Showing posts from 2010

Qualified Improvements

15-Year Recovery Period for Qualified Improvements

The Tax Bill signed December 17, 2010 extends the 15-year recovery period through 2010 and 2011 for:

Qualified leasehold improvements
Qualified restaurant improvements, and
Qualified retail improvements.

The 15-year recovery period previously expired at the end of 2009. The extension applies to 2010 as well as 2011.

Expense Limits Increased to $125k

Code Sec. 179 Expensing Limits

Internal Revenue Code Sect. 179 expensing limits were raised to $125,000 with a $500,000 investment limit for 2012. The 2010 Small Business Jobs Act, which was signed in September, raised the expensing limits to $500,000 with a $2 million investment limit for 2010 and 2011. It also permitted, for the first time, expensing of up to $250,000 of Qualified Real Property, such as qualified leasehold, restaurant or retail improvements. The expensing of Qualified Real Property was not extended in the new tax act.

Bonus Depreciation -100%

Bonus Depreciation

The Tax Bill signed December 17, 2010 provides 100% First Year Bonus Depreciation created for qualified improvements made after September 8 2010 and before January 1, 2012. Bonus depreciation reverts back to 50 Percent for qualified 2012 improvements.

IRS issues new withholding tables

the Internal Revenue Service has issued new withholding tables based upon the changes in tax law reducing withholding for 2011.

Even though most employers use payroll services, it is a good idea to print out and read the chart so employees can understand the changes.

2010 Estate and Gift Tax Changes

Here is a detailed Explanation of the Estate and Gift Tax Changes:


Estate Tax

*Basic exclusion amount: $5,000,000 Formerly called applicable exclusion amount
Unified credit: $1,730,800

*Maximum tax rate: 35%
Level where 35% rate begins: $500,000 But no tax until taxable estate + gifts > $5m

* Step-up in basis: Full step-up, unless estate elects out of estate tax

State death tax deduction: Still available on Line 3b (as it was in 2005-2009)

*Due date: No earlier than nine (9) months after date of enactment

*Carryover basis: Applicable only if estate elects out of estate tax

*Max basis increase available: $1.3m (plus $3m for property passing to spouse)

*Due date of new form (8939): No earlier than nine (9) months after date of enactment
Penalty for failure to report to the IRS: $10,000 per failure

Penalty for intent…

New Estate Tax Law

Here is a quick summary of the new Estate Tax rates signed into law December 17, 2010

Estate Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35%
Carryover basis: Option to elect carryover basis instead of estate tax treatment

Gift Tax
Exclusion amount: $1,000,000 (no change)
Maximum tax rate: 35% (no change)

Estate Tax

Exclusion amount: $5,000,000
Maximum tax rate: 35%

Gift Tax
Exclusion amount: $5,000,000
Maximum tax rate: 35% (no change)

Tax Bill Signed into Law

President Obama signed the Tax Extesnion into law. This continues the tax rates for 2 more years. Unfortuantely, Congress refuses to address tax simplification and making tax reduction permanent.

What will Happen to Estate Tax

The Democrats in the House are vowing to fight the Estate Tax exemption of $5m approved in the Senate. If no action is taken by December 31, the exemption will fall to $1m. Remember, this includes proceeds from Life Insurance policies, IRA's, pension plans, homes and real estate. Many estates will be heavily taxed (up to 55%.)

"Retreat Center" Gets Property Tax Exemption

A New York state appeals court held a center founded by a Catholic Priest, providing "spiritual renewal" to Catholics, partly by inspirational art created by visitors, is entitled to the property tax exemption denied by town officials. The court determined the group demonstrated sufficient proof that its complex is a "retreat" eligible for a charitable tax exemption under the state's Real Property Tax Law.
Full Article

We Hold These Truths...

Thank you Founding Fathers! Please read the Declaration of Independence:

IRS Going After NonProfits

Nonprofit organizations that do not file 990's can lose their exempt status. Previously, only nonprofit organizations that have more than $25,000 of income had to report. Now all month profits must report. The IRS is trying to promote the concept of this is to protect donors but in reality it just makes it much harder for a small nonprofit to remain in existence.

If you are a small nonprofit organization you must contact your tax lawyer right away to make sure you do not lose nonprofit status.

IRS Focuses Audits on Smaller Businesses

Even the the return is much greater for auditing large businesses, the IRS is focusing on auditing small businesses reports Atlantic Monthly. The reason is large firms have the resources to fight the IRS and drag on audits while smaller companies do not hire the tax attorneys needed and lack internal resources. The IRS finds it easier to pick on the "little guy."

Foreclosures will Increase

The Washington Post Reported:

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can't obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete

Solutions include Mortgage Loan Modifications and short sales

Government requires NonProfits to Incur Accounting Expenses

Nonprofit groups are paying a price for the corporate and accounting misdeeds of Enron, Tyco International and others nearly a decade ago.That price is manifested in increased tax-preparation and auditing fees.

In simple terms, the federal government now requires nonprofit groups to provide more extensive information at tax time to make sure they are functioning correctly.
Click Here for the full article

Tax Simplification? A Bill Languishes in the Senate

The Bipartisan Tax Fairness and Simplification Act of 2010, would also eliminate the alternative minimum tax and reduce the number of individual tax brackets from the current total of six to three: 15 percent, 25 percent and 35 percent. The bill would nearly triple the standard tax deduction. Wyden and Gregg plan to make it possible for most taxpayers to file a simple one-page 1040 form, and allow individuals and families to request that the IRS prepare a tax return for them to review and sign.

To encourage small business growth, those with gross annual receipts of up to $1 million would be able to permanently expense all equipment and inventory costs in a single year. To help American corporations compete internationally, the Wyden-Gregg bill would reduce the top corporate tax rate of over 35 percent and replace the existing six corporate rates and eight tax brackets with a single flat rate of 24 percent. Wyden-Gregg would reduce corporate tax rates approximately 30 percent — below t…

U.S. = the New Greece

Greece is having Massive Economic Problems. Germany is trying to bail it out so it does not pull down the EU and the World economy. Greece is yet one more example of a government offering its population loads of benefits, while at the same time, running an economy too weak to generate the necessary cash. (It actually sounds a lot like the U.S.!) Some economists are concerned that a move like this by Germany might be a quick fix, but that the runaway deficits in some of the PIIGS (Portugal, Italy, Ireland, Greece, Spain) are still a major cause for concern. Greece, for example, is being asked by the EU to decrease its current deficit of 13% to just 3% by 2012, and we all know how tough it is to reign in government spending. (Again, it certainly sounds like the U.S.!)

With 6 unempliyed Americans looking for every job, it is certainly time to get the government out of the economy!

Estate Tax in Limbo for 2010

The death tax, as many refer to the Estate Tax, was changed earlier in the decade so that in 2009 it would impose a tax rate of 45 percent to the estates of people who die with more than $3.5 million in assets. Before the law was changed — back in 2001 — the death tax had applied a tax rate up to 55 percent on estates in excess of $1 million. Now, without action on the part of Congress to set up a plan or new law for the estate tax, in 2010 there is no tax on estates of persons dying this year. In 2011, however, the law will revert back to how it existed before the 2001 law change, with a $1 million exemption and up to 55 percent tax on the deceased’s assets following a death.

Under the 2009 law, just 6,000 estates throughout the country would have had to pay the estate tax. In 2011, when all estates worth more than $1 million will be subject to the death tax, more than 61,000 estates could be affected.

Note many States "decoupled" with the Federal Estate Tax Exemption and app…