Berdon Blogs

TAX TALK: Donating Real Estate to Charity can have Tax Pitfalls

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 11, 2017 9:36:55 AM

Charitable giving allows you to help an organization you care about and, in most cases, enjoy a valuable income tax deduction. If you’re considering a large gift, a noncash donation such as appreciated real estate can provide additional benefits. For example, if you’ve held the property for more than one year, you generally will be able to deduct its full fair market value and avoid any capital gains tax you’d owe if you sold the property.

However, there are potential tax pitfalls to watch for:

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Topics: TAX TALK

T&E TALK: Is Your Revocable Trust Properly Funded?

Posted by Scott T. Ditman, CPA/PFS on Sep 11, 2017 7:03:00 AM

If your estate plan includes a revocable trust — also known as a “living” trust — it’s critical to ensure that the trust is properly funded. Revocable trusts offer significant benefits, including asset management in the event you become incapacitated and probate avoidance. But these benefits aren’t available if you don’t fund the trust.

The Basics

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Topics: T&E TALK

TAX TALK: The ABCs of the Tax Deduction for Educator Expenses

Posted by Hal Zemel, CPA, J.D., LL.M. on Sep 5, 2017 11:27:48 AM

At back-to-school time, much of the focus is on the students returning to the classroom — and on their parents buying them school supplies, backpacks, clothes, etc., for the new school year. But let’s not forget about the teachers. It’s common for teachers to pay for some classroom supplies out of pocket, and the tax code provides a special break that makes it a little easier for these educators to deduct some of their expenses.

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Topics: TAX TALK

SALT TALK: Counting Days: The Tax Consequences of Getting Sick

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Sep 5, 2017 10:33:04 AM

For those of you familiar with the comic strip Dilbert, my favorite strip ever involves Dilbert pointing out to his boss that they did an extensive research study and determined that forty percent of sick days are taken on Monday and Friday. (For those of you who don’t have similarly warped senses of humor, Monday and Friday are forty percent of the five day work week.)  While New York doesn’t care what day of the week you are sick, getting ill in New York can have serious consequences for your day count and the statutory residency test.

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Topics: SALT TALK

T&E TALK: Powers of Attorney - To Spring or Not to Spring

Posted by Scott T. Ditman, CPA/PFS on Sep 5, 2017 7:05:00 AM

Estate planning requires more than just focusing on what happens to your assets when you die. It’s equally important to have a plan for making critical financial and medical decisions if you’re unable to make those decisions yourself. That’s where the power of attorney (POA) comes in.

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Topics: T&E TALK

TAX TALK: Undoing a Roth IRA Conversion

Posted by Hal Zemel, CPA, J.D., LL.M. on Aug 28, 2017 11:40:00 AM

Converting a traditional IRA to a Roth IRA can provide tax-free growth and the ability to withdraw funds tax-free in retirement. However, when you convert to the Roth IRA, all of the deductible contributions and earnings in the traditional IRA are included in taxable income. Therefore, you will have to pay tax on the balance converted. If after you convert a traditional IRA you discover that you would have been better off not converting to a Roth IRA, it’s possible to undo a Roth IRA conversion, using a “recharacterization.”

Reasons to Recharacterize

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Topics: TAX TALK

SALT TALK: Online Marketplace Sellers Highly Incentivized to Say Sorry

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Aug 28, 2017 9:18:00 AM

In the 1970 film “Love Story”, actress Ali McGraw may have immortalized the line “Love means never having to say you’re sorry.”  Many opinions exist whether this is good relationship advice, but I can state with certainty it is bad advice for online marketplace sellers as approximately 28 states have joined with the Multistate Tax Commission (MTC) to offer an extremely generous amnesty program.  The program is in place through October 17, 2017.

Online marketplace sellers are those sellers of merchandise who don’t have their own website or even warehousing infrastructure, but use the likes of Amazon or a similar marketplace to distribute and sell their merchandise.  So while the seller may not have any contacts or nexus in a taxing jurisdiction, the marketplace provider may very well.  States have been successful in attributing the nexus of the marketplace to the seller himself and accordingly attaching all of the sales tax collection obligations and even income franchise tax liability created by the marketplace to the seller.

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Topics: SALT TALK

T&E TALK: Don’t Trigger the GST Tax when Transferring Assets to Grandchildren

Posted by Scott T. Ditman, CPA/PFS on Aug 28, 2017 7:03:00 AM

When planning your estate, don’t overlook the generation-skipping transfer (GST) tax. Despite a generous $5.49 million GST tax exemption, complexities surrounding its allocation can create several tax traps for the unwary.

GST Basics

The GST tax is a flat, 40% tax on transfers to “skip persons,” including grandchildren, other family members more than a generation below you, nonfamily members more than 37½ years younger than you and certain trusts (if all of their beneficiaries are skip persons). If your child predeceases his or her children, however, they’re no longer considered skip persons.

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Topics: T&E TALK

TAX TALK: Put your Audit in Reverse to Save Sales and Use Tax

Posted by Terence Avella, J.D., LL.M. Guest Blogger on Aug 21, 2017 11:42:00 AM

It’s a safe bet that state tax authorities will let you know if you haven’t paid enough sales and use taxes, but what are the odds that you’ll be notified if you’ve paid too much? The chances are slim — so slim that many businesses use reverse audits to find overpayments so they can seek refunds.

Claim your Exemptions

In most states, businesses are exempt from sales tax on equipment used in manufacturing or recycling, and many states don’t require them to pay taxes on the utilities and chemicals used in these processes, either. Additionally, in some states, custom software, computers and peripherals are exempt if they’re used for research and development projects.

This is just a sampling of sales and use tax exemptions that might be available but unless you’re diligent about claiming exemptions, you may be missing out on some to which you’re entitled.

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Topics: TAX TALK

SALT TALK: Substance or Forlorn; or How I Stopped Worrying and Learned to Love Tax Planning

Posted by Wayne Berkowitz CPA, J.D., LL.M. on Aug 21, 2017 9:21:00 AM

[Readers Note: In conjunction with my firm’s centennial, 1917-2017, this happens to be my 100th blog. Where does the time go?]

Following in the spirit of the 1964 film “Dr. Strangelove” the New York State Department of Taxation and Finance has recognized that perceived anti-abuse legislation is only a deterrent if everyone knows about it. Just this week the Department has issued a Technical Memorandum[1] explaining how legislation effective April 10, 2017 purports to eliminate certain sales and use tax planning techniques perceived to be abusive.

While most other taxing schemes look to interpret the underlying law and regulations so as to put substance over form, sales tax has notoriously been recognized for taking the opposite approach. The simplest example being of two separate businesses having 100% common ownership and one sells taxable services to the other as a valid business reason (liability issues, perhaps) exists to have the employees of the selling entity separate from the recipient of the services. Had the employees of the seller been instead employees of the purchaser, no tax would result for essentially the identical transaction.

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Topics: SALT TALK

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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