Getting the Jump on Year-End Tax Planning Ideas for Individuals

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Getting the Jump on Year-End Tax Planning Ideas for Individuals"

Transcription

1 Getting the Jump on Year-End Tax Planning Ideas for Individuals Broadcast Date: Sept. 26, 2012 Copyright 2012 All-Star Tax Series, LLC

2 3.8% Medicare Surtax As applied to individuals, tax is 3.8% of lesser of: Net investment income (NII) for the tax year, or The excess of MAGI for the tax year over the threshold amount.

3 Copyright 201Copyright 2012 All-Star Tax Series, LLC 2 All-Star Tax Series, LLC Individual MAGI Threshold Amount For taxpayer MFJ or a surviving spouse: $250,000 For taxpayer MFS: $125,000 Any other case (individual): $200,000 Bottom Line: if MAGI under these amounts, no 3.8% tax!

4 Copyright 2012 All-Star Tax Series, LLC Net Investment Income Gross investment income over allocable investment expenses Investment income for purposes of the 3.8% tax includes the sum of: Interest Dividends Annuities Royalties Rents (unless active) Passive activity income (like a partnership interest treated as a passive activity) Capital gain Income from a trade or business of trading in financial instruments or commodities (hedge funds) Oil and gas production payments, royalties, or other income arrangements if the investment is not a working interest

5 Copyright 2012 ACopyright 2012 All-Star Tax Series, LLC ll-star Tax Series, LLC Income Not Treated as Investment Income Active trade or business income Any investment income (interest, dividends, etc.) to the extent derived in an active trade or business Any distribution from a qualified retirement plan, qualified annuity, or IRA Any income taken into account for purposes of determining the taxpayer s SE income A working interest in an oil and gas property that a taxpayer holds through an entity that does not limit the taxpayer s liability, or one held directly

6 Wandry v. Comer, TC Memo In 2001, taxpayers began to gift interests in Norseman Capital, LLC to their children. Number of member units gifted equal to the desired value of gifts on any given date, unknown until valued later. All gifts given as specific dollar amounts, rather than specific numbers of member units (see language on the next slide )

7 Wandry v. Comer, TC Memo Although the number of member units gifted is fixed on the date of the gift, that number is based on the fair market value of the gifted member units, which cannot be known on the date of the gift but must be determined after such date based on all relevant information as of that date. If, after the number of gifted member units is determined based on such valuation, the IRS challenges such valuation and a final determination of a different value is made by the IRS or a court of law, the number of gifted member units shall be adjusted accordingly so that the value of the number of member units gifted to each person equals the amount set forth above, in the same manner as a federal estate tax formula marital deduction amount would be adjusted for a valuation redetermination by the IRS and/or a court of law.

8 Wandry v. Comer, TC Memo Donors transferred an ascertainable dollar value of stock even though the units themselves had an unknown value. Bottom line: tax practitioners may now rely on formula clauses, not only as another tool for estate planning with a charitable component, but also in situations where no charitable giving is contemplated.

9 Copyright 2012 All-Copyright 2012 All-Star Tax Series, LLC Star Tax Series, LLC Eugene A. Fisher et al. v. U.S. (Ct Cl 8/6/2008) 102 AFTR 2d The Court of Federal Claims applied the open transaction doctrine with the result that a policyholder had no gain to report when it chose a cash option in connection with a demutualization of an insurance company. Shares awarded to the policyholder were immediately sold by the company, and the proceeds were then paid to the policyholder in cash. IRS said that the policyholder was taxable on the full amount of the gain without being able to allocate any of his basis in the contract to offset the sales proceeds. The Court allowed the policyholder to use his basis in the contract (which greatly exceeded the amount of the sales proceeds) to fully offset the proceeds, and thus to report no gain.

10 Copyright 2012 All-StaCopyright 2012 All-Star Tax Series, LLC r Tax Series, LLC Dorrance v. U.S., (DC AZ 7/9/2012) 110 AFTR 2d The court stated that the open transaction doctrine did not apply to the facts in this case, as the basis in the insurance contracts could be reasonably allocated between the stock received in the demutualization and the insurance policies maintained after the demutualization transaction. The trial will focus on determining the most equitable method to use to allocate the basis between the post-demutualization insurance contracts and stock.

11 Qualified Principal Residence Indebtedness Proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion. If a taxpayer qualifies, he/she claims the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaches it to his/her federal income tax return for the tax year in which the qualified debt was forgiven. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions, such as insolvency, may be applicable.

12 Qualified Principal Residence Indebtedness If a taxpayer s debt is reduced or eliminated, he/she normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from his/her lender. Examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Taxpayer should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for taxpayer s home in Box (a)(1)(E) expires at the end of 2012.

13 Copyright 2012 All-Star Copyright 2012 All-Star Tax Series, LLC Tax Series, LLC Qualified Principal Residence Indebtedness A taxpayer can exclude canceled debt from income if it is qualified principal residence indebtedness. Qualified principal residence indebtedness is any mortgage a taxpayer took out to buy, build, or substantially improve his or her main home. It also must be secured by taxpayer s main home. A taxpayer s main home is the home where he or she ordinarily lives most of the time. A taxpayer can have only one main home at any one time. Qualified principal residence indebtedness also includes any debt secured by the main home that taxpayer used to refinance a mortgage he or she took out to buy, build, or substantially improve his or her main home, but only up to the amount of the old mortgage principal just before the refinancing.

14 Copyright 2012 All-Star Copyright 2012 All-Star Tax Series, LLC Tax Series, LLC Qualified Principal Residence Indebtedness This exclusion does not apply to a cancellation of debt in a Title 11 bankruptcy case. If qualified principal residence indebtedness is canceled in a Title 11 bankruptcy case, the taxpayer must apply the bankruptcy exclusion rather than the exclusion for qualified principal residence indebtedness. If the taxpayer was insolvent immediately before the cancellation, he or she can elect to apply the insolvency exclusion instead of applying the qualified principal residence indebtedness exclusion. The maximum amount a taxpayer can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately).

15 Short Sales and Foreclosures Short sale: selling home for less than the mortgage balance/lender forgives the unpaid balance. Foreclosure: legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. Short sales are taxed under the same tax rules as foreclosures.

16 Copyright 2012 All-StCopyright 2012 All-Star Tax Series, LLC ar Tax Series, LLC Short Sales and Foreclosures When a nonrecourse mortgage is foreclosed, the property is treated as being sold for the balance of the mortgage. Gain from a foreclosure of a principal residence may be eligible for the Section 121 exclusion.

17 Short Sales and Foreclosures: Example of Foreclosure of a Nonrecourse Debt Nonrecourse debt $1,000,000 Tax basis $600,000 Gain $400,000* *Potentially subject to the Section 121 exclusion

18 Copyright 2012 All-SCopyright 2012 All-Star Tax Series, LLC tar Tax Series, LLC Short Sales and Foreclosures: Example of Foreclosure of a Recourse Debt Debt satisfied only up to FMV of property Sale up to that amount If lender forgives the balance of the mortgage, there is CODI, which is ordinary income: Recourse debt $1,000,000 FMV $900,000 CODI $100,000* *If CODI was for qualified principal residence debt, it will be excluded from taxable income.

19 Short Sales and Foreclosures: Example of Foreclosure of a Recourse Debt FMV $900,000 Tax basis $600,000 Gain $300,000* *May be subject to Section 121 exclusion

20 Recharacterizing a Roth IRA Net income = Contribution x Adjusted closing balance adjusted opening balance Adjusted opening Balance Net Income = the earnings or loss on the amount being recharacterized. Contribution = the conversion or contribution amount being recharacterized. Adjusted Opening Balance = FMV of the IRA at the beginning of the computation period plus the amount of any contributions or transfers (including the contribution that is being recharacterized and any other recharacterization) made to the IRA during the computation period. Adjusted Closing Balance = FMV of the IRA at the end of the computation period plus the amount of any distributions, transfers or recharacterization made from the IRA during the computation period.

21 Recharacterizing a Roth IRA The computation period begins immediately prior to when the contribution being recharacterized is made to the IRA and ends immediately prior to the recharacterizing of the contribution. If the IRA is not valued on a daily basis, the most recent available FMV preceding the contribution may be used as the beginning of the period, and the most recent available FMV preceding the recharacterization is the ending FMV. A calculation of earnings or loss is required only if a partial recharacterization is being done. If the full IRA balance is being recharacterized, no calculation is required.

22 Tax Reporting Forms on Recharacterization IRA custodian will report taxpayer s IRA contributions (to taxpayer and the IRS) on IRS Form This contribution will be reported even if it is later recharacterized. Thus, if recharacterize contribution, taxpayer will receive two Form 5498s, one for the initial contribution and a second for the amount that is credited to the other IRA as a recharacterization. Will also receive one Form 1099-R for the IRA that first received the contribution. Custodian will use a special code in box 7 of the Form R to indicate that the transaction is a recharacterization and therefore not taxable.

Copyright 2009-2010 LA First Tax & Financial Services. All Rights Reserved.

Copyright 2009-2010 LA First Tax & Financial Services. All Rights Reserved. Cancellation of Debt Important Terms Foreclosure/ Repossession Forms 1099- A or C Non-recourse Debt Recourse Debt Debt Discharge Income (DDI) Insolvency IRS Tax Provisions Tax Provisions Involved: Emergency

More information

Real Property: Cancellation of Debt and Foreclosure

Real Property: Cancellation of Debt and Foreclosure Real Property: Cancellation of Debt and Foreclosure Kim Lawson Senior tax analyst Small Business/Self-Employed Division May 16, 2012 The information contained in this presentation is current as of the

More information

Cancellation of Debt

Cancellation of Debt Cancellation of Debt ROBERT E. MCKENZIE Arnstein & Lehr LLP Arnstein & Lehr LLP 1 Debt Cancellation If a debt is canceled or forgiven, other than as a gift or bequest, the debtor generally must include

More information

Taxpayers. What You Should Know. I Found My Voice At The IRS

Taxpayers. What You Should Know. I Found My Voice At The IRS Cancellation Advocating of Debt for Taxpayers What You Should Know I Found My Voice At The IRS National Taxpayer Advocate Podcast Current Law IRS Office of Chief Counsel Cancellation of Debt Section 61(a)(12)

More information

Presented by: David L. Rice, Esq. For CalCPA Pasadena Discussion Group. (c) David L. Rice

Presented by: David L. Rice, Esq. For CalCPA Pasadena Discussion Group. (c) David L. Rice Presented by: David L. Rice, Esq. For CalCPA Pasadena Discussion Group 1 Mortgage defaults and foreclosures are of a national concern. In 2011, nearly 5,000,000 borrowers are behind on their mortgage.

More information

Mortgage Forgiveness Debt Relief Act. Cancellation of Debt (COD) Income. Recourse Loan 10/6/2014. Consequences of the expiration of the act

Mortgage Forgiveness Debt Relief Act. Cancellation of Debt (COD) Income. Recourse Loan 10/6/2014. Consequences of the expiration of the act Mortgage Forgiveness Debt Relief Act Consequences of the expiration of the act Cancellation of Debt (COD) Income When a loan is forgiven without being paid back, COD Income is created. That amount is included

More information

Is Cancellation of Debt Income Taxable? One question that I am asked often these days is whether cancellation of debt (COD) income is taxable or not?

Is Cancellation of Debt Income Taxable? One question that I am asked often these days is whether cancellation of debt (COD) income is taxable or not? Is Cancellation of Debt Income Taxable? One question that I am asked often these days is whether cancellation of debt (COD) income is taxable or not? For tax purposes, the general rule is that all debt

More information

DEALING WITH THE BANKRUPT PROPERTY OWNER BY HARRY CHARLES AUGUST 22, 2008 & AUGUST 28, 2008

DEALING WITH THE BANKRUPT PROPERTY OWNER BY HARRY CHARLES AUGUST 22, 2008 & AUGUST 28, 2008 DEALING WITH THE BANKRUPT PROPERTY OWNER BY HARRY CHARLES AUGUST 22, 2008 & AUGUST 28, 2008 FORECLOSURE: ISSUES, TRENDS AND PERSPECTIVES IN COMMERCIAL LAW MOBAR CLE 1. What is foreclosure for tax purposes?

More information

Common Foreclosure and Cancellation of Debt Issues for Real Property (edited transcript)

Common Foreclosure and Cancellation of Debt Issues for Real Property (edited transcript) Common Foreclosure and Cancellation of Debt Issues for Real Property (edited transcript) Yvonne McDuffie-Williams: Thank you. As he said, my name is Yvonne McDuffie-Williams. I am a senior program analyst

More information

*Brackets adjusted for inflation in future years. 2015 Long Term Capital Gains & Dividends Taxable income up to $413,200/$457,600 0% - 15%*

*Brackets adjusted for inflation in future years. 2015 Long Term Capital Gains & Dividends Taxable income up to $413,200/$457,600 0% - 15%* Income Tax Planning Overview The American Taxpayer Relief Act of 2012 extended prior law for certain income tax rates; however, it also increased income tax rates on upper income earners. Specifically,

More information

Tax Relief for Businesses in Distress American Bar Association Section of Taxation

Tax Relief for Businesses in Distress American Bar Association Section of Taxation Tax Relief for Businesses in Distress American Bar Association Section of Taxation 5-Year Carryback of 2008 and 2009 Net Operating Losses (NOLs) for Eligible Small Businesses (ESBs) For 2008 and 2009,

More information

Transcript for Canceled Debt (Tax Consequences)

Transcript for Canceled Debt (Tax Consequences) Transcript for Canceled Debt (Tax Consequences) Hello. I m Jean Wetzler, with a reenactment of a March 2009 IRS National Phone Forum on the Tax Consequences of Canceled Debt. The presenter for the phone

More information

Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)

Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Form 982 (Rev. July 2013) Department of the Treasury Internal Revenue Service Name shown on return Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) OMB No.

More information

Presented by Walter Copeland, CPA Heather Kovalsky, CPA Brimmer, Burek & Keelan LLP

Presented by Walter Copeland, CPA Heather Kovalsky, CPA Brimmer, Burek & Keelan LLP Presented by Walter Copeland, CPA Heather Kovalsky, CPA Brimmer, Burek & Keelan LLP 1. Cost Segregation Study What is a cost segregation study and how is it done? What is the IRS position on cost segregation?

More information

Foreclosures on the Rise

Foreclosures on the Rise That Pesky COD Karen Brosi, EA, CFP Foreclosures 2 1 Foreclosures on the Rise Top 4 states at Sep 30, 2009: Nevada Arizona California Florida 2.5 million properties p received default notice first 9 months

More information

The goal today is to accomplish three things:

The goal today is to accomplish three things: MARK SHERMAN, CPA The goal today is to accomplish three things: 1. Educate you on The Mortgage Forgiveness Debt Relief Act of 2007. 2. Show you how to save taxes on your real estate business. 3. Help you

More information

Continuing Professional Education

Continuing Professional Education Continuing Professional Education Course Number CPE20908 Revision Date: 11/15/2008 Debt Relief Income & Insolvent Taxpayer Exclusion Learning Objectives After completing this course, the student will be

More information

2013 Year-End Tax Planning Letter

2013 Year-End Tax Planning Letter PLAN AHEAD 2013 Year-End Tax Planning Letter You are receiving this letter because your income tax rates have increased based on 2012 data. Please be sure to talk with your advisor to discuss anticipated

More information

PFS Planning Update Planning for the Net Investment Income Tax, also known as the Medicare Contribution Tax

PFS Planning Update Planning for the Net Investment Income Tax, also known as the Medicare Contribution Tax www.pwc.com/us/pfs PFS Planning Update Personal Financial Services Planning for the Net Investment Income Tax, also known as the Medicare Contribution Tax Local disclaimer and copyright statements go here

More information

American Taxpayer Relief Act of 2012- UPDATED

American Taxpayer Relief Act of 2012- UPDATED American Taxpayer Relief Act of 2012- UPDATED On January 2, 2013, the President signed the American Taxpayer Relief Act, thus ending the nation s brief stint over the fiscal cliff a confluence of expiring

More information

Cancellation of Debt A Special Focus on Home Foreclosures

Cancellation of Debt A Special Focus on Home Foreclosures Cancellation of Debt A Special Focus on Home Foreclosures Mary M. Gillum, Coordinator and Attorney Tennessee Taxpayer Project Legal Aid Society of Middle Tennessee and the Cumberlands (Graphics from Microsoft

More information

Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability

Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability Presentation: Federal Income Taxation Chapter 7 Receipt Subject to Offsetting Liability Professors Wells September 21, 2015 Transactions with Borrowed Funds p.437 No income realized upon the receipt of

More information

The 1099- C, Insolvency, and the Cancellation of Debt: What you Need to Know

The 1099- C, Insolvency, and the Cancellation of Debt: What you Need to Know Moving Your Practice in the Right Direction TM The 1099- C, Insolvency, and the Cancellation of Debt: What you Need to Know A Practice Essentials Presentation 2010 OnePath Practice Management Advisors,

More information

Income, Gift, and Estate Tax Update

Income, Gift, and Estate Tax Update Income, Gift, and Estate Tax Update Individual Income Tax Rates p. 1 Phil Harris Department of Agricultural and Applied Economics University of Wisconsin-Madison Marriage Penalty Relief p. 1 Capital Gains

More information

CANCELLATION OF DEBT(COD) Applicable Entities COD. Informational Return. Identifiable Event. IRC Sec. 6050P:

CANCELLATION OF DEBT(COD) Applicable Entities COD. Informational Return. Identifiable Event. IRC Sec. 6050P: Tax Consequences of Foreclosure Philip J. Rosenkranz Staff Attorney Tax Consequences in Foreclosure Two distinct taxable Events: 1.Cancellation of debt 2. Gain or loss The Legal Aid Society of Milwaukee,

More information

Post Election Focus: Stars, Stripes & Taxes

Post Election Focus: Stars, Stripes & Taxes Post Election Focus: Stars, Stripes & Taxes Presented By: Margo Cook, CPA December 6, 2012 Click HERE to listen to webinar. Post Election Focus: Stars, Stripes & Taxes Presented By: Margo Cook, CPA December

More information

The 3.8% Medicare Surtax on Investment Income

The 3.8% Medicare Surtax on Investment Income Wealth Strategy Report The 3.8% Medicare Surtax on Investment Income OVERVIEW Beginning in 2013, certain investment income will be subject to an additional 3.8% surtax, enacted as part of the Health Care

More information

Partner's Instructions for Schedule K-1 (Form 1065)

Partner's Instructions for Schedule K-1 (Form 1065) 2014 Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. (For Partner's Use Only) Department of the Treasury Internal Revenue Service Section references

More information

The mechanics of foreclosure are specific to the laws of the State in

The mechanics of foreclosure are specific to the laws of the State in Unraveling the Mystery of Cancellation of Indebtedness Income What Borrowers Need to Know of the Potential Tax Costs of Loan Workouts and Foreclosures by Edward J. Hannon, Partner, Corporate and Real Estate

More information

INDIVIDUAL TAX STRATEGIES

INDIVIDUAL TAX STRATEGIES BY SCOTT HENSLEY SHENSLEY@STANCILCPA.COM DECEMBER 4, 2014 STANCIL & COMPANY CERTIFIED PUBLIC ACCOUNTANTS 4909 WINDY HILL DRIVE RALEIGH, NC 27609 919-872-1260 TOPICS TO BE COVERED TODAY WHAT IS TAX PLANNING

More information

Insolvency Procedures under Section 108

Insolvency Procedures under Section 108 Income Tax Insolvency Insights Insolvency Procedures under Section 108 Irina Borushko and Urmi Sampat In the current prolonged recession, many industrial and commercial entities have had to restructure

More information

ADDITIONAL MEDICARE TAX ON EARNED INCOME

ADDITIONAL MEDICARE TAX ON EARNED INCOME Assisting Family Lawyers With Navigating the 2013 Tax Changes Under the Patient Protection Care Act (PPACA) and the Health Care and Education Reconciliation ACT (HCERA) On June 28, 2012, the United States

More information

FORECLOSURE TAXATION

FORECLOSURE TAXATION FORECLOSURE TAXATION Phil Rosenkranz Attorney At Law Legal Aid Society of Milwaukee 521 North 8th Street Milwaukee, Wisconsin 53233 (414) 727-5300 (414) 291-5488 (fax) prosenkranz@lasmilwaukee.com Sean

More information

2015 Savvy Year-End Tax Planning Thoughts & Ideas

2015 Savvy Year-End Tax Planning Thoughts & Ideas 2015 Savvy Year-End Tax Planning Thoughts & Ideas JONATHAN GASSMAN CFP, CPA/PFS November 11, 2015 2015 Tax Rates Ordinary Income Qualified Dividends & Long-Term Capital Gains 10% 15% 25% 28% 2015 Rates

More information

Chapter 18. Corporations: Distributions Not in Complete Liquidation. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A.

Chapter 18. Corporations: Distributions Not in Complete Liquidation. Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Chapter 18 Corporations: Distributions Not in Complete Liquidation Eugene Willis, William H. Hoffman, Jr., David M. Maloney and William A. Raabe Copyright 2004 South-Western/Thomson Learning Taxable Dividends

More information

Partner's Instructions for Schedule K-1 (Form 1065)

Partner's Instructions for Schedule K-1 (Form 1065) 2012 Partner's Instructions for Schedule K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. (For Partner's Use Only) Department of the Treasury Internal Revenue Service Section references

More information

WithumSmith+Brown, PC Certified Public Accountants and Consultants BE IN A POSITION OF STRENGTH. withum.com

WithumSmith+Brown, PC Certified Public Accountants and Consultants BE IN A POSITION OF STRENGTH. withum.com 1 Objectives for Today s Webinar What are the different types of K-1s? K-1 line items where do they end up? My income is greater than the cash I received why would that be? 2 What is a Schedule K-1 Form?

More information

Tax-Saving Opportunities for "Active" Business Owners

Tax-Saving Opportunities for Active Business Owners S CORPORATIONS Tax-Saving Opportunities for "Active" Business Owners S corporations now provide business owners with a unique opportunity to minimize earnings subject to both the recently imposed additional

More information

2010 Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only)

2010 Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only) 2010 Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only) Section references are to the Internal Revenue Code unless otherwise

More information

Cancelled Debt Remains Issue for Homeowners

Cancelled Debt Remains Issue for Homeowners Cancelled Debt Remains Issue for Homeowners Let s Talk Tax By Brett Hersh, EA, MBA The housing crisis may have dropped from the headlines in recent months. Unfortunately, however, the crisis remains a

More information

Department of Legislative Services 2012 Session

Department of Legislative Services 2012 Session House Bill 600 Ways and Means Department of Legislative Services 2012 Session FISCAL AND POLICY NOTE Revised (Delegate Zucker, et al.) HB 600 Budget and Taxation Income Tax - Subtraction Modification -

More information

Staying Healthy, Wealthy & Wise: The Aftermath of the Fiscal Cliff. Heather Kovalsky, CPA

Staying Healthy, Wealthy & Wise: The Aftermath of the Fiscal Cliff. Heather Kovalsky, CPA Staying Healthy, Wealthy & Wise: The Aftermath of the Fiscal Cliff Heather Kovalsky, CPA 2013 Tax Changes The Patient Protection and Affordable Care Act American Tax Relief Act of 2012 The Patient Protection

More information

Simplify the Tax Treatment of Cancellation of Debt Income

Simplify the Tax Treatment of Cancellation of Debt Income Appendices Most Serious Simplify the Tax Treatment of Cancellation of Debt Income LR # 6 LR #6 Simplify the Tax Treatment of Cancellation of Debt Income Problem At a time when the government is taking

More information

Tax Items For Businesses Ohio Tax Law Changes

Tax Items For Businesses Ohio Tax Law Changes FRUSH & ASSOCIATES, INC. OVERVIEW Recap of 2013 ACA Act NII Surtax Medicare Wage Surtax Tax Items For Businesses Ohio Tax Law Changes Circular 230 Disclosure Pursuant to the rules of professional conduct

More information

General Rules 1. All income is taxable.

General Rules 1. All income is taxable. Chapter 17 Pages 239-252 General Rules 1. All income is taxable. p. 239 2. Cancelled debt is income. 3. Cancelled debt is taxable: a. To a solvent taxpayer. b. To the extent solvency is restored. Warning!

More information

2014-2015 Tax Update: Another Year For Tax Breaks By Kurt J. Kilwein, CPA, CFP, Partner and Olga Zarney, CPA, MBT, Manager

2014-2015 Tax Update: Another Year For Tax Breaks By Kurt J. Kilwein, CPA, CFP, Partner and Olga Zarney, CPA, MBT, Manager WINTER 2014-2015 2014-2015 Tax Update: Another Year For Tax Breaks By Kurt J. Kilwein, CPA, CFP, Partner and Olga Zarney, CPA, MBT, Manager Individual Taxation Many of the tax breaks which expired at the

More information

no--asset 7 s asset 7 s

no--asset 7 s asset 7 s Bankruptcy Questions Answered! Attorney to Non- Attorney Robert McKenzie, EA, Esq. Types of Bankruptcies This is not an easy subject, but our goal is to distill it to key issues you need to know as a return

More information

Kuno S. Bell on How Best to Sell Your Ownership in a Rental Real Estate Partnership

Kuno S. Bell on How Best to Sell Your Ownership in a Rental Real Estate Partnership Kuno S. Bell on How Best to Sell Your Ownership in a Rental Real Estate Partnership By Kuno S. Bell, Pease & Associates, Inc. 3.01 Introduction The statement that you own real estate through a partnership

More information

Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only)

Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only) 2009 Partner s Instructions for Schedule K-1 (Form 1065) Partner s Share of Income, Deductions, Credits, etc. (For Partner s Use Only) Department of the Treasury Internal Revenue Service Section references

More information

26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1, 1.1001-1.

26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1, 1.1001-1. Section 121. Exclusion of gain from sale of principal residence 26 CFR 1.121-1: Exclusion of gain from sale or exchange of a principal residence. (Also: 61, 165, 691, 1001; 1.61-6, 1.165-1, 1.691(a)-1,

More information

Tax Rate Increases? The Outlook and Tax Planning Considerations. Partner. Copyright Keiter All Rights Reserved.

Tax Rate Increases? The Outlook and Tax Planning Considerations. Partner. Copyright Keiter All Rights Reserved. Tax Future Update Tax Rate Increases? The Outlook and Tax Planning Considerations Carroll D. Hurst, CPA Partner IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we

More information

Instructions for Form 8582 Passive Activity Loss Limitations

Instructions for Form 8582 Passive Activity Loss Limitations 2007 Instructions for Form 8582 Passive Activity Loss Limitations Department of the Treasury Internal Revenue Service Section references are to the Internal rental passive activities. Overall loss is limited,

More information

Part 1 Cancellation of Debt Principal Residence. Slide 2 Objectives At the end of this lesson, using the resource materials, you will be able to:

Part 1 Cancellation of Debt Principal Residence. Slide 2 Objectives At the end of this lesson, using the resource materials, you will be able to: Slide 1 Welcome! The Cancellation of Debt lesson is optional specialty training available only on Link & Learn Taxes for volunteers with an Advanced, Military, or International Certification. A separate

More information

Real Estate Accounting Potpourri. Presented by: Jason Thompson Kimberly Brown and Stephanie Onzay

Real Estate Accounting Potpourri. Presented by: Jason Thompson Kimberly Brown and Stephanie Onzay Real Estate Accounting Potpourri Presented by: Jason Thompson Kimberly Brown and Stephanie Onzay Tax Consequences of Debt Discharge & Foreclosure Rules Outline Tax consequences of forgiven debt if: Insolvent

More information

Canceled Debts, Foreclosures, Repossessions, and Abandonments

Canceled Debts, Foreclosures, Repossessions, and Abandonments Department of the Treasury Internal Revenue Service Publication 4681 Cat. No. 51508F Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) For use in preparing 2013 Returns Contents

More information

ACTIONABLE STRATEGIES FOR REDUCING MEDICARE TAXES

ACTIONABLE STRATEGIES FOR REDUCING MEDICARE TAXES ACTIONABLE STRATEGIES FOR REDUCING MEDICARE TAXES Medicare taxes increased in 2013 for high-income earners. Timely action can help reduce the impact of higher taxes. KEY TAKEAWAYS High-income taxpayers

More information

IRS Issues Reliance Proposed Regulations On Some Net Investment Income Tax Issues. Background

IRS Issues Reliance Proposed Regulations On Some Net Investment Income Tax Issues. Background /////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Special Report Series on Section 1411

More information

Shareholder's Instructions for Schedule K-1 (Form 1120S)

Shareholder's Instructions for Schedule K-1 (Form 1120S) 2015 Shareholder's Instructions for Schedule K-1 (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. (For Shareholder's Use Only) Department of the Treasury Internal Revenue Service Section

More information

REAL ESTATE PROPERTY FORECLOSURE and CANCELLATION OF DEBT AUDIT TECHNIQUE GUIDE

REAL ESTATE PROPERTY FORECLOSURE and CANCELLATION OF DEBT AUDIT TECHNIQUE GUIDE REAL ESTATE PROPERTY FORECLOSURE and CANCELLATION OF DEBT AUDIT TECHNIQUE GUIDE NOTE: This document is not an official pronouncement of the law or the position of the Service and cannot be used, cited,

More information

SPECIAL ALERT: MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 BRINGS TAX CHANGES TO REAL ESTATE

SPECIAL ALERT: MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 BRINGS TAX CHANGES TO REAL ESTATE SPECIAL ALERT: MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007 BRINGS TAX CHANGES TO REAL ESTATE By Patricia Hughes Mills, J.D., L.L.M. Associate Professor of Clinical Accounting University of Southern California

More information

FARM LEGAL SERIES June 2015 Tax Considerations in Liquidations and Reorganizations

FARM LEGAL SERIES June 2015 Tax Considerations in Liquidations and Reorganizations Agricultural Business Management FARM LEGAL SERIES June 2015 Tax Considerations in Liquidations and Reorganizations Phillip L. Kunkel, Jeffrey A. Peterson, S. Scott Wick Attorneys, Gray Plant Mooty INTRODUCTION

More information

2013 Year End Tax Planning Seminar

2013 Year End Tax Planning Seminar 2013 Year End Tax Planning Seminar Walter H. Deyhle, CPA, CFP December 4, 2013 GRF s Tax Team 2 Disclosure This presentation and these materials are designed to provide accurate and authoritative information

More information

MCCLANAHAN & EATON, LLC CERTIFIED PUBLIC ACCOUNTANTS

MCCLANAHAN & EATON, LLC CERTIFIED PUBLIC ACCOUNTANTS , LLC CERTIFIED PUBLIC ACCOUNTANTS It's that time of year where we should think about preparing an estimate of your current year tax liability and see if we can reduce that liability. There are several

More information

Partner's Instructions for Schedule K-1 (Form 1065-B)

Partner's Instructions for Schedule K-1 (Form 1065-B) 2015 Partner's Instructions for Schedule K-1 (Form 1065-B) Partner's Share of Income (Loss) From an Electing Large Partnership (For Partner's Use Only) Department of the Treasury Internal Revenue Service

More information

THE AMERICAN LAW INSTITUTE Continuing Legal Education

THE AMERICAN LAW INSTITUTE Continuing Legal Education 41 THE AMERICAN LAW INSTITUTE Continuing Legal Education American Taxpayer Relief Act: What You Need To Know for Tax Planning and Compliance January 22, 2013 Video Presentation Service Issues Proposed

More information

WORKING OUT AND RESTRUCTURING DISTRESSED DEBT TAX TRAPS AND TECHNIQUES TO ACHIEVE FAVORABLE OUTCOMES

WORKING OUT AND RESTRUCTURING DISTRESSED DEBT TAX TRAPS AND TECHNIQUES TO ACHIEVE FAVORABLE OUTCOMES WORKING OUT AND RESTRUCTURING DISTRESSED DEBT TAX TRAPS AND TECHNIQUES TO ACHIEVE FAVORABLE OUTCOMES State Bar of Wisconsin Annual Convention May 6, 2009 Richard A. Latta Michael Best & Friedrich LLP One

More information

Income Tax Planning for Commercial Real Estate Debt Restructuring

Income Tax Planning for Commercial Real Estate Debt Restructuring Bankruptcy Planning Insights Income Tax Planning for Commercial Real Estate Debt Restructuring Robert F. Reilly, CPA Many industry observers forecast a continued downturn in the commercial real estate

More information

2015 TAX UPDATES. TaxSmarter.com

2015 TAX UPDATES. TaxSmarter.com 2015 TAX UPDATES TaxSmarter.com NEW TAX LAWS FOR 2015 Standard Deduction: $12,600 MFJ or QW (increase of $200) $9,250 - Head of Household (increase of $150) $6,300 - Single or MFS (increase of $100) Additional

More information

tax planning strategies

tax planning strategies tax planning strategies In addition to saving income taxes for the current and future years, tax planning can reduce eventual estate taxes, maximize the amount of funds you will have available for retirement,

More information

business owner issues and depreciation deductions

business owner issues and depreciation deductions business owner issues and depreciation deductions Individuals who are owners of a business, whether as sole proprietors or through a partnership, limited liability company or S corporation, have specific

More information

Presented By: Tracy Monroe, CPA, MT

Presented By: Tracy Monroe, CPA, MT Presented By: Tracy Monroe, CPA, MT Tax extenders for individuals Tax planning Ohio update On December 18, 2015 the President signed the Protecting Americans from Tax Hikes (PATH Act): Extended many expired

More information

Medicare taxes for higher-income taxpayers

Medicare taxes for higher-income taxpayers Medicare taxes for higher-income taxpayers Many changes from the 2010 Affordable Care Act are now in effect Begin planning now You ll especially want to discuss these tax provisions with your Financial

More information

What the Bank Giveth, the IRS May (Partially) Take Away An Introduction to the Tax Aspects of Workouts

What the Bank Giveth, the IRS May (Partially) Take Away An Introduction to the Tax Aspects of Workouts What the Bank Giveth, the IRS May (Partially) Take Away An Introduction to the Tax Aspects of Workouts February 17, 2009 By: Gregory R. Wilson Many individual and business taxpayers are currently struggling

More information

Gift Acceptance Policy

Gift Acceptance Policy Gift Acceptance Policy Purpose The purpose of this Gift Acceptance Policy is to establish the guidelines according to which the Catholic Community Foundation of Los Angeles (the Foundation ) accepts gifts

More information

2011 Tax And Financial Planning Tables

2011 Tax And Financial Planning Tables 2011 Tax and Financial PLanning Tables Investment Planning 2011 Tax And Financial Planning Tables Tax planning is an important component for your overall financial plan. 2011 Tax and Financial PLanning

More information

2013 TAX PLANNING TIPS FOR INDIVIDUALS

2013 TAX PLANNING TIPS FOR INDIVIDUALS 2013 TAX PLANNING TIPS FOR INDIVIDUALS The 2012 American Taxpayer Relief Act, which was enacted in early January 2013, was a sweeping tax package that included permanent extension of the Bush-era tax cuts

More information

PENNSYLVANIA PERSONAL INCOME TAX GUIDE CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES

PENNSYLVANIA PERSONAL INCOME TAX GUIDE CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES CHAPTER 24: CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES TABLE OF CONTENTS I. OVERVIEW OF CANCELLATION OF DEBT FOR PENNSYLVANIA PERSONAL INCOME TAX PURPOSES... 7 A. In General...

More information

Department of Legislative Services 2014 Session

Department of Legislative Services 2014 Session Senate Bill 596 Budget and Taxation Department of Legislative Services 2014 Session FISCAL AND POLICY NOTE Revised (Senator Peters, et al.) SB 596 Ways and Means Income Tax Subtraction Modification - Mortgage

More information

Tax Update. Rod Mauszycki, CliftonLarsonAllen

Tax Update. Rod Mauszycki, CliftonLarsonAllen Tax Update Rod Mauszycki, CliftonLarsonAllen Government s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subside

More information

ROTH IRA DISCLOSURE STATEMENT

ROTH IRA DISCLOSURE STATEMENT Toll Free: 1-800-962-4238 www.pensco.com ROTH IRA DISCLOSURE STATEMENT This Disclosure Statement summarizes the requirements for the Roth Individual Retirement Account (Roth IRA). The rules under which

More information

Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers

Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers March 6, 2013 Application of the Self-Employment Tax and 3.8% Net Investment Income Tax to Fund Managers By Robert A.N. Cudd and Michelle M. Jewett With the imposition of a new 3.8% net investment income

More information

2015 Individual Tax Planning Letter

2015 Individual Tax Planning Letter 2015 Individual Tax Planning Letter Just as the daylight hours are getting shorter, so is the time for fine tuning any last-minute strategies to lower your 2015 tax bill. While year-end legislation extending

More information

Annual contributions: Conversion of a traditional IRA account: Rollovers from a qualified plan:

Annual contributions: Conversion of a traditional IRA account: Rollovers from a qualified plan: The Roth IRA differs from the traditional IRA in that contributions are never deductible and, if certain requirements are met, account distributions are free of federal income tax. 1 Annual contributions:

More information

Tax Issues for Bankruptcy & Insolvency

Tax Issues for Bankruptcy & Insolvency Tax Issues for Bankruptcy & Insolvency By David S. De Jong, Esquire, CPA Stein, Sperling, Bennett, De Jong, Driscoll & Greenfeig, PC 25 West Middle Lane Rockville, Maryland 20850 301-838-3204 ddejong@steinsperling.com

More information

1135 E. Route 66, Suite 108 Glendora, CA 91740 626 852-2202

1135 E. Route 66, Suite 108 Glendora, CA 91740 626 852-2202 1135 E. Route 66, Suite 108 Glendora, CA 91740 626 852-2202 Dear Client: The Tax Organizer will assist you in collecting and reporting information necessary for us to properly prepare your income tax return.

More information

TRADITIONAL TAX PLANNING

TRADITIONAL TAX PLANNING Partners David R. Brzezniak CPA Daniel P. Schreiber CPA William T. Botzum CPA Thomas C. Zonaras CPA Oliver R. McElroy CPA Re: 2014 Year-End Tax Planning For Individuals As 2014 draws to a close, we are

More information

SC REVENUE RULING #06-12. All previous advisory opinions and any oral directives in conflict herewith.

SC REVENUE RULING #06-12. All previous advisory opinions and any oral directives in conflict herewith. State of South Carolina Department of Revenue 301 Gervais Street, P. O. Box 125, Columbia, South Carolina 29214 Website Address: http://www.sctax.org SC REVENUE RULING #06-12 SUBJECT: Tax Rate Reduction

More information

Module 10 S Corporation/Corporation Workbook Introduction

Module 10 S Corporation/Corporation Workbook Introduction Module 10 Workbook Introduction Running your own business presents many challenges. One of the most difficult is complying with complex and ever-changing tax laws. This small-business tax education program

More information

Checklist of Documents and Information Needed to Prepare Your Tax Return

Checklist of Documents and Information Needed to Prepare Your Tax Return Checklist of Documents and Information Needed to Prepare Your Tax Return The following list covers the most common items needed to prepare your individual tax return, but it is not 100% inclusive. If you

More information

Denver Tax Group, LLC CHADWICK ELLIOTT 1888 Sherman Street SUITE 650 DENVER, CO 80203 (0) Organizer Mailing Slip

Denver Tax Group, LLC CHADWICK ELLIOTT 1888 Sherman Street SUITE 650 DENVER, CO 80203 (0) Organizer Mailing Slip Denver Tax Group, LLC CHADWICK ELLIOTT Sherman Street SUITE 0 DENVER, CO 00, (0) Organizer Mailing Slip TAX ORGANIZER TO:, FROM: Denver Tax Group, LLC Sherman Street SUITE 0 DENVER CO 00 (0) -0 Enclosed

More information

When the IRS StRIkeS How to Get out of a Bind

When the IRS StRIkeS How to Get out of a Bind Representing Non-Filers How Not to Lose Your EA License Vol.29 No.5 When the IRS StRIkeS How to Get out of a Bind Turning a Practice into a Business Member Resource Guide President s Message Capitol Corner

More information

TAX CONSEQUENCES OF MORTGAGE MODIFICATIONS

TAX CONSEQUENCES OF MORTGAGE MODIFICATIONS TAX CONSEQUENCES OF MORTGAGE MODIFICATIONS 1 Presenters: Jeff Gentes, Connecticut Fair Housing Center Elizabeth Maresca, Fordham Law School Diane E. Thompson, NCLC CANCELLATION OF DEBT - GENERAL RULES

More information

IMPACT. Taxpayer implications of an Economic Downturn TAX IMPLICATIONS

IMPACT. Taxpayer implications of an Economic Downturn TAX IMPLICATIONS TAX IMPLICATIONS IMPACT Taxpayer implications of an Economic Downturn By Joseph LiPari, CPA, M.B.A. As the United States continues to be mired in its worst recession in 80 years, we are all well aware

More information

HEALTH CARE ACT TAX OVERVIEW INDIVIDUALS. Expanded Medicare taxes and other changes make planning critical

HEALTH CARE ACT TAX OVERVIEW INDIVIDUALS. Expanded Medicare taxes and other changes make planning critical HEALTH CARE ACT TAX OVERVIEW INDIVIDUALS Expanded Medicare taxes and other changes make planning critical 1 The agenda The health care act s tax impact on individuals Medicare tax increase on earned income

More information

Debt Modifications: Tax Planning Options Including New 10-Year Potential Deferral Ann Galligan Kelley, Providence College, USA

Debt Modifications: Tax Planning Options Including New 10-Year Potential Deferral Ann Galligan Kelley, Providence College, USA Debt Modifications: Tax Planning Options Including New 10-Year Potential Deferral Ann Galligan Kelley, Providence College, USA ABSTRACT With the recent decline in the real estate market, many taxpayers,

More information

2015 YEAR-END TAX PLANNING NEWSLETTER

2015 YEAR-END TAX PLANNING NEWSLETTER 2015 YEAR-END TAX PLANNING NEWSLETTER Dear Client: As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next.

More information

Part III. 1 Ordinary business income (loss) 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Guaranteed payments

Part III. 1 Ordinary business income (loss) 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Guaranteed payments Schedule K-1 (Form 1065) 2010 Department of the Treasury Internal Revenue Service For calendar year 2010, or tax year beginning, 2010 ending, 20 Partner s Share of Income, Deductions, Credits, etc. See

More information

National Capital Gift Planning Council

National Capital Gift Planning Council National Capital Gift Planning Council Nuts and Bolts Session September 16, 2015 Craig Stevens, Aronson LLC www.aronsonllc.com 1 Income Tax and Tax Brackets Calculating Income Tax Gross Income Everything

More information

Treatment of COD Income by Partnerships

Treatment of COD Income by Partnerships Treatment of COD Income by Partnerships Stafford Presentation January 28, 2015 Polsinelli PC. In California, Polsinelli LLP Allocation of COD Income COD income is allocated to those partners who are partners

More information

Tax Implications of Farm Liquidation, Debt Forgiveness, and Bankruptcy

Tax Implications of Farm Liquidation, Debt Forgiveness, and Bankruptcy Tax Implications of Farm Liquidation, Debt Forgiveness, and Bankruptcy Prepared by C. Robert Holcomb, EA, Extension Educator, University of Minnesota Extension Revised December 9, 2009 Introduction: A

More information