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Archive for the ‘Estate Tax’ Category

PostHeaderIcon Tax News – August 16, 2013

Not a lot of news the last couple of days so I’m going to double up.

I’m from the Detroit area and Bill Davidson, who passed away a few years ago, is a well known name in Detroit sports.  Amongst other things, he owned the Detroit Pistons  and I even interviewed for a job at his company, Guardian Glass, over a decade ago.  It looks like his estate is being questioned and the IRS has sent out a $2 billion (yes, that’s a “b”) notice for estate and gift taxes due.  Some of it is estate tax but they’re also questioning some past gifts that were made to heirs with valuations lower than what the IRS thinks.

While this article talks about farm equipment, it’s a Section 179 issue and it’s available to all businesses.  Normally if you buy fixed assets, you have to depreciate them over their useful life.  If you don’t buy a lot of assets, you have the option of immediately expensing them via Section 179.  With bonus depreciation, this has been less of an issue but the amount a person can deduct is going to drop from $500,000 in 2013 all the way down to $25,000 if Congress doesn’t do anything about it.  This is one of those things where every year or two, Congress bumps it up but makes the increase temporary.  While not an extender (the law has been around for a long time), the amount has been the equivalent of an extender in that you never quite know what the amount is going to be until Congress acts.  Also interestingly, I found a website that’s specifically dedicated to the Section 179 deduction with ticker and all.

Finally, we have an agreement between the US and the Cayman Islands to fight tax evasion.  I wonder if there was a run on Cayman banks this week.

PostHeaderIcon Tax News – August 12, 2013

I let a short vacation derail my daily tax news updates but now I’m back.  Let’s get caught up…..

The title to this article is a little deceiving but small businesses are getting tagged by the newer 1099-K form.  If you do business via credit card or a third party service like paypal, you will receive a 1099-K from your service provider showing how much your sales were with them.  In the IRS’s effort to get everyone else to do their job for them and the income you report doesn’t at least match what’s on your 1099-K, then it’s going to create a notice.  That’s what is meant by “target” in this article.  If you file a Schedule C for your business (for all of you single member LLC business owners out there), there’s even a special line for putting in your 1099-K income.  If you don’t do the form right, you will probably have some explaining to do so be sure to either do it right, or have someone who knows how to do it prepare the return for you.

In some cases, if you receive money from an estate and taxes aren’t paid on it like you should, the beneficiaries might see the IRS come after them.  This article’s title is also deceiving because in this case, the tax should have been paid and someone got a little crazy with what they did with the money (that is, they lost it).  Then the IRS came after some distributions that were made to the beneficiaries.

If you haven’t filed your taxes in a while, this is a good article on how to get caught up.  I didn’t know there was a special number for tax practitioners so I’ll have to look into that.

In the, “I’ll believe it when I see it category,” we have some discussion on how real estate benefits could be cut if tax reform is enacted.  In some ways, this is already the case with the AMT and the itemized deduction phaseout out there but I don’t see the home interest deduction going anywhere.

Do you think the new 3.8% tax on investment income is going to apply to you?  The IRS recently released a draft of the new Form 8960.  There’s also some links to details on the new tax so if your income is in the higher range, there’s plenty of information here.