This document summarizes tax issues from 2009, including:
1) Homebuyer tax credits for those who purchased homes in 2009 or 2010, claiming the credit using Form 5405.
2) Income tax breaks for mortgage assistance/cancellation from 2007-2012 and exclusions for HAMP payments.
3) A sales tax deduction for vehicles purchased in 2009 and exclusions for "Cash for Clunkers" vouchers.
4) Various energy, education, and payroll tax credits, along with IRA and retirement contribution limits.
Income Tax Consequences Of The Sales And Surrenders Of Life Insurance Policieskirkpatj
The document summarizes IRS tax code provisions related to income taxation of life insurance policies when they are sold or surrendered. It discusses that gains from surrenders or sales by the insured are generally taxed as ordinary income under IRC section 72 or capital gains/losses under section 1001. For investors who purchase policies, gains from resales are capital gains, and gains from death benefits are taxed as ordinary income under section 101. Losses from surrenders generally are not deductible, but may be for business policies.
This document contains 13 exhibits that summarize key provisions related to nonrecognition of gains and losses from property transactions under sections 1031, 1033, and 121 of the Internal Revenue Code. The exhibits cover topics such as like-kind exchanges, involuntary conversions, and the sale of a principal residence. Each exhibit provides an overview of the relevant rules, qualifications, time limitations, and tax treatment for these various property transactions.
(a) The adjusted basis of the original common stock shares remains $8,800 (100 shares x $88 per share). The basis of the new stock rights is $0 since they are worth less than 15% of the original stock's FMV.
(b) The holding period of the original common stock shares remains March 31, 2011. The holding period of the new stock rights includes the holding period of the original shares, which is March 31, 2011.
Matthew Howard presented on micro captives and the 831(b) election. Key points include:
- The 831(b) election allows insurance companies with less than $1.2 million in annual premiums to pay $0 income tax on underwriting profits. Investment income is taxed as ordinary C-Corp income.
- A micro captive structure involves a business forming a captive insurance company that is owned by related entities. The business pays up to $1.2 million in annual premiums to the captive for various insurance policies.
- Benefits include the tax deductibility of premiums, taxation of underwriting profits at only the investment income level, and opportunities for retirement and estate planning using
This document summarizes the key rules and concepts around the treatment of capital assets and Section 1231 assets for tax purposes. It defines capital assets and outlines the determination of capital gains and losses. Section 1231 assets are defined as depreciable business property held for over 12 months. The steps for determining Section 1231 gains and losses are provided. The document also summarizes the rules for recapturing depreciation taken under Sections 1245 and 1250.
InKnowVision September 2013 Captive Insurance PowerpointInKnowVision
After completing this course, you will be able to:
- Identify the benefits of Captive Insurance companies
- Differentiate which clients would be ideal for a Captive
- List the necessary steps to form a Captive
- Define and address Captive tax issues
- Apply all of the processes to form a successful Captive Insurance company
This document discusses various strategies for SMSFs to acquire and hold real property, including:
1) Acquiring business real property from related parties under section 66 of the SIS Act, which allows exceptions for market value transactions.
2) Using family trusts or trading companies to lease land to SMSFs to provide deductible rent and tax-free pension income.
3) Tax planning opportunities around capital gains tax exemptions for the sale of long-held business assets and contributions to superannuation.
4) Issues around the in-house assets test for leases and investments between related parties and SMSFs.
5) Using unit trusts or instalment warrant structures to acquire real property through joint
Income Tax Consequences Of The Sales And Surrenders Of Life Insurance Policieskirkpatj
The document summarizes IRS tax code provisions related to income taxation of life insurance policies when they are sold or surrendered. It discusses that gains from surrenders or sales by the insured are generally taxed as ordinary income under IRC section 72 or capital gains/losses under section 1001. For investors who purchase policies, gains from resales are capital gains, and gains from death benefits are taxed as ordinary income under section 101. Losses from surrenders generally are not deductible, but may be for business policies.
This document contains 13 exhibits that summarize key provisions related to nonrecognition of gains and losses from property transactions under sections 1031, 1033, and 121 of the Internal Revenue Code. The exhibits cover topics such as like-kind exchanges, involuntary conversions, and the sale of a principal residence. Each exhibit provides an overview of the relevant rules, qualifications, time limitations, and tax treatment for these various property transactions.
(a) The adjusted basis of the original common stock shares remains $8,800 (100 shares x $88 per share). The basis of the new stock rights is $0 since they are worth less than 15% of the original stock's FMV.
(b) The holding period of the original common stock shares remains March 31, 2011. The holding period of the new stock rights includes the holding period of the original shares, which is March 31, 2011.
Matthew Howard presented on micro captives and the 831(b) election. Key points include:
- The 831(b) election allows insurance companies with less than $1.2 million in annual premiums to pay $0 income tax on underwriting profits. Investment income is taxed as ordinary C-Corp income.
- A micro captive structure involves a business forming a captive insurance company that is owned by related entities. The business pays up to $1.2 million in annual premiums to the captive for various insurance policies.
- Benefits include the tax deductibility of premiums, taxation of underwriting profits at only the investment income level, and opportunities for retirement and estate planning using
This document summarizes the key rules and concepts around the treatment of capital assets and Section 1231 assets for tax purposes. It defines capital assets and outlines the determination of capital gains and losses. Section 1231 assets are defined as depreciable business property held for over 12 months. The steps for determining Section 1231 gains and losses are provided. The document also summarizes the rules for recapturing depreciation taken under Sections 1245 and 1250.
InKnowVision September 2013 Captive Insurance PowerpointInKnowVision
After completing this course, you will be able to:
- Identify the benefits of Captive Insurance companies
- Differentiate which clients would be ideal for a Captive
- List the necessary steps to form a Captive
- Define and address Captive tax issues
- Apply all of the processes to form a successful Captive Insurance company
This document discusses various strategies for SMSFs to acquire and hold real property, including:
1) Acquiring business real property from related parties under section 66 of the SIS Act, which allows exceptions for market value transactions.
2) Using family trusts or trading companies to lease land to SMSFs to provide deductible rent and tax-free pension income.
3) Tax planning opportunities around capital gains tax exemptions for the sale of long-held business assets and contributions to superannuation.
4) Issues around the in-house assets test for leases and investments between related parties and SMSFs.
5) Using unit trusts or instalment warrant structures to acquire real property through joint
This article takes the viewer through the Accounting Aspects related to Insurance under IFRS and the Income Tax requirements in India. It also touches upon the Direct Tax Code and its impact on Insurance based deductions.
This chapter discusses tax planning strategies for individuals, including:
1) General principles such as avoiding income recognition, deferring income or deductions, and accelerating deductions.
2) Differences in tax treatment between self-employed individuals and employees.
3) Family tax planning strategies like income shifting, college savings plans, and divorce settlements.
4) Asset-related planning including the Section 179 deduction, home ownership, and retirement accounts.
The document summarizes the benefits of establishing a Captive Insurance Company (CIC). It notes that a CIC allows businesses to lower insurance costs, expand coverage, ensure continuity of coverage, retain underwriting income, increase asset liquidity, control investment decisions, and enjoy significant tax benefits. Specifically, premiums paid to a CIC are tax deductible, underwriting income up to $1.2M is excluded from tax, and earnings can grow tax-deferred and may eventually be taxed at lower capital gains rates upon distribution. Overall, a CIC can improve cash flow, profits, and risk management for small businesses.
"Non-Qualified Deferred Compensation Plans" was presented by Tom Sigmund on December 18, 2014, at the CPA Mega Tax Conference.
Tom discussed the details of non-qualified deferred compensation plans, including social security taxes, informal funding and penalties.
Captive Insurance Group - A Risk Management Strategycaptiveinsurance
We provide our clients with unique risk management tools & support designed to help them control their costs with private insurance companies.
With extensive experience, our team of dedicated professionals can help deliver the stability and predictability you need in order to lower costs and drive profits.
With creative concepts and an intuitive grasp on our clients’ goals, we design policies that help you strengthen your position in the present and protect you as you head into the future.
FindLaw | AIG Bonus Details Letter from NY AGLegalDocs
The Attorney General wrote to the House Committee on Financial Services to provide information about his investigation into executive compensation at AIG. He expressed dismay that AIG distributed over $160 million in retention bonuses to its Financial Products unit after receiving taxpayer funds. While AIG claims it had no choice, the AG argues AIG had leverage as employees agreed to $1 salaries in exchange for bonuses. The AG is seeking the names of bonus recipients to determine if AIG's claims that they were crucial to unwinding the unit are valid, as some recipients are no longer employed there. His office subpoenaed AIG for the names and will enforce compliance, as American taxpayers deserve to know where money is going.
The paperwork filed by Aubrey McClendon setting up a new blind pool investment company called Energy 11, LP. The new company has no assets and no income (definition of a blind pool) and exists on paper to raise investment funds for McClendon to use in leasing and drilling shale wells. He's attempting to raise $2 billion via this new effort.
This document provides an overview and summary of preserving retirement assets through IRA rollovers. It discusses the options available when changing jobs, including taking a lump sum distribution, leaving funds in the previous employer's plan, or rolling funds over to a new employer's plan or a traditional IRA. It notes that taking a lump sum distribution can result in taxes and penalties that reduce the available retirement funds. The document then provides examples showing how much more money could be available in retirement by rolling funds over instead of taking a lump sum. It discusses the details and benefits of direct and indirect IRA rollovers.
- The document discusses various tax deductions and credits related to homeownership, such as mortgage interest deduction, property tax deduction, and first-time homebuyer credit.
- It provides examples of how itemizing deductions by claiming mortgage interest and property taxes can result in lower taxes than taking the standard deduction.
- It also outlines other itemized deductions like state income taxes, charitable contributions, and medical expenses that may further reduce one's taxable income and tax owed.
This document provides exhibits related to Chapter 18 on taxation of trusts and estates. It includes definitions of key terms like simple trust, complex trust, and grantor trust. It also illustrates the life cycle of a trust and compares the process of computing tax liability for estates/trusts versus individuals. The exhibits provide worksheets and examples for calculating items like gross income, deductions, distribution deductions, and taxable income for estates and trusts.
This document discusses the pros and cons of qualified and non-qualified deferred compensation plans. It explains that non-qualified plans allow employers more flexibility in selecting participants and setting contribution amounts compared to qualified plans, but non-qualified plans require employers to defer tax deductions. A major con of non-qualified plans is complying with Section 409A, which introduces penalties for failing to follow specific rules. The document also notes that non-profits face additional challenges with non-qualified plans due to risks of forfeiture.
Regulation of the insurance industry in India is governed by the Insurance Act of 1938, the IRDA Act of 1999, and the Insurance Amendment Act of 2002. The IRDA has prescribed accounting formats and standards that insurance companies must follow.
There are two main types of insurance business - life insurance and general insurance. Financial statements for both include a revenue account, profit and loss account, and balance sheet. The revenue account shows incomes and expenses, the profit and loss account shows profits appropriated to shareholders, and the balance sheet records assets and liabilities. Additionally, life insurance companies must prepare a receipts and payments account and segmental reporting.
This document discusses the latest trends and strategies for SMSF estate planning, including:
1. Using binding death benefit nominations and including provisions in governing rules to direct benefits to specific beneficiaries.
2. Paying death benefits to "non-traditional" beneficiaries like those in an interdependency relationship.
3. Managing the tax implications of death benefits, including any untaxed elements or use of anti-detriment payments.
4. Preserving fund assets and control after a member's death through strategies like non-member benefit insurance or paying income streams.
Good SMSF estate planning requires a holistic understanding of the SMSF's interaction with a member's other assets and estate plan.
The IRS defines a home as any house, condominium, cooperative,
mobile home, boat, or similar property that
has sleeping space, toilet facilities, and cooking facilities.
Homeowners may qualify for the following deductions.
This document discusses captive insurance companies, which are insurance companies formed by businesses to insure their own risks or the risks of affiliated businesses. Captive insurance companies allow businesses to insure risks that are not covered by traditional commercial insurance, retain underwriting profits, take advantage of tax incentives, and provide asset protection and estate planning benefits. The document outlines how captive insurance companies work, the types of businesses that may benefit from them, requirements for legitimate captive insurance companies, and examples of policies that could be issued by captive insurers for different types of businesses.
1) Foreign pension plans can potentially be transferred to a Canadian RRSP, allowing the pension income to be tax deferred in Canada. However, several issues must be considered regarding the rules and tax implications in both Canada and the original country.
2) It needs to be determined if the foreign pension plan is transferable under the rules of the original country. The tax consequences of transferring or keeping the plan in the original country also require examination.
3) Upon transfer to Canada, any foreign tax paid may be eligible for foreign tax credits to offset Canadian tax owing on the pension income. But the specific tax rules between Canada and the original country must be understood to determine the full tax impact. Independent tax and legal advice is
The document provides information and tips about various tax benefits available to individuals including contributing to retirement plans, cafeteria plans, itemizing deductions, individual retirement accounts (IRAs), home improvements tax credits, residential energy property tax credits, and the first-time homebuyer tax credit. It outlines eligibility and limitations for each tax benefit and encourages readers to take advantage of these opportunities to reduce their tax burden.
Year End Tax Planning Tips Individuals 2009guest366c4e
This document provides an overview of various tax benefits available to individuals related to retirement plans, health plans, itemized deductions, IRAs, home improvements, vehicle purchases, education expenses, and adoption. It discusses contribution limits, eligibility, phase-outs based on income, and how to claim various credits and deductions. Key benefits include tax-free contributions to retirement and cafeteria plans, the home improvement tax credit, deductions for education expenses, and tax credits for adoptions and student loans.
Summary Of The American Recovery And Reinvestment Act Of 2009Charles Knox
The American Recovery and Reinvestment Act of 2009 provided $787 billion in tax breaks, investments in healthcare and energy, funding for infrastructure projects, and expanded unemployment benefits. Specifically, it offered individual tax relief through credits and deductions such as the Making Work Pay tax credit, increased earned income tax credit, and expanded first-time homebuyer tax credit. It also provided assistance to the unemployed through an extension of unemployment benefits and COBRA health insurance. The legislation aimed to stimulate the economy through these various tax cuts and spending measures.
This article takes the viewer through the Accounting Aspects related to Insurance under IFRS and the Income Tax requirements in India. It also touches upon the Direct Tax Code and its impact on Insurance based deductions.
This chapter discusses tax planning strategies for individuals, including:
1) General principles such as avoiding income recognition, deferring income or deductions, and accelerating deductions.
2) Differences in tax treatment between self-employed individuals and employees.
3) Family tax planning strategies like income shifting, college savings plans, and divorce settlements.
4) Asset-related planning including the Section 179 deduction, home ownership, and retirement accounts.
The document summarizes the benefits of establishing a Captive Insurance Company (CIC). It notes that a CIC allows businesses to lower insurance costs, expand coverage, ensure continuity of coverage, retain underwriting income, increase asset liquidity, control investment decisions, and enjoy significant tax benefits. Specifically, premiums paid to a CIC are tax deductible, underwriting income up to $1.2M is excluded from tax, and earnings can grow tax-deferred and may eventually be taxed at lower capital gains rates upon distribution. Overall, a CIC can improve cash flow, profits, and risk management for small businesses.
"Non-Qualified Deferred Compensation Plans" was presented by Tom Sigmund on December 18, 2014, at the CPA Mega Tax Conference.
Tom discussed the details of non-qualified deferred compensation plans, including social security taxes, informal funding and penalties.
Captive Insurance Group - A Risk Management Strategycaptiveinsurance
We provide our clients with unique risk management tools & support designed to help them control their costs with private insurance companies.
With extensive experience, our team of dedicated professionals can help deliver the stability and predictability you need in order to lower costs and drive profits.
With creative concepts and an intuitive grasp on our clients’ goals, we design policies that help you strengthen your position in the present and protect you as you head into the future.
FindLaw | AIG Bonus Details Letter from NY AGLegalDocs
The Attorney General wrote to the House Committee on Financial Services to provide information about his investigation into executive compensation at AIG. He expressed dismay that AIG distributed over $160 million in retention bonuses to its Financial Products unit after receiving taxpayer funds. While AIG claims it had no choice, the AG argues AIG had leverage as employees agreed to $1 salaries in exchange for bonuses. The AG is seeking the names of bonus recipients to determine if AIG's claims that they were crucial to unwinding the unit are valid, as some recipients are no longer employed there. His office subpoenaed AIG for the names and will enforce compliance, as American taxpayers deserve to know where money is going.
The paperwork filed by Aubrey McClendon setting up a new blind pool investment company called Energy 11, LP. The new company has no assets and no income (definition of a blind pool) and exists on paper to raise investment funds for McClendon to use in leasing and drilling shale wells. He's attempting to raise $2 billion via this new effort.
This document provides an overview and summary of preserving retirement assets through IRA rollovers. It discusses the options available when changing jobs, including taking a lump sum distribution, leaving funds in the previous employer's plan, or rolling funds over to a new employer's plan or a traditional IRA. It notes that taking a lump sum distribution can result in taxes and penalties that reduce the available retirement funds. The document then provides examples showing how much more money could be available in retirement by rolling funds over instead of taking a lump sum. It discusses the details and benefits of direct and indirect IRA rollovers.
- The document discusses various tax deductions and credits related to homeownership, such as mortgage interest deduction, property tax deduction, and first-time homebuyer credit.
- It provides examples of how itemizing deductions by claiming mortgage interest and property taxes can result in lower taxes than taking the standard deduction.
- It also outlines other itemized deductions like state income taxes, charitable contributions, and medical expenses that may further reduce one's taxable income and tax owed.
This document provides exhibits related to Chapter 18 on taxation of trusts and estates. It includes definitions of key terms like simple trust, complex trust, and grantor trust. It also illustrates the life cycle of a trust and compares the process of computing tax liability for estates/trusts versus individuals. The exhibits provide worksheets and examples for calculating items like gross income, deductions, distribution deductions, and taxable income for estates and trusts.
This document discusses the pros and cons of qualified and non-qualified deferred compensation plans. It explains that non-qualified plans allow employers more flexibility in selecting participants and setting contribution amounts compared to qualified plans, but non-qualified plans require employers to defer tax deductions. A major con of non-qualified plans is complying with Section 409A, which introduces penalties for failing to follow specific rules. The document also notes that non-profits face additional challenges with non-qualified plans due to risks of forfeiture.
Regulation of the insurance industry in India is governed by the Insurance Act of 1938, the IRDA Act of 1999, and the Insurance Amendment Act of 2002. The IRDA has prescribed accounting formats and standards that insurance companies must follow.
There are two main types of insurance business - life insurance and general insurance. Financial statements for both include a revenue account, profit and loss account, and balance sheet. The revenue account shows incomes and expenses, the profit and loss account shows profits appropriated to shareholders, and the balance sheet records assets and liabilities. Additionally, life insurance companies must prepare a receipts and payments account and segmental reporting.
This document discusses the latest trends and strategies for SMSF estate planning, including:
1. Using binding death benefit nominations and including provisions in governing rules to direct benefits to specific beneficiaries.
2. Paying death benefits to "non-traditional" beneficiaries like those in an interdependency relationship.
3. Managing the tax implications of death benefits, including any untaxed elements or use of anti-detriment payments.
4. Preserving fund assets and control after a member's death through strategies like non-member benefit insurance or paying income streams.
Good SMSF estate planning requires a holistic understanding of the SMSF's interaction with a member's other assets and estate plan.
The IRS defines a home as any house, condominium, cooperative,
mobile home, boat, or similar property that
has sleeping space, toilet facilities, and cooking facilities.
Homeowners may qualify for the following deductions.
This document discusses captive insurance companies, which are insurance companies formed by businesses to insure their own risks or the risks of affiliated businesses. Captive insurance companies allow businesses to insure risks that are not covered by traditional commercial insurance, retain underwriting profits, take advantage of tax incentives, and provide asset protection and estate planning benefits. The document outlines how captive insurance companies work, the types of businesses that may benefit from them, requirements for legitimate captive insurance companies, and examples of policies that could be issued by captive insurers for different types of businesses.
1) Foreign pension plans can potentially be transferred to a Canadian RRSP, allowing the pension income to be tax deferred in Canada. However, several issues must be considered regarding the rules and tax implications in both Canada and the original country.
2) It needs to be determined if the foreign pension plan is transferable under the rules of the original country. The tax consequences of transferring or keeping the plan in the original country also require examination.
3) Upon transfer to Canada, any foreign tax paid may be eligible for foreign tax credits to offset Canadian tax owing on the pension income. But the specific tax rules between Canada and the original country must be understood to determine the full tax impact. Independent tax and legal advice is
The document provides information and tips about various tax benefits available to individuals including contributing to retirement plans, cafeteria plans, itemizing deductions, individual retirement accounts (IRAs), home improvements tax credits, residential energy property tax credits, and the first-time homebuyer tax credit. It outlines eligibility and limitations for each tax benefit and encourages readers to take advantage of these opportunities to reduce their tax burden.
Year End Tax Planning Tips Individuals 2009guest366c4e
This document provides an overview of various tax benefits available to individuals related to retirement plans, health plans, itemized deductions, IRAs, home improvements, vehicle purchases, education expenses, and adoption. It discusses contribution limits, eligibility, phase-outs based on income, and how to claim various credits and deductions. Key benefits include tax-free contributions to retirement and cafeteria plans, the home improvement tax credit, deductions for education expenses, and tax credits for adoptions and student loans.
Summary Of The American Recovery And Reinvestment Act Of 2009Charles Knox
The American Recovery and Reinvestment Act of 2009 provided $787 billion in tax breaks, investments in healthcare and energy, funding for infrastructure projects, and expanded unemployment benefits. Specifically, it offered individual tax relief through credits and deductions such as the Making Work Pay tax credit, increased earned income tax credit, and expanded first-time homebuyer tax credit. It also provided assistance to the unemployed through an extension of unemployment benefits and COBRA health insurance. The legislation aimed to stimulate the economy through these various tax cuts and spending measures.
The document is a set of frequently asked questions about the $8,000 tax credit for first-time homebuyers purchasing a principal residence between January 1, 2009 and December 1, 2009. It provides answers to questions about who is eligible for the credit, how the credit amount is determined, applicable income limits, how to claim the credit, and other details about using the tax credit.
The American Recovery And Reinvestment Act Of 2009micellehughes
The document summarizes key provisions of the American Recovery and Reinvestment Act of 2009 (ARRA), including:
- The "Making Work Pay" tax credit that increased take-home pay for most Americans through changes to tax withholding tables.
- The first-time homebuyer tax credit for home purchases between 4/8/2008 and 12/1/2009.
- The automobile sales tax deduction for vehicle purchases between 2/16/2009 and 1/1/2010.
- Expansions to the education tax credits and unemployment tax exemptions.
- Bonus depreciation and Section 179 expensing for businesses.
The document provides information about the tax credit for first-time home buyers authorized by the American Recovery and Reinvestment Act of 2009. It defines eligible home buyers as those who have not owned a principal residence in the last three years. The tax credit is worth up to $8,000 for home purchases from January 1 to November 30, 2009, with the amount determined as 10% of the home's purchase price. The credit phases out for single filers with incomes over $75,000 and joint filers over $150,000.
The document summarizes changes made to the homebuyer tax credit. It extends the first-time homebuyer tax credit of $8,000 until April 30, 2010 and increases the income limits. It also creates a new $6,500 "step-up" tax credit for homeowners who have lived in the same home for 5 years to purchase a new home between December 1, 2009 and May 1, 2010. Both credits phase out for single and joint filers with incomes over $125,000 and $225,000 respectively.
This document provides a summary of a webinar on last minute tax advice presented by H&R Block and hosted by Jenn Fowler. The webinar agenda included opening remarks, an introduction to the master tax advisor Chris Wilson, discussions on last minute tax tips, new tax credits and deductions, commonly overlooked deductions, common errors that can delay refunds, and a Q&A session. Technical assistance was provided by Paul Huffman, and participants were encouraged to submit questions via chat.
Webinar: “Got a Payroll? Don’t Leave Money on the Table”PYA, P.C.
Under the CARES Act, every employer with a payroll has an opportunity to retain cash–whether they have a PPP loan or not. What employers need to know right now.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) along with the Payroll Protection Program (PPP) offer all business owners relief, but the details can be confusing or overlooked.
Perhaps you don’t fully understand how the deferral of the employer’s share of Social Security taxes works. Maybe you wonder if the deferral even applies to you—good news, it does if you have a payroll!
Failure to fully understand your options could cost you money, at a time when “cash is king.”
As part of PYA’s ongoing commitment to sharing helpful guidance, Tax Principals Debbie Ernsberger and Mark Brumbelow outlined issues and opportunities within the CARES Act, and answered questions during a one-hour webinar that originally aired on Wednesday, May 20, 2020.
The document summarizes the key details of the American Recovery and Reinvestment Act's $8,000 tax credit for first-time homebuyers. Eligible buyers who purchase a home between January 1, 2009 and December 1, 2009 can receive a tax credit of up to $8,000. The credit is available to individual filers with incomes up to $75,000 and joint filers with incomes up to $150,000. If the home is sold within 3 years, the full credit amount must be repaid. Consult a real estate agent or tax advisor for more information on qualifying for the credit.
The document provides 30 key points summarizing changes to the new US tax law. Some major changes include doubling the standard deduction, increasing the child tax credit, capping the state and local tax deduction at $10,000, lowering the corporate tax rate to 21%, and eliminating some itemized deductions for moving expenses, tax preparation, and alimony payments. The new law also expands tax breaks for education expenses and increases exemption amounts for the alternative minimum tax and estate tax.
This document summarizes the First Time Homebuyer Credit that was part of the economic stimulus package. It provides details on the maximum credit amounts for 2008 and 2009/2010 purchases, eligibility requirements, repayment rules, common filing errors, required documentation for audits, and potential penalties for non-compliance.
The document discusses the details of the $8,000 first-time homebuyer tax credit available for home purchases from January 1, 2009 to November 30, 2009. It provides answers to frequently asked questions about eligibility requirements, how the credit is applied, income limitations, repayment rules, and examples of how the credit affects tax refunds for different situations. The credit can reduce a homebuyer's tax liability dollar-for-dollar or provide a refund if their liability is less than $8,000.
The 2009 First Time Homebuyer Tax Credit was created to provide incentives for first-time home buyers. Originally a $7,500 non-refundable credit, it was expanded in 2009 to a maximum $8,000 refundable credit for homes purchased between January 1 and November 30, 2009. The repayment requirement for the 2008 credit was also eliminated. The changes aimed to make the credit more beneficial for home buyers and boost home purchases.
FAQ 2009 First Time Home Buyer Tax Creditgmcintosh
This document provides frequently asked questions about the first-time homebuyer tax credit for 2009. It explains that the credit has been increased to $8,000 from the previous $7,500 amount. To qualify, buyers must purchase a home between January 1 and December 1, 2009 and must be first-time homebuyers. The credit phases out for single filers with incomes between $75,000-$95,000 and for joint filers between $150,000-$170,000. Eligible buyers can claim the credit when filing their 2008 or 2009 tax returns.
This document summarizes various small business tax strategies and planning tips presented by Laura Gannon, CPA of Sullivan and Gannon, LLC. It discusses opportunities for increased deductions and credits including Section 179 expensing, bonus depreciation, retirement plans, and startup costs. It also reviews reporting requirements and penalties as well as planning considerations for 2012 such as the additional Medicare taxes. Business owners are advised to have a succession plan and avoid draining their company of capital or ignoring their financials.
This document summarizes several changes to Virginia's individual and business income tax laws for 2008 and beyond. Key points include:
- Mandatory electronic filing for tax preparers with 100+ clients, excluding certain returns.
- Conformity with recent federal tax law changes including increased Section 179 expensing.
- Increases to the personal exemption amount and filing thresholds through 2012.
- New subtractions for gains from space flight services and resupply services contracts.
- A biodiesel fuels tax credit for producers.
- Filing extensions for military serving overseas or in combat zones.
The document summarizes several key provisions and tax law changes from the American Recovery and Reinvestment Act of 2009. It discusses increases to tax credits such as the earned income tax credit and additional child tax credit. It also covers education-related changes like expansions to the Hope and Lifetime Learning credits. New tax deductions and exclusions are introduced for unemployment benefits, state sales tax on vehicle purchases, and up to $8,000 for first-time homebuyers in 2009.
1. 2009 TAX RETURN
PREPARATION ISSUES AND
ESTATE TAX UPDATE
A Presentation By:
J. Scot Kirkpatrick, Esq.
And
Karen S. Kurtz, Esq.
February 17, 2010
2. Tax Legislation – Home Ownership
Certain taxpayers who purchased or will purchase new homes are eligible for a
homebuyer credit.
§ “First-Time Homebuyer Credit” – A tax credit of up to $8,000 is available for
eligible taxpayers who purchase or enter into a binding contract on a home during
2009 or before May 1, 2010.
§ To be eligible –
§ Prior to November 6, 2009 – MAGI of $75,000 ($95,000 cap)/$150,000
($170,000 cap)
§ After November 5, 2009 – MAGI of $125,000 ($145,000 cap)/$225,000
($245,000 cap)
§ Existing Home Owners – A tax credit of up to $6,500 is available to existing
home owners who have lived in the same principal residence for any five
consecutive year period during the past eight years. The same eligibility
requirements for the first-time credit apply to existing home owners.
-2-
3. Tax Legislation – Home Ownership
Certain taxpayers who purchased or will purchase new homes are eligible for a
homebuyer credit.
§ Claim the credit using Form 5405.
§ Taxpayers claiming the credit must file a paper return and include a copy
of the settlement statement.
§ Existing homeowners should also include a mortgage interest statement,
property tax records, or homeowner’s insurance records.
§ The credit must be paid back if the house is sold within three years of the date
of purchase or ceases to be the principal residence.
§ Members of the Armed Forces and certain federal employees serving outside
the U.S. have an extra year to buy a principal residence in the U.S. and still qualify
for the credit.
-3-
4. Tax Legislation – Home Ownership
Income tax breaks for assistance with or cancellation of mortgage indebtedness.
§ Cancellation of Indebtedness Income Exclusion for discharge of “Qualified
Principal Residence Indebtedness” occurring after December 31, 2006 and before
January 1, 2013.
§ Pay-for-Performance Success Payments Not Taxable – Home Affordable
Modification Program (“HAMP”).
§ Rev. Rul. 2009-19 deemed payments received under HAMP excluded from
income under the general welfare exclusion.
-4-
5. Tax Legislation – Vehicles
§ Sales Tax Deduction for New Vehicles – Eligible taxpayers may deduct the sales
tax paid on the cost of new automobiles, motor homes, light trucks and
motorcycles purchased (not leased) after February 16, 2009 and before January 1,
2010.
§ Treat as an itemized deduction on Line 5 or Line 7 of Schedule A
§ Non-itemizers may add such tax to their standard deduction on the new
Schedule L (limits and phase outs apply to non-itemizers).
§ “Cash for Clunkers” Not Taxable – A $3,500 or $4,500 voucher or payment
received under the “Cash for Clunkers” program does not have to be reported as
taxable income.
-5-
6. Tax Legislation – Miscellaneous
§ Credit for Residential Energy Efficiencies – Taxpayers may receive an unlimited
credit for up to 30% of the cost of solar water heating equipment, solar electric
systems, geothermal heat pumps or small wind turbines. A credit may also be
available for energy-saving home improvements.
§ Bonus Depreciation and Section 179 Expenses – The additional 50% first year
depreciation allowance for qualified property was extended by the American
Recovery and Reinvestment Act of 2009.
§ New College Tuition Credit – American Opportunity Credit permits eligible
taxpayers a $2,500 credit per student per year for four years of college. The credit
phases out at $80,000AGI/$160,000AGI.
§ Payroll Tax Credit – “Making Work Pay Credit” of 6.2% of earned income up to
$400 for single filers and $800 for joint filers.
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7. Individual Returns –
Retirement and Savings
§ Contribution Limit for 401(k) Plans – For 2009 the contribution limit increases
to $16,500. Workers age 50 or older can put in an additional $5,500 for a total
contribution of $22,000. The limits are scheduled to remain the same in 2010.
§ IRAs and Rollovers –
§ Expanded deductions may be available if AGI is less than $65,000.
§ Late IRA Rollovers were permitted before November 30, 2009.
§ No required minimum distributions for 2009.
§ Early distribution penalty waived for period payment modification for
higher education.
§ 2009 is the last year for direct donations of IRAs to charity are permitted
without reporting the transfer as income. 2009 is also the last year the special
Enron IRA rule applies.
§ The U.S. Department of Labor deemed a requirement that a client pledge
his personal account to cover indebtedness of his IRA a prohibited
transaction.
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8. Individual Returns – Children and
Parents
§ Kiddie Tax – In 2009, a child’s unearned income over $1,900 will be taxed at the
parents’ marginal rate until the child is age 19, or age 24 for full-time students.
§ Noncustodial Parent Claiming Child – Starting in 2009, a noncustodial parent
must attach a Form 8332 Release/Revocation of Release of Claim to Exemption for
Child by Custodial Parent, or similar statement to their tax return.
§ 529 College Savings Plans – Starting in 2009, the definition of qualified higher
education expenses includes computer technology and equipment or internet
access and related services used by the 529 Plan beneficiary while enrolled in an
eligible educational institution.
§ Infant Formula Not Deductible – PLR 200941003 concluded that infant formula
could not be deducted as a medical expense and was deemed to be food
purchased to satisfy the ordinary nutritional needs of a healthy child.
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9. Individual Returns – Employment
Related Issues
§ Employer May Accrue Medical Expenses at the Time Services are Provided – In
PLR 200846021 the IRS ruled accrued amounts paid more than 2.5 months after
the end of the taxable year for the prior year’s cost for a medical and dental benefit
plan were deductible in the prior year (the year the medical services were
provided).
§ COBRA Subsidies Not Taxable – 65% subsidy is not taxable.
§ Unemployment Benefits – For 2009, the first $2,400 of unemployment benefits
received is tax free. Amounts over $2,400 are taxable.
§ Earned Income Tax Credit Rises – To $48,279, $45,295, $40,463, or $18,440 –
respectively for families with 3 or more qualifying children, 2 or more qualifying
children, one qualifying child or no children.
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10. Individual Returns – Miscellaneous
§ Bankruptcy – Prince v. Commissioner, 133 T.C. No. 12 (2009) – An IRS lien, in
place before taxpayer filed bankruptcy remained in effect despite discharge of
taxpayer’s liability for personal tax debts.
§ AMT Patch – For 2009, the AMT exemption levels increased to $70,950, $46,700
and $35,475 respectively for married persons filing jointly, single persons and
married person filing separately.
§ Mileage – For 2009, the standard mileage rate for the business use of a car, van
pick-up or panel truck is 55 cents per mile. If for medical reasons or a deductible
move it is 24 cents per mile. If for charitable uses it is 14 cents per mile.
§ Personal Casualty or Theft Loss Must be More Than $500. This does not apply
to Ponzi scheme theft loss deductions.
§ Contract Attorney Denied Business Expense Deduction – Forrest v.
Commissioner, 98 T.C.M. (CCH) 316 (2009), deduction disallowed because activity
was not regular or continuous when work only lasted for a two-month period.
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11. Return Preparers and Work Product
Privilege
§ Electronic Filing Requirement for Return Preparers – The Worker,
Homeownership and Business Assistance Act of 2009 mandates that any
individual income tax return filed by a tax return preparer must be filed
electronically, unless the prepare reasonably expects to file fewer than 10
individual returns during the calendar year.
§ Work-Product Privilege
§ United States v. Textron, Inc., 577 F.3d 21 (1st Cir. 2009), en banc. An in-
house attorney’s tax accrual papers were not privileged when prepared to
compute tax reserve and comply with securities laws, as opposed to in
preparation for litigation.
§ Valero Energy Corp. v. United States, 103 AFTR 2d 2009-2683 (7th Cir. 2009).
Holding to the extent documents are used for both preparing tax returns and
litigation, such documents are not privileged.
§ United States v. Deloitte & Touche USA LLP, 623 F.Supp.2d 39 (D. D.C.
2009). Privilege upheld when Deloitte created memo that recorded thoughts
of client’s attorney regarding the prospect of litigation.
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12. Sale of Life Insurance Policies
Treatment of Insured Owned Policies
§ Rev. Rul. 2009-13 – concerns the tax treatment to the insured upon the
surrender or sale of whole life and term policies on his life.
§ Situation 1 – Upon surrender of a cash value policy the insured is treated
as having ordinary income in the amount of the excess of the surrender value
received over the total premiums paid.
§ Situation 2 – Upon the sale of the policy to an investor the insured income
is measured by subtracting the policy’s adjusted basis from the sale proceeds.
The adjusted basis is the total premiums paid reduced by the cost of
insurance while the policy was held.
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13. Sale of Life Insurance Policies
Treatment of Investor Owned Policies
§Rev. Rul. 2009-14 – concerns the tax treatment to the investor-purchaser of a
policy.
§ Situation 1 – Upon the insured’s death the investor-purchaser excludes
from income the purchase price of the policy and the additional premiums
paid, but is taxable on the balance of the proceeds as ordinary income.
§ Situation 2 – Upon the re-sale of a policy the investor-purchaser’s gain is
the excess of the sale price over the purchase price and additional premiums
paid. The gain is capital gain.
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14. Estate and Gift Tax Returns
§ Pay by Credit or Debit Card – Taxes due on a Form 1041 may now be paid by
credit or debit card; however, a convenience fee may apply.
§ $3.5 Million Estate Tax Exemption for Decedents Dying in 2009.
§ Final Treasury Regulations Issued under I.R.C. § 2053 – The Regulations apply
to estates for decedents dying on or after October 20, 2009 and explain when the
IRS will allow an estate tax deduction for claims against the estate and how to
determine the amount of the deduction.
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15. “S” Corporation Returns and Other
Small Businesses
§ Interest on Small Business Hardship Loans Excludable from Income – CCA
200943028 determined the small business borrower can exclude from gross income
the interest on a loan that the Small Business Administration pays to a lender
under the America’s Recovery Capital Loan Program.
§ One Class of Stock Rule Upheld By Fifth Circuit – The Fifth Circuit upheld the
Tax Court’s decision in Minton v. Commissioner that a corporation is treated as
having one class of stock if all outstanding shares confer identical rights as to
distribution and liquidation proceeds – even if pro rata distributions are not made.
§ Deductions for Trade or Business Expenses – In Woody v. Commissioner, 97
T.C.M. (CCH) 1484 (2009), the Tax Court disallowed business deduction expenses
associated with a real estate investment and rental business when taxpayer was
not actively engaged in the business and property was not held out for rent during
the tax year.
§ The IRS issued Regulations on Deemed NOL’s of S Corporations With
Excluded COD Income.
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16. Partnership and Other Pass-Through
Issues
§ Passive Activity Loss Rules – Presumptive passive treatment of lossses is
applicable to limited partners who are also general partners and to members of
LLPs and LLCs where State law does not bar the entity members from
participating in the entities' businesses. See Temp. Tres. Reg. § 1.469-5T; Hegarty v.
Commissioner, T.C. Summ. Op. 2009-153.
§ Maintenance of Capital Accounts – In Robertson v. Commissioner, 97 T.C.M.
(CCH) 1476 (2009) the Tax Court found, in part, that taxpayers failed to prove
sufficient adjusted basis such that a distribution would not be taxable. The Court
also found insufficient evidence that distributions were used to pay partnership
liabilities, as opposed to personal liabilities.
§ Discharge of Partnership Debt – The IRS issued proposed regulations under
I.R.C. § 108 providing that the fair market value of equity issued in discharge of a
partnership debt is the liquidation value. The creditor would recognize no gain or
loss from the exchange pursuant to I.R.C. § 721 and its capital account would be
credited with the liquidation value of the interest.
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17. Exempt Organization and Charitable
Giving
§ Haitian Relief Contributions Made Before March 10, 2010 Deductible on 2009
Returns – H.R. 4462 allows individuals who make charitable cash contributions to
aid Haitian earthquake victims to elect to claim an itemized charitable deduction
on their 2009 return instead of their 2010 return. The election only applies to
contributions made in cash after January 11, 2010 and before Mar ch 1, 2010.
§ Church Inquiries – IRS published proposed regulations under I.R.C. § 7611 that
would make the Exempt Organizations Director in the IRS Tax-Exempt and
Government Entities Division responsible for making the determination as to
whether a church could qualify for exempt status.
§ Golf Course Perpetual Conservation Easement Qualifies for Charitable
Contribution Deduction – In Kiva Dunes Conservation, LLC v. Commissioner, 97
T.C.M. (CCH) 1818 (2009), the Tax Court held a golf course owner was entitled to
a charitable contribution deduction for a perpetual conservation easement
covering the golf course.
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18. Estate Tax Update
To the surprise of many estate planners Congress did not act prior to the end
of 2009, resulting in a “repeal” of the estate and GST tax for 2010.
§ H.R. 4154 – The House of Representatives passed H.R. 4154 to permanently
extend the 2009 $3.5M exemption and 45% rate on December 3, 2009. The
permanent extension passed without a single Republican vote.
§ The Senate Failed to Pass H.R. 4154 Before the End of 2009 – A number of
Senators oppose the permanent extension and hope to get more favorable
provisions such as a $5M exemption and 35% top rate.
§ December 31, 2009 – The House Ways and Means and Senate Finance
Committees confirmed that they would not issue a letter addressing the estate tax
in 2010 due to an absence of agreement on what to do.
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19. Estate Tax Update
Republicans and Democrats each have strategies with regard to estate tax
legislation…we will have to wait to see which strategy prevails.
§ Senate Finance Committee Chairman, and long advocate of estate tax repeal, Max
Baucus describes the current environment as “massive, massive confusion.”
Republicans and conservative Democrats intend to use the one-year repeal as
leverage to insist on larger exemptions and lower rates…certainly if repeal is intact
for a year returning to a $1M exemption and 55% rate in an election year would be
unacceptable.
§ On the flip side, Democrats feel they have leverage in the situation because 60
votes will be required in the Senate to avoid the return of a $1M exemption and 55%
rate.
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20. Estate Tax Update
Democrats and Republicans also disagree as to whether an estate tax would
be applied retroactively in 2010…
§ Representative Pomeroy, who has been heavily active in estate tax legislation
proposing last year’s H.R. 436, has reportedly stated that the estate tax would not
be retroactively applied to January 1, 2010.
§ However, Senate Finance Committee Chair Max Baucus disagrees and argues
“the correct public policy is to achieve continuity with respect to the estate tax”
thus claiming Congress will “clearly work to do this retroactively.”
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21. Estate Tax Update
Is retroactive legislation constitutional???? Case law suggests it would be;
however, there is certainly an argument on both sides.
§ Untermyer v. Anderson, 276 U.S. 440 (1928) – The Supreme Court refused to
retroactively apply the gift tax at its inception in 1924. Prior to the enactment of
the gift tax only gifts made in contemplation of death were taxed.
§ U.S. v. Hemme, 106 S. Ct. 2071 (1985) – The Supreme Court upheld a retroactive
rate increase and contrasted the situation to Untermyer stating “Untermyer
involved the levy of the first gift tax; its authority is of limited value in assessing
the constitutionality of subsequent amendments that bring about certain changes
in operation of the tax laws, rather than the creation of a wholly new tax.
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22. Estate Tax Update
Is retroactive legislation constitutional???? Case law suggests it would be;
however, there is certainly an argument on both sides.
§ U. S. v. Carlton, 512 U.S. 26 (1994) – The Supreme Court upheld the retroactive
disallowance of a once allowed estate tax deduction. The Court again emphasized
the limitation of the Untermyer holding stating it was limited to “certain changes
in the law” distinguishing that situation from one in which there is not a “wholly
new tax.”
§ Quarty v. United States, 83 AFTR2d ¶ 99-597 (9th Cir. 1999) – The
constitutionality of a retroactive increase in the gift and estate tax rate was upheld.
The taxpayer who died on January 12, 1993 was impacted by the increase enacted
on August 10, 1993 but made effective as of January 1, 1993.
§ H.R. 4154 could play a role in retroactive legislation as tax legislation enactment
is sometimes made effective as of the date that legislative proposals come out of
the House Ways and Means Committee.
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23. Estate Tax Update
What is the current law?
§ Is “repeal” the correct term? I.R.C. § 2210 states that the estate tax “shall not
apply to estates of decedents dying after December 31, 2009” except as provided in
§ 2210(b) regarding QDOTs. The language is the same with regard to the GST tax,
I.R.C. § 2664 also makes the GST tax inapplicable to decedents dying after
December 31, 2009. NOTE – neither § 2210 or § 2664 revoke the chapter of the
Code imposing the estate tax and GST tax, they are still there just not applicable.
§ Gift Tax – The gift tax is still in effect with a $1M lifetime gift exclusion, the gift
tax rate is 35% for 2010.
§ Carryover Basis – The basis of property acquired from a decedent is the lesser
of the decedent’s adjusted basis or the fair market value of the property on the
decedent’s death. I.R.C. § 1022(a)(2). Two basis step ups are available through an
executor’s election - $1.3M and $3M, these will be discussed on a later slide.
§ Certain QDOT and Recapture provisions continue.
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24. Estate Tax Update
What is the current law?
§ Transfers to Non-Grantor Trusts. I.R.C. § 2511(c) applies to gifts made after
December 31, 2009 and treats a transfer in trust as a transfer of property by gift,
unless the trust is treated as wholly owned by the donor or the donor’s spouse.
Accordingly, transfers to non-grantor trusts are presumably subject to gift tax.
§ The purpose of this provision is reportedly to “prevent transfers from
shifting the income tax brackets applicable to investment income from the
donor’s bracket to the bracket of the trust or trust beneficiaries without
subjecting the transferred property to gift tax.” Akers, Estate Planning in the
Shadow of the One-Year “Repeal” of Estate and GST Tax in 2010.
§ Notice 2010-19 – The IRS confirms that gifts to grantor trusts during 2010
may be completed gifts and states that Regulations will be issued to confirm
the conclusions of the Notice.
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25. Estate Tax Update
Carryover Basis
§ $1.3 Million – The executor of an estate may allocate $1.3M, increased by certain
unused losses and loss carryovers, to the basis of property acquired from a
decedent. This is an increased basis of $1.3M and can be allocated to property
passing to anyone.
§ $3 Million – The executor of an estate may allocate $3M to the basis of
property acquired from a decedent passing to a surviving spouse, either outright
or in a QTIP trust. This is an increased basis of $3M.
§ Practice Tip – Wills should be reviewed to ensure they contain provisions
which would allow executors to make the aforementioned elections as well as
provisions to exonerate the executor of any consequences that arise from the
elections.
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26. Estate Tax Update
Reporting Requirements
§ The new I.R.C. § 6018 requires reporting of:
§ transfers at death of non-cash assets in excess of $1.3M
§ appreciated property received by the decedent that does not qualify for
the basis adjustments by reason of I.R.C. § 1022(d)(1)(C) and which was
required to be reported on a gift tax return.
§ The information that must be reported to the IRS includes the name and TIN of
recipient of property, description of the property, decedent’s adjusted basis in
property, sufficient information to determine if gain on sale treated as ordinary
income, amount of basis increase allocated to the property, and any other
information required by the Regulations.
§ A form has not been issued for this reporting requirement. However, penalties
do apply in the case of a failure to report.
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27. Estate Tax Update
GST Concerns
§ Repeal – In 2010 the Generation-Skipping Transfer Tax does not apply to
generation-skipping transfers.
§ Transfers to GST Trusts in 2010? The law is unclear as to whether allocations of
the GST exemption to trusts in 2010 will lose that exemption in 2011 to the extent
the election exceeds any applicable exemption present in 2011.
§ Payment of Life Insurance Premiums? Commentators have discussed whether
a gift should be made to a GST trust during 2010, especially with regard to
payment for life insurance premiums. Instead, some have recommended a sale or
loan to GST trusts to cover any expenses.
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28. Estate Tax Update
Planning Recommendations
§ Wills – Client wills should be reviewed to ensure that they contain provisions
in contemplation of the “repeal” of the estate tax. In addition, wills should contain
provisions giving the executor discretion to allocate the $1.3M and $3M carryover
basis adjustments and a provision to exonerate the executor with respect to such
elections.
§ Discount Entity Planning – There is still talk of the abolishment of discounts for
family limited partnerships and other non-active business entities. Therefore,
clients should be encouraged to continue discount entity planning despite the
current estate tax “repeal.” Although there may not be an estate tax currently, one
can still be retroactively enacted and if not, it is highly likely that an estate tax will
be enacted in the future.
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