Berdon Blogs

TAX TALK: Don’t Gamble on your Taxes

Posted by Michael Eagan, J.D., LL.M. on Jun 18, 2018 9:20:00 AM

For anyone who takes a spin at roulette, buys a lottery ticket, or engages in other wagering activities, it’s important to be familiar with the applicable tax rules. Otherwise, you could be putting yourself at risk for interest or penalties — or missing out on tax-saving opportunities.

Wins
You must report 100% of your wagering winnings as taxable income. The value of extraordinary complimentary items (“comps”), such as autos and jewelry, provided by gambling establishments must also be included in taxable income because comps are considered gambling winnings. The IRS has reserved its opinion on whether you can exclude “normal comps,” such as food, drink, lodging, and entertainment, from taxable income. Winnings are subject to your regular federal income tax rate, which may be as high as 39.6%.

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Topics: TAX TALK

TAX TALK: QSB Stock Offers Two Valuable Tax Benefits

Posted by Michael Eagan, J.D., LL.M. on Jun 11, 2018 10:08:49 AM

Investing in qualified small business (QSB) C corporation stock offers you the opportunity to diversify your portfolio and enjoy two valuable tax benefits:

  1. Tax-free gain rollovers. If you buy other QSB stock with the proceeds of selling QSB stock within 60 days, you can defer the tax on your gain until you dispose of the new stock. The rolled-over gain reduces your basis in the new stock. For determining long-term capital gains treatment, the new stock’s holding period includes the holding period of the stock you sold.
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Topics: TAX TALK

TAX TALK: Receive Restricted Stock? Here’s a Tax-Saving Opportunity

Posted by Michael Eagan, J.D., LL.M. on Jun 4, 2018 9:20:13 AM

Today many employees receive stock-based compensation from their employer as part of their compensation and benefits package. The tax consequences can be complex — subject to ordinary-income, capital gains, employment and other taxes. But if you receive restricted stock awards, you might have a tax-saving opportunity in the form of the Section 83(b) election.

Convert Ordinary Income to Long-Term Capital Gains

Restricted stock is stock your employer grants you subject to a substantial risk of forfeiture. Income recognition is normally deferred until the stock is no longer subject to that risk (that is, it’s vested) or you sell it.

At that time, you pay taxes on the stock’s fair market value (FMV) at your ordinary-income rate. The FMV will be considered FICA income, so it also could trigger or increase your exposure to the additional 0.9% Medicare tax.

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Topics: TAX TALK

TAX TALK: Before Selling your Home, Weigh the Tax Consequences

Posted by Michael Eagan, J.D., LL.M. on May 21, 2018 9:20:00 AM

In many parts of the country, summer is peak season for selling a home. If you’re planning to put your home on the market, you’re probably thinking about things like how quickly it will sell and how much you’ll get for it. But don’t neglect to consider the tax consequences.

Home Sale Gain Exclusion

The U.S. House of Representatives’ original version of the Tax Cuts and Jobs Act included a provision tightening the rules for the home sale gain exclusion. Fortunately, that provision didn’t make it into the version that was signed into law.

As a result, if you’re selling your principal residence, there’s still a good chance you’ll be able to exclude up to $250,000 ($500,000 for joint filers) of gain. Gain that qualifies for exclusion also is excluded from the 3.8% net investment income tax.

To qualify for the exclusion, you must meet certain tests. For example, you generally must own and use the home as your principal residence for at least two years during the five-year period preceding the sale. (Gain allocable to a period of “nonqualified” use generally isn’t excludable.) In addition, you can’t use the exclusion more than once every two years.

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Topics: TAX TALK

TAX TALK: 2018 Tax Planning - Start Now in Light of the TCJA

Posted by Michael Eagan, J.D., LL.M. on May 7, 2018 9:20:00 AM

With the April 17 individual income tax filing deadline behind you (or with your 2017 tax return on the back burner if you filed for an extension), you may not want to think about taxes for the next several months. But for maximum tax savings, now is the time to start tax planning for 2018.  It’s especially critical to get an early start this year because the Tax Cuts and Jobs Act (TCJA) has substantially changed the tax environment.

Many Variables

A tremendous number of variables affect your overall tax liability for the year. Looking at these variables early in the year can give you more opportunities to reduce your 2018 tax bill.

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Topics: TAX TALK

TAX TALK: Individual Tax Calendar: Important Deadlines for the Remainder of 2018

Posted by Michael Eagan, J.D., LL.M. on Apr 23, 2018 9:30:00 AM

With April 17 behind us, to help you make sure you don’t miss any important 2018 deadlines, here’s a look at when some key tax-related forms, payments, and other actions are due. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you.

Please review the calendar and let us know if you have any questions about the deadlines or would like assistance in meeting them.

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Topics: TAX TALK

TAX TALK: How Long Should You Retain your Tax Records?

Posted by Michael Eagan, J.D., LL.M. on Apr 16, 2018 9:17:00 AM

You should keep your tax records for at least three years from the date you file your tax return. The Internal Revenue Service (IRS) generally has three years to assess additional tax liabilities and you generally have three years to amend a prior tax return. However, since under some circumstances the IRS has up to six years to audit your returns, you should consider keeping your records for six years from the date you filed your tax return.

What to Keep Longer

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Topics: TAX TALK

TAX TALK: Key Q2 Tax Calendar Deadlines for Businesses and Other Employers

Posted by Michael Eagan, J.D., LL.M. on Apr 3, 2018 9:20:00 AM

Here are some of the key tax-related deadlines affecting businesses and other employers during the second quarter of 2018. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

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Topics: TAX TALK

TAX TALK: Casualty Losses Provide a 2017 Deduction, but Rules Tighten for 2018

Posted by Michael Eagan, J.D., LL.M. on Mar 19, 2018 9:09:45 AM

If you suffered damage to your home or personal property last year, you may be able to deduct these “casualty” losses on your 2017 federal income tax return. For 2018 through 2025, however, the Tax Cuts and Jobs Act suspends this deduction except for losses due to an event officially declared a disaster by the President.

What is a casualty? It’s a sudden, unexpected or unusual event, such as a natural disaster (hurricane, tornado, flood, earthquake, etc.), fire, accident, theft or vandalism. A casualty loss doesn’t include losses from normal wear and tear or progressive deterioration from age or termite damage.

Here are some things you should know about deducting casualty losses on your 2017 return:

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Topics: TAX TALK

TAX TALK: Size of Your Charitable Deductions Depends on Many Factors

Posted by Michael Eagan, J.D., LL.M. on Mar 12, 2018 9:20:00 AM

Whether you’re claiming charitable deductions on your 2017 return or planning your donations for 2018, be sure you know how much you’re allowed to deduct. Your deduction depends on more than just the actual amount you donate.

Type of Gift

One of the biggest factors affecting your deduction is what you give:

Cash. You may deduct 100% gifts made by check, credit card, or payroll deduction.

Ordinary-income property. For stocks and bonds held one year or less, inventory, and property subject to depreciation recapture, you generally may deduct only the lesser of fair market value or your tax basis.

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Topics: TAX TALK

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