortgage Bank) allows for the purchase of a second home for elderly family members. The house cannot be listed as a rental property according to the mortgage company. Thanks to a depressed housing market, my family is able to afford this second house with my in-laws participating with the mortgage based on what they can afford. I am not gouging them at all. They insist on participation. When I got married, my wife's house was in her name and larger than my place so I have never been on her mortgage. When we bought this second house, I put it in my name only. Question: This second house is not a rental property. My wife and I currently file as a married couple. Is is possible for me to claim mortgage interest on this second home as a deduction on my taxes? Would I need to change our filing status to married, filing separately? The second house is actually listed as my primary residence. I am not looking to defraud, just wondering if I have set myself up for an audit by listing this place as my primary residence.
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# ? Sep 13, 2012 18:25 |
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Keith Stone posted:Recently, I purchased a second house to allow my in-laws to live in so they could retire. My mother in-law has cancer and is unable to work. My father in law is needed to support her, and therefore unlikely to be able to handle a full time job. The program I bought the place under (Suntrust Mortgage Bank) allows for the purchase of a second home for elderly family members. The house cannot be listed as a rental property according to the mortgage company. At the most basic level, taxpayers can deduct mortgage interest on, at most, two residences on up to $1.1M in principal total on the loans. It isn't necessary to file separately. I'm not aware of it really mattering which address is listed on a tax return as long as the taxpayer can receive correspondence from the IRS. catman fucked around with this message at 02:41 on Sep 14, 2012 |
# ? Sep 14, 2012 02:35 |
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Just got my first real paycheck at the new job - I've been there two months, but there's always this or that. Phone expense, no 401k, etc. This is the first paycheck that is fully in the rhythm and gives me a sense of what I can expect in the bank account every two weeks. And uh, the federal tax scares the crap out of me. Married, 2 exemptions (one for me and one for her, items A and C), and my federal tax represents only 9% of gross income, about 11% of taxable income. That just feels way, way, way too low. Is this unusual? I'm worried that I'm going to get crushed at the end of the year. Is this possibly a side effect of being new at the job - essentially, I'm getting taxed at the lowest rate because my yearly income is so low in the company's eyes?
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# ? Sep 14, 2012 07:26 |
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MC Fruit Stripe posted:Just got my first real paycheck at the new job - I've been there two months, but there's always this or that. Phone expense, no 401k, etc. This is the first paycheck that is fully in the rhythm and gives me a sense of what I can expect in the bank account every two weeks. There is nobody in this thread that can tell you whether that's too low, too high, or just right without knowing the job's salary, you and your wife's various incomes, whether you itemize, etc. It doesn't seem abnormally low.
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# ? Sep 14, 2012 12:40 |
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catman posted:At the most basic level, taxpayers can deduct mortgage interest on, at most, two residences on up to $1.1M in principal total on the loans. It isn't necessary to file separately. I'm not aware of it really mattering which address is listed on a tax return as long as the taxpayer can receive correspondence from the IRS. Thanks, catman! Your response gave me enough information to go digging through the IRS site. I found publication 936 which confirmed what you said. I had no idea the second home has so few restrictions. I thought it would be a maze of limitations and caveats. You definitely lessened some stress there.
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# ? Sep 14, 2012 14:10 |
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Keith Stone posted:Thanks, catman! Here's your concern: The IRS computers flag your return based upon the amount of mortgage interest claimed vs. your AGI. They call/send you a letter asking to explain. They see funds coming in from your relatives not claimed as rent. I've been in practice since 1998 and have never seen one of these letters, so who knows. In theory the IRS tells us they can track this down. There's an IRS agent who lurks around here but I doubt we'll get anymore insight from him.
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# ? Sep 14, 2012 16:43 |
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AbbiTheDog posted:There's an IRS agent who lurks around here but I doubt we'll get anymore insight from him. Where does this rumor come from?
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# ? Sep 14, 2012 17:20 |
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Admiral101 posted:Where does this rumor come from? He popped up and posted pages back. Don't think he's posted since.
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# ? Sep 14, 2012 18:11 |
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AbbiTheDog posted:Here's your concern: Haven't seen a notice on the above either but wouldn't surprise me if notices like that are sent. I'd speculate that a bigger audit/correspondence issue is claiming an interest deduction on interest paid with no 1098 present.
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# ? Sep 15, 2012 02:39 |
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Admiral101 posted:Where does this rumor come from? There is a goon who is an IRS auditor who chimed in briefly earlier in the thread.
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# ? Sep 15, 2012 03:43 |
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furushotakeru posted:There is a goon who is an IRS auditor who chimed in briefly earlier in the thread.
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# ? Sep 15, 2012 04:01 |
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10-8 posted:There are multiple IRS people who read this thread. Thread instant kill Gee, thanks
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# ? Sep 15, 2012 05:09 |
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I pay my taxes!!
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# ? Sep 15, 2012 16:28 |
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furushotakeru posted:Thread instant kill I've tried to turn in fraudulent preparers to the IRS and the state in my area. So far after three years of effort all I've gotten is a collective yawn. I've even talked to people who had returns prepared by these people who got audited, and the auditors have exclaimed that their tax preparer was an idiot and shouldn't have done what they did. Yet they still are in business for all of the IRS' claims of shutting people down.
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# ? Sep 15, 2012 17:20 |
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AbbiTheDog posted:I've tried to turn in fraudulent preparers to the IRS and the state in my area. So far after three years of effort all I've gotten is a collective yawn. Had someone tell me this exactly thing (albeit it was by the taxpayer rather than a preparer): her ex-husband was fraudulently filing the 2 kids as dependents on his returns for the last few years, she became aware of it, tried telling the IRS and NY and they blew her off.
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# ? Sep 15, 2012 19:37 |
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Was today a big workday for you guys with the corp extended TY2011 deadline and all?
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# ? Sep 18, 2012 04:39 |
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Mandalay posted:Was today a big workday for you guys with the corp extended TY2011 deadline and all? I had to work all weekend, so did all my staff. Sucked.
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# ? Sep 18, 2012 17:01 |
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came in for about five hours each sat + sun, but then was done by 3:30 yesterday so I left. now I'm going out to breakfast with my awesome wife and coming in to work whenever I feel like it. tax owns
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# ? Sep 18, 2012 17:06 |
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Relaxed most of the weekend, finished the last C Corp on Monday, spent remainder of afternoon playing sudoku. Good times.
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# ? Sep 18, 2012 18:08 |
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I know when you sell stock, you're not taxed on the basis. But if some of your shares were acquired at different prices, and you're not selling them all, how is your basis (both for the sale and the remainder) determined?
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# ? Sep 19, 2012 07:50 |
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Small White Dragon posted:I know when you sell stock, you're not taxed on the basis. But if some of your shares were acquired at different prices, and you're not selling them all, how is your basis (both for the sale and the remainder) determined? FIFO, unless you instruct your broker to sell a specific lot of shares at the time the order is placed.
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# ? Sep 19, 2012 07:53 |
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furushotakeru posted:FIFO, unless you instruct your broker to sell a specific lot of shares at the time the order is placed. And if you have a DRIP it's a pain in the rear.
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# ? Sep 20, 2012 16:10 |
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I have a question, am I allowed to deduct the cost of a new laptop that I bought to use for school which I am currently enrolled in and continuing to be enrolled in as an education expense?
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# ? Sep 21, 2012 05:32 |
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Ramadu posted:I have a question, am I allowed to deduct the cost of a new laptop that I bought to use for school which I am currently enrolled in and continuing to be enrolled in as an education expense? No
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# ? Sep 21, 2012 05:36 |
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# ? May 10, 2024 10:27 |
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Shoot, well thanks for the quick response.
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# ? Sep 21, 2012 05:39 |