Friday, January 20, 2012 February AFR
The February AFR's were released yesterday. The rates remain at a historic low. The short-term rate (.19%) and the Section 7520 rate (1.4%) remain the same as last month. The mid-term rate (1.12%) and long-term rate (2.58%) have gone down slightly. With the gift tax exemption increased to $5,120,000, in 2012, this is an exceptional time to do life-time estate planning with your clients. While you are meeting with them for the preparation of their income tax returns you should be discussing the fact that with rates this low they should be considering estate planning techniques that are available.
As always Neil and I remain available to assist you and your clients in this regard.
Bob Katz
Monday, January 16, 2012 Form 8939 - Allocation of Increase in Basis for Property Acquired From a Decedent
Reminder: If you have a client who died in 2010 and the executor wants to elect out of the estate tax and into the carry-over basis regime, Form 8939 must be filed. The deadline for filing the return is tomorrow, January 17. There are no extensions of time to file this form. In addition, as I have stated in a previous blog, the only way to elect out of the estate tax, for 2010 decedents, is to timely file this form.
Bob Katz
Tuesday, January 10, 2012 Foreign Account Voluntary Disclosure Initiative
At our recent seminars I spent a considerable amount of time talking about the offshore voluntary disclosure initiatives that had expired and the extremely large penalties that can be asserted. Commissioner Shulman stated that there would be no more disclosure initiatives available after the second one ended in 2011.
Good News!!!!!! Yesterday the IRS announced that it had reopened the Offshore Voluntary Disclosure Initiative. The 2009 and 2011 programs have accounted for $4.4 billion of revenue so far. While the reopened program will be generally the same as the 2011 program, the penalty will 27.5% of the highest amount in the accounts in the previous 8 years (this is a 10% increase from the 25% penalty that applied in the 2011 program). In certain cases the penalty could be as low as 5% or 12.5%.
At this time the IRS has not set a date for the end of this initiative. As always, Neil and I remain available to assist you and your clients in regards to applying for this program and receiving the relief available.
Bob Katz
Wednesday, December 21, 2011 New Foreign Financial Asset Reporting
The Internal Revenue Service has released the final version of, and instructions for, Form 8938 (Statement of Specified Foreign Financial Assets) which must be used by individuals to report specified foreign financial assets for tax year 2011. With a joint return, only one Form need be filed. Until regulations are promulgated, this disclosure requirement does not apply to domestic entities formed or used to hold such assets.
The requirement to file Form 8938, which is an attachment to the tax return, applies to any year in which an individual has an interest in specified foreign assets the aggregate value of which exceeds an applicable reporting threshold amount. The threshold amount depends upon whether the individual lives in the United States or files a joint income tax return. The Form need not be filed if there is no income tax return filing requirement.
The specified foreign assets include any financial account at a foreign financial institution, individually owned stock or securities issued by foreign persons, any foreign issued financial instrument or contract, and any interest in a foreign entity.
Failure to file the disclosure form could result in a $10,000 penalty with an additional penalty of up to $50,000 for continued failure to file after IRS notification, unless there is reasonable cause for not filing the form.
Monday, December 12, 2011 NYS Tax Changes
Governor Cuomo has signed legislation restructuring the personal income tax for the tax year 2012 -2014. In addition, significant changes to the MCTMT will apply to small businesses.
These changes along with a number of other developments in NYS taxation will be discussed in detail at our Year End NYS/Entity Tax Update on December 14, 2011 at the Uniondale Marriott and January 6, 2012 at the Melville Marriott.
We hope to see you there.
N
Tuesday, November 22, 2011 Super Committee - Take 2
As you all know by now, the Super Committee has failed in its task regarding deficit reduction. Politics as usual! It now appears that there may not be any significant tax legislation, income or estate related, until after the Presidential election. Planning in a vacuum continues.
Tuesday, November 22, 2011 Thanksgiving
Neil, Lara and I want to take this opportunity to wish you all a Happy Thanksgiving.
Monday, November 14, 2011 Super Committee report
The Joint Select Committee on Deficit Reduction, commonly known as the Super Committee, was created by the Budget Control Act of 2011. The committee was charged with issuing recommendations for at least $1.5 trillion in deficit reduction steps to be undertaken over a ten-year period. Their report is due next week (November 23). Areas to be considered by the committee include raising taxes and tax reform including the simplication of the tax code and the elimination of tax breaks and loopholds.
Over the past few weeks a number of rumors have appeared, from sources allegedly close to the committee, as to changes in the tax laws that will be presented in the report. I am sure you have read some of these rumors. For example, one report has the estate tax exemption going back to the $1 million level starting next year. Another has the exemption going back to $3.5 million effective the date the report is issued. And so on and so on!
However, if you believe the reports that have recently been published in the New York Times, The Wall Street Journel, and the Washington Post, there will be no specific tax proposals coming in the report. Instead, the committee will decide on the amount of revenue to be raised but will leave to the tax-writing committees of Congress to fill in the details next year.
Here we go again! When the report is issued we will be back with further comments.
Bob Katz
Friday, November 11, 2011 Networking Event
We thought that you would be interested in an upcoming networking event for accountants and attorneys only. OnTuesday, November 29, there will be a "Networking Wine Tasting Reception" at the Crest Hollow Country Club. This event is run by the Attorneys and Accountants Joint Committee in cooperation with the NYSSCPAs, Nassau and Suffolk Chapters and the Nassau and Suffolk County Bar Associations and the Suffolk County Women's Bar.
The event will start with a cocktail party from 6 P.M. to 7 P.M. followed by a buffet and presentation by Elyse Luray, the author of "Great Wines Under $20." Following that there will be networking until 8:30 P.M. The cost of the event is $50 per person if you register before the event or $60 at the door.
This should be an excellant night of networking for you. We are one of the sponsors of the event and if you attend please stop by our table to meet with us.
If you are interested in coming to this event please contact Kathleen Becker at Marcum LLP. Her phone number is 631-414-4404 and her email address is Kathleen.Becker@marcumllp.com.
Bob Katz
Tuesday, November 01, 2011 Inflation Adjustments
The IRS is issuing Rev. Proc. 2011-52 which will provide inflation adjustment amounts for various items beginning in 2012. Some of the adjustments are particularly important to estate planning.
While the gift tax annual exclusion amount will remain at $13,000 for the 4th consecutive year, the exemption equivalent of the unified credit for gift and estate tax purposes is being adjusted to $5,120,000. In addition the GST exemption amount is increasing to $5,120,000.
It is also important to remember that interest rates are at a historic low, values are still not rising and discounts on intra-family transfers are still viable. Now is an incredible time for clients to be doing estate planning!
If we can be of any assistance to you or your clients, do not hesitate to contact Bob or I.
Neil
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