Tuesday, July 06, 2010 Home Buyers Tax Credit
President Obama signed the bill on July 2 giving taxpayers, who qualify, until midnight on September 30, 2010 to take title to their new home. Thursday, July 01, 2010 Home Buyers Tax Credit
Update- Last night the Senate passed the extension as well. It is now going to the President for signature. Wednesday, June 30, 2010 Home Buyers Tax Credit
The $8,000 home tax credit expired on April 30, 2010. However, anyone who had a contract in place on that date could qualify for the credit as long as they closed title before July 1, 2010. As we all are aware, if you went to contract in late April it is very difficult to accomplish the closing by July 1. Many clients are faced with the dilemma caused by this restrictive closing date. Yesterday the House passed "The Home Buyer Assistance Act of 2010" which would extend the closing deadline to midnight on Sepember 30, 2010. The Senate is expected to pass a similar measure and once passed the President is expected to sign the bill.
As soon as this provision is signed into law (hopefully !) we will send out a further blog. Any thoughts? Friday, April 23, 2010 NYS Tax Update
Lara and Neil attended the NYS Bar Association NYS and NYC Tax Institute yesterday, and while none of these provisions have as of yet been passed, there are a number of proposals that appear likely to be included in the final budget bill. Among them are:
1) A provision that would make Covenant Not to Compete payments to Non-Residents New York Source Income if the payments relate to a NY business.
2) Substantial changes to the OIC program including eliminating the requirement that the taxpayer have either filed bankruptcy or been insolvent, and changing the calculation of the minimum offer from the Maximum Amount that can be Collected Under the Law to an amount that Reasonably Reflects Collection Potential.
3) The elimination of the client Opt-Out as an automatic ground for the abatement of the penalty for failure to e-file. (This provision is apparently in response to a concern about the abuse of the client opt-out).
4) Allowing same-sex couples whose marriages are now recognized in NY to file Joint NY State returns. The filing of these returns will require the preparation of a pro-forma Federal return.
In addition, there are currently two bills before the NYS Legislature (S.6951 & S.2409A) both of which are intended to reverse the current rule that makes LLC members and Limited Partners per se personally responsible for unpaid Payroll and Sales tax regardless of whether they would otherwise meet the definition of Responsible Persons.
Lastly, Acting Commissoner Woodward announced that the NYS website will soon contain a list (in searchable form) of EVERY taxpayer against whom a Tax Warrant has been filed.
These issues will all likely be decided in the next few weeks and months and they will be discussed in detail at future seminars. Wednesday, March 03, 2010 First Time Home Buyer Credit update
The IRS has reposted Form 5405 (First-Time Homebuyer Credit and Repayment Credit) with a special note concerning the attachment of the settlement statement. The Form's instructions requires that a signed settlement statement be attached to 2009 returns claiming the credit. The special note recognizes the fact that depending on the jurisdiction the settlement statement may not contain the signatures of the buyer and seller. Where signatures are not on the settlement statement the IRS is requesting that the buyer sign the settlement statement before it is attached to the return. The full note is reproduced below:
"While the Form 5405 instructions indicate that a properly executed settlement statement should show the signatures of all parties, the IRS recognizes that the elements of the settlement document, often a Form HUD-1, may vary from jurisdiction to jurisdiction and may not reflect the signatures of the buyer and the seller. The settlement statement that must be attached to the return is considered to be properly executed if it is complete and valid according to local law. In locations where signatures are not required, the IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return even in cases where the settlement form does not include a signature line." Tuesday, February 16, 2010 Pay-As-You-Go (PAYGO)On February 12, President Obama signed into law the Statutory Pay-As-You-Go Act of 2010. The bill requires that any new non-emergency legislation affecting tax revenue not increase the federal deficit. In other words, any tax reduction provisions must be paid for by other tax increases.
It is interesting to note that the following tax provisions have been exempted from PAYGO:
Extension of the 2009 Estate and Gift Tax provisions;
An Alternative Minimum Tax patch;
A permanent extension of the Section 179 increases; and
Making permanent any middle class tax cuts (i.e. reduced capital gains and dividend rates, educational incentives, elimination of limits on personal and dependency exemptions and itemized deductions, and tax rate reductions). Tuesday, January 19, 2010 IR 2010-6 Home Sale ExclusionThe IRS has issued the new Form 5405, First Time Homebuyer Credit and Repayment of the Credit. This form is to be used to claim the first-time and second-time homebuyer credit on 2009 Income Tax Returns. The IRS announced that it will begin processing 2009 returns that claim the credit in mid-February. 2009 returns claiming the credit cannot be filed electronically.
One of the following documents must be attached to the new form:
1. A copy of the settlement statement showing all parties' names, addresses and signatures, the address of the property, the sales price and the date of purchase.
2. For newly constructed homes where a settlement statement is not available, a copy of the certificate of occupancy showing the owner's name, property address and date of the certificate.
To qualify for the "long-time resident credit" (the second-time homebuyer credit) the IRS is requesting the following documents to prove the 5 consecutive-year period out of the eight prior years requirement:
1. Copies of Form 1098, Mortgage Statement for the applicable years, or
2. Copies of property records, or
3. Homeowner's Insurance records.
To view a copy of the new form go to the following IRS website address:
http://www.irs.gov/pub/irs-pdf/f5405.pdf
Wednesday, December 30, 2009 2010 Where do we go from here?Here we are on December 30, 2009 and there has been no change to the upcoming one-year repeal of the Federal Estate Tax. If anyone had told me, at any time within the past ten years, that I would be discussing the repeal at this time I would have told them they were crazy. But it appears that the truly crazy people are our elected officials in Washington.
Let me give you something to think about and we would like to hear what you have to say in this matter. There are two possible senarios that we must contemplate:
First- Congress will do nothing in 2010 to the estate tax. If this happens there will be a one year moratorium and many plugs will be pulled. For people dying in 2010 there will be no estate tax, the beneficiaries (with limited exceptions) will inherit assets with a carry-over basis (instead of a stepped-up basis) and gifts over and above the annual exemptions and life-time exemption will be taxed at a rate of 35%. On January 1, 2011 the estate and gift taxes will revert to the rules that were in place ten years ago (Exemption of $1,000,000 and maximum tax rate of 55%).
Second- During 2010 Congress will enact a "permanent estate and gift tax law." Based upon bills introduced into the House and the Senate, in 2009, the exemption may stay at the $3.5 million level, the tax rate will be at most 45%, possibly lower, and stepped up basis will be reinstated.
Generally, the government does not like to pass tax legislation retroactively (unless it benefits taxpayers). Ponder this: A taxpayer dies early in 2010. Congress enacts an estate tax subsequent to the date of the taxpayer's death. What is going to happen?
Will the estate tax be applied retroactively? Will there be some blending of tax rates to soften the blow to the estate? Can you have two taxpayers who died in 2010, both with identical estate values, where one dies before the enactment and one dies after, where their estates are taxed differently?
Welcome to the State of Confusion. Your comments would be welcome.
Bob Katz
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