Berdon Blogs

SALT TALK: Republicans Insist SALT is Detrimental to our Health

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Nov 20, 2017 10:21:43 AM

Even though a 2017 study of Russian cosmonauts concluded that everything we thought we knew about salt might be completely wrong, the House and Senate are poised to pass tax legislation taking away our daily dose of SALT.  While salt (NACL or Sodium Chloride) is completely different from SALT (state and local taxes), I love them both and don’t want anyone other than my internist to limit my intake.  Neither the cosmonauts nor my internist have denounced science as of yet, so both opinions are still highly valued.

Now that the House of Representatives has passed their version of “tax reform” the extinction of the state and local tax deduction seems closer to reality.  As passed, the House Bill completely eliminates any deduction for state and local income taxes, but still allows property tax deductions up to $10,000.  The Senate version, still working its way to a vote, goes even further by eliminating the $10,000 window for property tax deductions.

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TAX TALK: Accelerating Your Property Tax Payment into 2017 May Be Especially Beneficial

Posted by Michael Eagan, J.D., LL.M. on Nov 20, 2017 9:17:00 AM

Accelerating deductible expenses, such as property tax on your home, into the current year typically is a good idea. Why? It will defer tax, which usually is beneficial. Prepaying property tax may be especially beneficial this year, because proposed tax legislation might reduce or eliminate the benefit of the property tax deduction beginning in 2018.

Proposed Changes

The initial version of the House tax bill would cap the property tax deduction for individuals at $10,000. The initial version of the Senate tax bill would eliminate the property tax deduction for individuals altogether.

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Topics: TAX TALK

T&E TALK: Consider a Letter of Instructions to your Heirs

Posted by Scott T. Ditman, CPA/PFS on Nov 20, 2017 7:03:00 AM

When you draft your estate plan, the centerpiece is your will or living trust. Such a document determines who gets what, where, when, and how, as well as tying up the loose ends of your estate. A valid will or living trust can be supplemented by other legally binding documents, such as trusts (or additional trusts), powers of attorney and health care directives.

But there’s still a place at the table for a document that has absolutely no legal authority: a “letter of instructions” to your heirs. This informal letter can provide valuable guidance and act as a road map to the rest of your estate.

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Topics: T&E TALK

TAX TALK: 2017 Might be Your Last Chance to Hire Veterans and Claim a Tax Credit

Posted by Michael Eagan, J.D., LL.M. on Nov 13, 2017 11:40:00 AM

With Veterans Day just over, it’s an especially good time to think about ways we can support our veterans.  One way for businesses is to hire them. The Work Opportunity Tax Credit (WOTC) can help businesses do just that, but it may not be available for hires made after this year.

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Topics: TAX TALK

SALT TALK: Where You Rest Your Weary Bones May Have No Impact on Tax Residency

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Nov 13, 2017 9:16:00 AM

As avid readers of my blog already know (see last week’s installment), most states have a two-pronged approach to pulling you in as a resident and consequently taxing you on worldwide income. The first way is domicile, the test that generally looks to your intentions. The second and the focus of this post is statutory residence.

If you have a permanent place of abode and are in the jurisdiction for more than 183 days, with limited exceptions, you will be held in the same regard as a domiciliary of the jurisdiction. You will be taxed as a resident. What many taxpayers fail to appreciate is that you don’t ever need to sleep, visit, drive by, look at or be within 500 miles of the so called living quarters that may constitute a permanent place of abode.

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T&E TALK: Leverage the Benefits of a Charitable Remainder Trust

Posted by Scott T. Ditman, CPA/PFS on Nov 13, 2017 7:00:00 AM

If you’re charitably inclined but concerned about having sufficient income to meet your needs, a charitable remainder trust (CRT) may be the answer. A CRT allows you to support a favorite charity while potentially boosting your cash flow, shrinking the size of your taxable estate, reducing or deferring income taxes, and enjoying investment planning advantages.

How a CRT Works

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Topics: T&E TALK

TAX TALK: Ins and Outs of Tax on “Income Investments”

Posted by Michael Eagan, J.D., LL.M. on Nov 6, 2017 11:35:00 AM

Many investors, especially those who are risk-averse, hold much of their portfolios in “income investments” — those that pay interest or dividends, with less emphasis on growth in value. But all income investments aren’t alike when it comes to taxes. So it’s important to be aware of the different tax treatments when managing your income investments.

Varying Tax Treatment

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Topics: TAX TALK

SALT TALK: Golf and a Little Bit of Residency Planning, Anyone?

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Nov 6, 2017 9:17:00 AM

At Berdon, we do our best to educate our clients about the tax ramifications of their decisions.  They know that in most states there are two ways to be considered a resident (and thereby taxed on worldwide income) for income tax purposes. First, the domicile test. It’s the “touchy-feely” test of what your intentions are and where you intend your home to be. Then there is the arguably more objective statutory resident test. If you have a “permanent place of abode” (a term of art to be discussed some other time) and are “present” (also a term of art to be further explored) in the jurisdiction for more than 183 days, you are a resident.

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T&E TALK: A Dynasty Trust keeps on Giving Long into the Future

Posted by Scott T. Ditman, CPA/PFS on Nov 6, 2017 7:05:00 AM

With a properly executed estate plan, your wealth can be enjoyed by your children and even their children. But did you know that by using a dynasty trust you can extend the estate tax benefits for several generations, and perhaps indefinitely? A dynasty trust can protect your wealth from gift, estate, and generation-skipping transfer (GST) taxes and help you leave a lasting legacy.

Dynasty Trust in Action

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SALT TALK: Traps in Transactions - Tax Free for Fed Doesn’t Mean Tax Free for State and Local

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Oct 30, 2017 11:41:00 AM

Another common misconception is the belief that because a transaction is tax free (really, tax deferred) for federal tax purposes the states will tag along and not subject the transaction to tax.  While this certainly isn't true when we are addressing the possibility of transfer taxes or even sales tax for that matter (stay tuned), it may not even be true for state income tax purposes.

Put yourself in the shoes of the state taxing authorities.  While a properly structured like-kind (1031) exchange can defer income taxes for years, it's technically only a deferral.  The newly acquired property will inherit the lower basis of the old property.  In theory, the federal government will eventually collect the tax on the ultimate sale in a straight transaction.  State tax collectors may not be so lucky.  What if the property being sold is in New York City and the replacement property is in Florida?  As the law now stands, both New York State and New York City are out of luck and not entitled to any tax resulting from the appreciation on the New York property. 

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About Berdon Blogs

Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

SALT TALK: Hear an insider’s perspective on the business issues, legislative updates in state and local tax, and tax aspects behind today’s headlines.

T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

TAX TALK: Get an all-inclusive perspective on regulatory changes, industry issues, and trends from our team of multidisciplinary tax professionals – many of whom also hold J.D. and LL.M degrees.

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