Ronald J. Cappuccio, J.D., LL.M.(Tax)

Ronald J. Cappuccio, J.D., LL.M.(Tax)
Tax Attorney and Business Lawyer

Tuesday, November 22, 2016

Is cash for keys cancellation of debt income?

When a house is foreclosed, or there is a deed in lieu of foreclosure, some mortgage companies make a deal with the owner or tenant. Usually the deal works like this: the owner agrees to leave the property on a certain date and broom swept condition without taking any of the appliances, copper pipes, etc. If the  home was left in the promise condition, the homeowner or tenant will receive a certain stipend from the mortgage company. Sounds good, right?

Nevertheless, the mortgage company than typically issues a 1099 for the cancellation of indebtedness income for the amount of the foreclosure and an additional 1099-MISC for the alleged miscellaneous income and cash for keys. The IRS has taken the position that the cash for keys income as ordinary income and should be taxed. In the case of Bobo vs. Commissioner, the US Tax Court determined that the foreclosure and the additional cash for keys payment were really one transaction. Since in that case, the taxpayer had an actual loss on the sale of their home, even with cash for keys payment there was no additional income.

Any time taxpayer receives a 1099s for a home foreclosure, settlement with a credit card company, or other loan, the matter should always be reviewed with a good tax lawyer to see if they amount of the 1099s is actually taxable or not.


Monday, November 21, 2016

NJ Ends Urban Enterprise Zones

The New Jersey Division of Taxation announced the end of urban enterprise zones for sales tax:

  • Bridgeton
  • Camden
  • Newark
  • Plainfield
  • Trenton

The former 3% rate for these urban enterprise zones for sales tax will be changed to the full rate of 6.875% starting January 1, 2017. It is possible that the New Jersey legislature a change this position, but it was part of the negotiated deal by the legislature when it radically increased the New Jersey gasoline tax.

Tuesday, November 01, 2016

New Jersey Phasing Out NJ Estate Tax

New Jersey has long had the highest state estate tax in the country. Any estate over $675,000 would owe tax to the state of New Jersey. This could be very substantial and was a significant reason for many taxpayers, especially retirees, to move from New Jersey to more tax-advantaged states such as Florida. Tax lawyers, and estate planners, have been arguing for many years that this is really costing New Jersey a lot in revenue and negatively affects the state.

Finally, after years of arguing, the New Jersey legislature passed a bill, signed by Governor Christie, that would reduce the New Jersey estate tax. Beginning January 1, 2017, only estates in excess of $2 million would be subject to the New Jersey estate tax. Starting January 1, 2018, if it is not repealed, the New Jersey estate tax would be eliminated.

There was a lot of political wrangling in order to get this passed. There is a slight reduction in New Jersey sales tax rate, but not the fact that many items are tax New Jersey that are not taxed elsewhere, and the legislature increased the gasoline tax by $0.30 a gallon. Instead of tightening their belts, the legislature chose to increase taxes in order to eliminate the estate tax. My choice would have been to simply cut the state budget!

Everyone within the state above $675,000 should have their Wills and Trusts, and entire Estate Plan reviewed immediately. Many of the actions we have taken to avoid New Jersey estate tax are no longer necessary. This is particularly true for estates with values between $675,00 and $5.5 million.

Monday, October 31, 2016

Sugar Tax Helps Beverage Companies!

The Internet is filled with reports from a recent article in the Journal of American Public Health showing that a sugar tax cuts consumption of sugar sweetened soda. This plays right into the hands of Bradford manufacturers! You are probably thinking I am crazy, but once again government does the wrong thing.

Sweetened sodas and diet sodas are sold for the same price. Nevertheless, diet sodas are much cheaper to manufacture than sodas with high fructose corn syrup and sodas with cane sugar. Therefore the tax on sweetened soft drinks increases the number of people drinking a diet soda, which is more profitable to the beverage industry, then naturally sugar sweetened soda and drinks.

So, governments by misusing taxes to force people to change behavior, have in fact increase the profit of beverage manufacturers and increase diet drinks rather than healthier all-natural sugar sweetened drinks. Obviously, the intake of the sugar sweetened drinks should be limited, but every study that is ever been done shows that diet sodas do not help people lose weight.

Let's get government out of taxing things to force people to change behavior. Let's just have taxes simply to collect the minimum money needed to run our government!

If you want to see the article in the Journal of American public health:
bit.ly/2ekY7Nu 

Wednesday, October 26, 2016

Is your LLC and S Corporation going to be Taxed at 25%?

Congress refuses to actually simplify the Internal Revenue Code. Since the 1986 tax Reform Act, Congress has passed more than 30,000 amendments to the Internal Revenue Code. Instead of simplification, Congress is now proposing a disguise tax increase for businesses.

Under our present federal corporate structure, if an individual owns a limited liability company or a sole proprietorship, the entity is not tax separately. Rather the income is added to the individual's own tax. That is also true for partnerships and limited partnerships. Congress wants to change this to add a 25% tax at the business level. This will mean that small businesses will now be facing the same double tax problem that large businesses have. In addition there will have to be a whole series of new forms and a complete rewrite of a portion of the Internal Revenue Code for this new scheme.

Instead of moving in the right direction, Congress is moving in the wrong direction!

Please see this interesting article discussing some of these issues in further detail:

http://news.cchgroup.com/2016/10/26/ways-means-now-building-legislation-based-gop-tax-reform-blueprint-staffer-says/?utm_campaign=Tax+News+Headlines+October+2016&utm_medium=EM-BRANDING&utm_source=TNH+10/26/2016+6:37:09+AM

Friday, October 21, 2016

Changes to the 1040

WHAT'S NEW ON THE 2016 DRAFT FORM 1040 AND RELATED FORMS AND SCHEDULES

IRS has released on its website a number of draft tax forms and instructions for the 2016 tax year, including Form 1040 and its related schedules.
This Practice Alert, which appears in two parts, highlights key changes made on the 2016 return. The first Part examined the draft Form 1040 itself. This Part II covers related draft forms and schedules.

FORM 1040—SCHEDULE A, ITEMIZED DEDUCTIONS
Line 1. Medical and dental expenses. The 2016 standard mileage rate for medically-related use of an auto is 19¢ per mile.
Line 21. Unreimbursed employee expenses. The 2016 standard mileage rate for business travel is 54¢ per mile.
Line 29. Limit on itemized deductions. Itemized deductions for taxpayers with adjusted gross incomes in excess of the "applicable amount" ($311,300 for joint filers or a surviving spouse, $285,350 for a head of household, $259,400 for a single individual who isn't a surviving spouse, and $155,650 for marrieds filing separately) may be reduced.
FORM 1040—SCHEDULE B, INTEREST AND ORDINARY DIVIDENDS
Line 1. Interest. Accrued interest on Series EE U.S. savings bonds issued in '86 is taxable.
Line 3. Excludable interest on Series EE or Series I U.S. savings bonds. The exclusion for education-related savings bond interest phases out at higher income levels. For 2016, the phaseout begins at modified AGI above $77,550 ($116,300 on a joint return).
FORM 1040—SCHEDULE C, PROFIT OR LOSS FROM BUSINESS
Line D. Employer ID number. For 2016, the Line D instructions provide that the sole owner of a limited liability company (LLC) that is not treated as a separate entity for federal income tax purposes, and that has an Employer ID number (EIN) issued in the LLC's legal name because it is required to file employment tax returns and/or certain excise tax returns, should enter the LLC's EIN here. In prior years, the Schedule C, Line D instructions provided that such a taxpayer wasn't to enter that EIN on Line D. Instead, the owner of such an LLC was instructed to enter here the EIN issued to him in his name as a sole proprietor, if there was such an EIN.
Part II. Expenses. Line 9. Car and truck expenses. The 2016 standard mileage rate for business travel is 54¢ per mile.
Part II. Expenses. Line 13. Depreciation and section 179 expense. See entries for Form 4562, below.
Part II. Expenses. Line 27a. Other expenses. Historically, taxpayers could elect to deduct costs of certain qualified film and television productions. Beginning in 2016, taxpayers can also elect to deduct costs of certain qualified live theatrical productions that have their first public performance for a paying audience in 2016.
FORM 4562, DEPRECIATION AND AMORTIZATION
Part I. Election to expense certain tangible property under Sec. 179. For tax years beginning in 2016, the maximum section 179 expense deduction is $500,000 ($535,000 for qualified enterprise zone property). This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,010,000.
Line 14. Special depreciation allowance for qualified property. Taxpayers can elect to claim the special depreciation allowance for certain specified plants bearing fruit and nuts that are planted or grafted after Dec. 31, 2015.
Part V. Listed property. First-year luxury auto limits for vehicles first placed in service in 2016 are $3,160 for autos and $3,560 for light trucks or vans.
Form 1040—SCHEDULE E, SUPPLEMENTAL INCOME AND LOSS
Standard mileage rate. The 2016 standard mileage rate for miles driven in connection with the taxpayer's rental activities is 54¢ per mile.
FORM 1040—SCHEDULE F, PROFIT OR LOSS FROM FARMING
Part II. Farm Expenses—Cash and Accrual Method. Line 10. Car and truck expenses. The 2016 standard mileage rate for business travel is 54¢ per mile

This is from a daily RIA alert which I find helpful.

Wednesday, October 19, 2016

Nanny Tax Threshold $2000 for 2017

You remember all the famous cases about politicians not reporting domestic employees for Social Security taxes? The unofficial term is the "nanny tax." The rule, as announced by the Social Security Administration, is quite simple. If you pay any individual domestic employee, such as a house cleaner gardener or babysitter less than $2000 per year, it does not have to be reported to the Social Security Administration and you do not have to collect and remit Social Security taxes. This is on a per employee basis. So, for example if you had one babysitter that you paid $1800 to during the course of the year and another one that you paid $1000, even though the combined total is $2800, more than $2000, you still do not have to report that. On the other hand if it were just one employee hired for $2800 you would have to report the entire $2800 and withhold Social Security and pay the employer's matching portion.

See the Social Security administration official announcement:

https://www.ssa.gov/OACT/COLA/CovThresh.html

Friday, October 07, 2016

Disaster victims in Florida qualify for tax relief

This is an article just announced on the Thompson Reuters Website:


DISASTER VICTIMS IN FLORIDA QUALIFY FOR TAX RELIEF

IRS has announced on its website that victims of Hurricane Hermine in counties of Florida that are designated as federal disaster areas qualifying for individual assistance have more time to make tax payments and file returns. Certain other time-sensitive acts also are postponed. This article summarizes the relief that's available and includes up-to-date disaster area designations and extended filing and deposit dates for all areas affected by storms, floods and other disasters in 2016.
Who gets relief. Only taxpayers considered to be affected taxpayers are eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts. Affected taxpayers are those listed in Reg. § 301.7508A-1(d)(1) and thus include:
  • Any individual whose principal residence, and any business entity whose principal place of business, is located in the counties designated as disaster areas;
  • Any individual who is a relief worker assisting in a covered disaster area, regardless of whether he is affiliated with recognized government or philanthropic organizations;
  • Any individual whose principal residence, and any business entity whose principal place of business, is not located in a covered disaster area, but whose records necessary to meet a filing or payment deadline are maintained in a covered disaster area;
  • Any estate or trust that has tax records necessary to meet a filing or payment deadline in a covered disaster area; and
  • Any spouse of an affected taxpayer, solely with regard to a joint return of the husband and wife.
What may be postponed. Under Code Sec. 7508A, IRS gives affected taxpayers until the extended date (specified by county, below) to file most tax returns (including individual, estate, trust, partnership, C corporation, and S corporation income tax returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date falling on or after the onset date of the disaster (specified by county, below), and on or before the extended date.
IRS also gives affected taxpayers until the extended date to perform other time-sensitive actions described in Reg. § 301.7508A-1(c)(1) and Rev Proc 2007-56, 2007-34 IRB 388, that are due to be performed on or after the onset date of the disaster, and on or before the extended date. This relief also includes the filing of Form 5500 series returns, in the way described in Rev Proc 2007-56, Sec. 8. Additionally, the relief described in Rev Proc 2007-56, Sec. 17, relating to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.
The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 or 5498 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. IRS, however, will abate penalties for failure to make timely employment and excise deposits, due on or after the onset date of the disaster, and on or before the deposit delayed date (specified by county, below), provided the taxpayer made these deposits by the deposit delayed date.
Affected areas and dates for storms, floods and other disasters occurring in 2016 (or in 2015, with extended dates going into 2016) that are federal disaster areas qualifying for individual assistance, as published on IRS's website, are carried below.
RIA observation: Effective for disasters declared in tax years beginning after Dec. 31, 2007, the term "federally declared disaster" replaced the previously used "presidential disaster area" term (see Code Sec. 1033(h)(3), as amended by Sec. 706(d)(1), Div. C, P.L. 110-343). The new term is substantially the same as the definition of "presidentially declared disaster" under former law. (T.D. 9443, 01/4/2009, see Weekly Alert ¶ 1 01/22/2009)
Arkansas: The following are federal disaster areas qualifying for individual assistance on account of severe storms, tornadoes, straight-line winds and flooding that took place beginning on Dec. 26, 2015: Benton, Carroll, Crawford, Faulkner, Jackson, Jefferson, Lee, Little River, Perry, Sebastian, and Sevier counties.
For these Arkansas counties, the onset date of the disaster was Dec. 26, 2015, the extended date was May 16, 2016 (which includes the 2015 income tax returns normally due on Apr. 18, the Jan. 15 and Apr. 18 deadlines for making quarterly estimated tax payments, the Feb. 1 and May 2 deadlines for quarterly payroll and excise tax returns, and the special Mar. 1 deadline for farmers and fishermen who choose to forgo making estimated tax payments). The deposit delayed date was Jan. 11, 2016.
California: The following are federal disaster areas qualifying for individual assistance on account of the Valley and Butte fires that took place beginning on Sept. 12, 2015: Calaveras and Lake counties.
For these California counties, the onset date of the disaster was Sept. 12, 2015, the extended date was Jan. 15, 2016 (which includes individual returns on extension to October 17, the September 15 deadline for making quarterly estimated tax payments, the 2015 corporate and partnership returns on extension through September 15, and for quarterly payroll and excise tax returns). The deposit delayed date was Sept. 28, 2015.
Florida: The following are federal disaster areas qualifying for individual assistance on account of Hurricane Hermine that took place beginning on Aug. 31, 2016: Citrus, Dixie, Hernando, Hillsborough, Leon, Levy, Pasco, and Pinellas counties.
For these Florida counties, the onset date of the disaster was Aug. 31, 2016, the extended date is Jan. 17, 2017 (which includes the Sept. 15 estimated tax deadline, the 2014 corporate and partnership returns on extension thru Sept. 15, and the Oct. 15 deadline for those who received an extension to file their 2014 return). The deposit delayed date was Sept. 15, 2016.
Louisiana: The following are federal disaster areas qualifying for individual assistance on account of severe storms and flooding that took place beginning on Mar. 8, 2016: Allen, Ascension, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Calcasieu, Caldwell, Catahoula, Claiborne, De Soto, East Carroll, Franklin, Grant, Jackson, La Salle, Lincoln, Livingston, Madison, Morehouse, Natchitoches, Ouachita, Rapides, Red River, Richland, Sabine, St. Helena, St. Tammany, Tangipahoa, Union, Vernon, Washington, Webster, West Carroll, and Winn parishes.
For these Louisiana parishes, the onset date of the disaster was Mar. 8, 2016, and the extended date was July 15, 2016 (which includes 2015 income tax returns normally due on April 18, the April 18 and June 15 deadlines for making quarterly estimated tax payments, and a variety of business tax deadlines including the May 2 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was Mar. 23, 2016.
Louisiana: The following are federal disaster areas qualifying for individual assistance on account of severe storms and flooding that took place beginning on Aug. 11, 2016: Acadia, Ascension, Avoyelles, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Pointe Coupee, St. Helena, St. James, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermilion, Washington, West Baton Rouge, and West Feliciana parishes.
For these Louisiana parishes, the onset date of the disaster was Aug. 11, 2016, and the extended date is Jan. 17, 2017 (which includes individual returns on extension to Oct. 17, the Sept. 15 deadline for making quarterly estimated tax payments, the 2015 corporate and partnership returns on extension through Sept. 15, and the Oct. 31 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was Aug. 26, 2016.
Mississippi: The following are federal disaster areas qualifying for individual assistance on account of recent storms that took place beginning on Dec. 23, 2015: Benton, Coahoma, Marshall, Monroe, Panola, Prentiss, Quitman, and Tippah counties.
For these Mississippi counties, the onset date of the disaster was Dec. 23, 2015, and the extended date was May 16, 2016 (which includes the 2015 income tax returns normally due on Apr. 18, the Jan. 15 and Apr. 18 deadlines for making quarterly estimated tax payments, and a variety of business tax deadlines including the Feb. 1 and May 2 deadlines for quarterly payroll and excise tax returns and the special Mar. 1 deadline for farmers and fishermen who choose to forgo making estimated tax payments). The deposit delayed date was Jan. 7, 2016. (IR 2016-2)
Mississippi: The following are federal disaster areas qualifying for individual assistance on account of recent storms that took place beginning on Mar. 9, 2016: Bolivar, Clarke, Coahoma, Forrest, George, Greene, Jones, Marion, Panola, Pearl River, Perry, Quitman, Sunflower, Tallahatchie, Tunica, Wayne, and Washington counties.
For these Mississippi counties, the onset date of the disaster was Mar. 9, 2016, and the extended date was July 15, 2016 (which includes the 2015 income tax returns normally due on Apr. 18, the Apr. 18 and June 15 deadlines for making quarterly estimated tax payments, and a variety of business tax deadlines including the May 2 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was Mar. 24, 2016.
Missouri: The following are federal disaster areas qualifying for individual assistance on account of recent storms that took place beginning on Dec. 23, 2015: Barry, Barton, Camden, Cape Girardeau, Cole, Crawford, Franklin, Gasconade, Greene, Hickory, Jasper, Jefferson, Laclede, Lawrence, Lincoln, Maries, McDonald, Morgan, Newton, Osage, Phelps, Polk, Pulaski, Scott, St. Charles, St. Francois, St. Louis, Ste. Genevieve, Stone, Taney, Texas, Webster, and Wright counties.
For these Missouri counties, the onset date of the disaster was Dec. 23, 2015, and the extended date was May 16, 2016 (which includes 2015 income tax returns normally due on April 18, the Jan. 15 and Apr. 18 deadlines for making quarterly estimated tax payments, and a variety of business tax deadlines including the Feb. 1 and May 2 deadlines for quarterly payroll and excise tax returns and the special March 1 deadline for farmers and fishermen who choose to forgo making estimated tax payments). The deposit delayed date was Jan. 7, 2016. (IR 2016-9)
South Carolina: The following are federal disaster areas qualifying for individual assistance on account of severe storms and flooding that took place beginning on Oct. 1, 2015: Bamberg, Berkeley, Calhoun, Charleston, Clarendon, Colleton, Darlington, Dorchester, Fairfield, Florence, Georgetown, Greenville, Greenwood, Horry, Kershaw, Lee, Lexington, Marion, Newberry, Orangeburg, Richland, Spartanburg, Sumter and Williamsburg counties.
For these South Carolina counties, the onset date of the disaster was Oct. 1, 2015, and the extended date was Feb. 16, 2016 (which includes the Oct. 15 deadline for those who received an extension to file their 2014 return). The deposit delayed date was Oct. 16, 2015.
Texas: The following are federal disaster areas qualifying for individual assistance on account of severe storms, tornadoes, straight-line winds and flooding that took place beginning on Oct. 22, 2015: Bastrop, Brazoria, Caldwell, Cameron, Comal, Galveston, Guadalupe, Hardin, Harris, Hays, Hidalgo, Liberty, Navarro, Travis, Willacy, and Wilson counties.
For these Texas counties, the onset date of the disaster was Oct. 22, 2015, and the extended date was Feb. 29, 2016. The deposit delayed date was Nov. 6, 2015.
Texas: The following are federal disaster areas qualifying for individual assistance on account of severe storms, tornadoes, and flooding that took place beginning on Mar. 7, 2016: Erath, Gregg, Harrison, Henderson, Hood, Jasper, Limestone, Marion, Newton, Orange, Parker, Shelby, and Tyler counties.
For these Texas counties, the onset date of the disaster was Mar. 7, 2016, and the extended date was July 15, 2016 (which includes the 2015 income tax returns normally due on April 18, the April 18 and June 15 deadlines for making quarterly estimated tax payments, and a variety of business tax deadlines including the May 2 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was Mar. 22, 2016.
Texas: The following are federal disaster areas qualifying for individual assistance on account of storms that took place beginning on Apr. 17, 2016: Anderson, Austin, Cherokee, Colorado, Fayette, Fort Bend, Grimes, Harris, Liberty, Montgomery, Parker, San Jacinto, Smith, Walker, Wharton, Wood counties.
For these Texas counties, the onset date of the disaster was Apr. 17, 2016, and the extended date was Sept. 1, 2016 (which includes 2015 income tax returns normally due on April 18, the April 18 and June 15 deadlines for making quarterly estimated tax payments, and a variety of business tax deadlines including the May 2 and Aug. 1 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was May 2, 2016. (IR 2016-67)
Texas: The following are federal disaster areas qualifying for individual assistance on account of the severe storms and flooding that took place beginning on May 26, 2016: Austin, Bastrop, Brazoria, Brazos, Burleson, Eastland, Fayette, Fort Bend, Grimes, Harris, Hidalgo, Hood, Kleberg, Lee, Liberty, Montgomery, Palo Pinto, Parker, San Jacinto, Stephens, Travis, Tyler, Waller, and Washington counties.
For these Texas counties, the onset date of the disaster was May 26, 2016, and the extended date is Oct. 17, 2016 (which includes the June 15 and Sept. 15 deadlines for making quarterly estimated tax payments, the 2015 corporate and partnership returns on extension through Sept. 15, and the Aug. 1 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was June 10, 2016.
West Virginia: The following are federal disaster areas qualifying for individual assistance on account of the severe storms, flooding, landslides, and mudslides that took place beginning on June 22, 2016: Clay, Fayette, Greenbrier, Jackson, Kanawha, Lincoln, Monroe, Roane, Summers, Nicholas, Pocahontas, and Webster counties.
For these West Virginia counties, the onset date of the disaster was June 22, 2016, and the extended date is Nov. 15, 2016 (which includes individual returns on extension to Oct. 17, the Sept. 15 deadline for making quarterly estimated tax payments, the 2015 corporate and partnership returns on extension through Sept. 15, and the Aug. 1 deadlines for quarterly payroll and excise tax returns). The deposit delayed date was July 7, 2016.
References: For postponement of tax deadlines due to disasters, see FTC 2d/FIN ¶ S-8500; United States Tax Reporter ¶ 75,08A4; TG ¶ 1944.


Thursday, October 06, 2016

Trump's Tax Returns

The controversy swirling around Donald Trump's tax returns is getting more and more ridiculous. First, Donald Trump is continually being audited by the IRS and many state tax agencies. There is absolutely no way his tax attorneys would ever let him release his tax returns in the middle of an audit. That is foolish and would be legal malpractice.

Hillary likes to focus on Donald Trump not releasing his tax return to avoid the fact that she and Bill Clinton have earned hundreds of millions of dollars in speaking fees since Bill's retirement from the Presidency. The Clintons have also taken big advantage of our federal tax laws such as bear $700,000 tax deductible loss in 2015.

The facts are very simple: the Internal Revenue Code and state tax laws are far too complex. Clinton is talking about increasing taxes and making things more complex. Trump is talking about decreasing taxes. But no one is addressing tax simplification except for Libertarian party candidate Gary Johnson. It is time for the American people to realize that our tax system is broken. It is too complex, too confusing and requires too much time effort and money on the part of taxpayers to have to comply with complicated and confusing tax laws. It is time that we stop focusing on tax returns and start focusing on simplifying our tax laws and reducing taxes and compliance expenses!

Friday, September 23, 2016

Candidate Clinton wants to increase Estate/Death Taxes

Not surprisingly, Hillary Clinton is proposing to increase federal estate taxes from 40% to 45%. Right now, the rate starts at 40% for people who die with an estate, including all assets such as insurance, in excess of $5.45 million. Clinton has repeatedly stated she wants to reduce this exemption to a lower figure so more people have to pay tax and she now is revealing that she wants to also increase the estate tax rate.

Many people forget that prior to President Reagan's estate tax reform in the 1980s, anyone within an   of $60,000 or more had to file a federal estate tax return and was subject to federal estate tax. This affected most people. As a result of the estate tax reform, very few people need to file federal estate tax returns. In states where the cost of housing is very high, lowering the exemption rate to $1 million would require many people to file estate tax returns with the IRS.

Once again, instead of hearing about tax simplification and tax reduction, candidate Clinton wants to increase the complexity of the Internal Revenue Code and increased taxes. Not a good idea!

One more comment, let us look at the debates, even though they exclude Libertarian Party candidate Brown, and Green Party candidate Stein, to see if either Clinton or Trump will talk about true tax reform, simplification and reduction.


Friday, August 19, 2016

Applicable Federal Rates for September 2016 




Rev Rul 2016-20
The Applicable Federal Rates for September 2016 are reproduced below.
Table 1
                Applicable Federal Rates (AFR) for September 2016
                          Period for Compounding
                Annual         Semiannual       Quarterly        Monthly
                                  Short-Term
     AFR         .61%           .61%             .61%             .61%
110% AFR         .67%           .67%             .67%             .67%
120% AFR         .73%           .73%             .73%             .73%
130% AFR         .79%           .79%             .79%             .79%
                                  Mid-Term
     AFR        1.22%          1.22%            1.22%            1.22%
110% AFR        1.34%          1.34%            1.34%            1.34%
120% AFR        1.47%          1.46%            1.46%            1.46%
130% AFR        1.60%          1.59%            1.59%            1.58%
150% AFR        1.84%          1.83%            1.83%            1.82%
175% AFR        2.15%          2.14%            2.13%            2.13%
                                  Long-Term
     AFR        1.90%          1.89%            1.89%            1.88%
110% AFR        2.09%          2.08%            2.07%            2.07%
120% AFR        2.28%          2.27%            2.26%            2.26%
130% AFR        2.48%          2.46%            2.45%            2.45%
Table 2
                         Adjusted AFR for September 2016
                          Period for Compounding
                   Annual         Semiannual        Quarterly        Monthly
Short-term
adjusted AFR        .45%            .45%              .45%            .45%
Mid-term
adjusted AFR        .91%            .91%              .91%            .91%
Long-term
adjusted AFR       1.41%           1.41%             1.41%           1.41%
Table 3
                    Rates Under Section 382 for September 2016
Adjusted federal long-term rate for the current month                  1.41%
Long-term tax-exempt rate for ownership changes during the current
month (the highest of the adjusted federal long-term rates for the
current month and the prior two months)                                2.08%
Table 4
                Appropriate Percentages Under Section 42(b)(1)
                                for September 2016**
Appropriate percentage for the 70% present value low-income
housing credit                                                         7.36%
Appropriate percentage for the 30% present value low-income
housing credit                                                         3.15%
Table 5
                    Rate Under Section 7520 for September 2016
Applicable federal rate for determining the present value of an
annuity, an interest for life or a term of years, or a remainder or
reversionary interest                                                  1.4%

**Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after Sept. 30, 2008, will not be less than 9%.

Friday, June 24, 2016

Let's end the draft started by Pre. Lincoln in the Civil War!

The Draft is Slavery. End it.
Congress has been debating the merits of adding women into Selective Service to be drafted with men during times of national emergency.
 
Sen. Rand Paul has suggested that it would be better to end the draft.
 
The Libertarian Party agrees.
 
"The draft is simply slavery by another name. Drafting people to go abroad and kill or be killed is barbaric and a discredit to our military and country," says Nicholas Sarwark, chair of the Libertarian National Committee.
 
If a national emergency is so severe to merit mobilizing extra troops, Americans from all backgrounds, ages, and genders will pitch in to do what is needed.
 
The Libertarian Party urges elected leaders to end the draft and also to pursue foreign policy which is less dependent on military might.
 
The United States has many tools of foreign policy at our disposal that do not require force. Military force should always be a last resort and only in defense.
 
The Libertarian Party is the only political party in America devoted to protecting all rights, of all human beings, all the time. The Libertarian Party also strongly condemns the use of force except in self defense.