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Category: Tax Law

IMPROPER GIFT TAX RETURN DISCLOSURE CARRIES RISK

IMPROPER GIFT TAX RETURN DISCLOSURE CARRIES RISK

Recent word from IRS Field attorneys suggests that improper disclosures on a gift tax return equates to an indefinite period of limitations, rather than the usual three years.  Failure of a taxpayer to properly disclose gifts (transfer of interests in two partnerships) to his daughter, including the identity of one of the partnerships, and failure to provide an adequate description of the valuation methodology tripped up the taxpayer in question. A transfer will be considered adequately disclosed only when: The…

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BEWARE IMPENDING STATUTE EXPIRATION

BEWARE IMPENDING STATUTE EXPIRATION

Folks who may still be pondering what they did in their 2011 Federal income tax return, and whether it was right or not, or maybe even questionable, though now looking like there’s room for interpretation in their favor, had better get on the ball. The statute of limitations on the 2011 tax year (for folks who extended their returns that year until October 15, 2012) will expire come this October 15, 2015.  So if you think you may need or…

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NO CAPITAL LOSS DEDUCTION AGAINST ANNUITY INCOME

NO CAPITAL LOSS DEDUCTION AGAINST ANNUITY INCOME

In the recent Tobias decision, the Tax Court rejected a couple’s argument that they could offset the income they would otherwise have recognized on an annuity distribution by the capital loss they incurred when they sold securities in order to purchase the annuity in the first place. In order to buy the annuity in 2003, the taxpayers sold securities for which they incurred a taxable loss of $158,000. Then in 2010, after the annuity contract had accrued substantial income, the…

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NINTH CIRCUIT LIBERALIZES MORTGAGE INTEREST LIMITS FOR UNMARRIEDS

NINTH CIRCUIT LIBERALIZES MORTGAGE INTEREST LIMITS FOR UNMARRIEDS

The Ninth Circuit recently reversed the Tax Court, concluding that the Code Section 163(h) limitations ($1 million of acquisition indebtedness and $100,000 of home equity indebtedness) should be applied on a per individual basis, and not on a per residence basis. As such, unmarried co-owners are subject to a maximum of $2.2 million in limitations, rather than $1.1 million. See Voss v. Comm.

RECENT CHANGE IN FBAR DUE DATE

RECENT CHANGE IN FBAR DUE DATE

Recent legislation will affect the due date for filing FinCEN Form 114. This is the annual form filed by folks with a financial interest in or signature authority over certain foreign financial accounts. Historically, the form has been due by June 30 following the end of the year in question. Under the new law, for returns for tax years beginning after December 31, 2015, the due date will be the following April 15, with a six month extension available.