T&E TALK: Hasty Choice of Executor can lead to Problems after Your Death

Posted by Scott T. Ditman, CPA/PFS on Jan 28, 2019 12:30:00 PM

Choosing the right executor — sometimes known as a “personal representative” — is critical to the smooth administration of an estate. Yet many people treat this decision as an afterthought. Given an executor’s many responsibilities and complex tasks, it pays to put some thought into the selection.

Job Description

An executor’s duties may include:

  • Collecting, protecting and taking inventory of the estate’s assets,
  • Filing the estate’s tax returns and paying its taxes,
  • Handling creditors’ claims and the estate’s claims against others,
  • Making investment decisions,
  • Distributing property to beneficiaries, and
  • Liquidating assets if necessary.
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Topics: T&E TALK

SALT Talk: Post Wayfair Snacks – Fed Still Need to Tell States to Put Down the Cookie (Ducky) [1]

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 28, 2019 11:30:00 AM

Being a state and local tax practitioner has always been a stressful job. Stress eating is certainly understandable, especially around the holidays. Nevertheless, after the Wayfair decision eliminated the physical presence requirement to compel sales tax collection, is it still necessary for states to force cookies down our throats. Not the baked kind, but the electronic variety. 

As avid readers of my blog know, the states have been very creative in attributing the more than de minimus physical presence previously required by the U.S. Supreme Court in Quill to internet retailers to create sales tax nexus and require the retailers to collect sales tax. Some of these approaches, especially those attributing the presence of a representative or agent to an otherwise out of state retailer, certainly seem to make sense.  

Now that Quill is dead, where will the states go next? Alternatively, is the announcement of its demise exaggerated? Will eliminating the physical presence requirement solve all our problems? What about uniformity for businesses and enforceability issues for taxing authorities? Has this all been magically resolved?

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TAX TALK: Still Time to Get Substantiation for 2018 Donations

Posted by Hal Zemel, CPA, J.D., LL.M. on Jan 28, 2019 9:20:00 AM

If you’re like many Americans, letters from your favorite charities have been appearing in your mailbox in recent weeks acknowledging your 2018 year-end donations. But what happens if you haven’t received such a letter — can you still claim an itemized deduction for the gift on your 2018 income tax return? It depends.

Basic Requirements

To support a charitable deduction, you need to comply with IRS substantiation requirements. This generally includes obtaining a contemporaneous written acknowledgment from the charity stating the amount of the donation, whether you received any goods or services in consideration for the donation, and the value of any such goods or services.

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Topics: TAX TALK

SALT TALK: NY Governor’s Executive Budget Aims Smoking Gun at the Internet, Out-of-State Gamblers, High(er) Income Taxpayers, Hedge Fund Managers, Cannabis, and Retired Race Horses

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 22, 2019 11:30:00 AM

The phrase “smoking gun” refers to the strongest of circumstantial evidence that one could have. One arrives at a crime scene to see a gunshot victim and a few feet away the holder of a gun with smoke emanating from the barrel, while not direct evidence of who shot the victim, nevertheless makes a compelling statement.

So what, if any conclusions, can we jump to regarding Governor Cuomo’s recently released budget? Certainly no tax relief for high-income taxpayers, despite the proposed legalization and corresponding twenty plus percent taxation of cannabis sold in New York State.

Remember, readers, the items below are the Executive Branch wish list for the coming fiscal year and still have a long way to go before becoming law. Some of the more interesting items include:

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TAX TALK: What Will Your Marginal Income Tax Rate Be?

Posted by Hal Zemel, CPA, J.D., LL.M. on Jan 21, 2019 9:20:00 AM

While the Tax Cuts and Jobs Act (TCJA) generally reduced individual tax rates for 2018 through 2025, some taxpayers could see their taxes go up due to reductions or eliminations of certain tax breaks — and, in some cases, due to their filing status. But some may see additional tax savings due to their filing status.

Unmarried vs. Married Taxpayers

In an effort to further eliminate the marriage “penalty,” the TCJA made changes to some of the middle tax brackets. As a result, some single and head of household filers could be pushed into higher tax brackets more quickly than pre-TCJA. For example, the beginning of the 32% bracket for singles for 2018 is $157,501, whereas it was $191,651 for 2017 (though the rate was 33%). For heads of households, the beginning of this bracket has decreased even more significantly, to $157,501 for 2018 from $212,501 for 2017.

Married taxpayers, on the other hand, won’t be pushed into some middle brackets until much higher income levels for 2018 through 2025. For example, the beginning of the 32% bracket for joint filers for 2018 is $315,001, whereas it was $233,351 for 2017 (again, the rate was 33% then).

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Topics: TAX TALK

T&E TALK: Time for Your Annual Estate Plan Checkup?

Posted by Scott T. Ditman, CPA/PFS on Jan 21, 2019 7:00:00 AM

An annual estate plan checkup is critical to the health of your estate plan. Because various exclusion, exemption, and deduction amounts are adjusted for inflation, they can change from year to year, impacting your plan.

2019 vs. 2018 Amounts

Here are a few key figures for 2018 and 2019:

Lifetime Gift and Estate Tax Exemption

  • 2018: $11.18 million
  • 2019: $11.40 million

Generation-skipping Transfer Tax Exemption

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Topics: T&E TALK

SALT TALK: Audit Burden of Proof - Where Was I and the IoT

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 14, 2019 11:30:00 AM

My regular readers are now experts in the concept of statutory residency: Have a permanent place of abode and be present in the jurisdiction for more than 183 days and you magically become a tax resident. You also know it is your burden to prove you were not in the jurisdiction and the taxing authorities are under no obligation to prove your presence.

How is it humanly possible to meet the burden of proof, you ask. Well, sometimes it is easy. You leave for Florida the day after Thanksgiving and don’t come back until July 4th. Of course, you saved your plane tickets to and from Florida. You also charged something every single day and played golf at least five times a week. Any reasonable auditor is going to agree that you have met your burden of proof and there is no doubt you weren’t in the jurisdiction.

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TAX TALK: 2 Major Tax Law Changes for Individuals in 2019

Posted by Hal Zemel, CPA, J.D., LL.M. on Jan 14, 2019 9:20:00 AM

While most provisions of the Tax Cuts and Jobs Act (TCJA) went into effect in 2018 and either apply through 2025 or are permanent, there are two major changes under the act for 2019. Here’s a closer look.

  1. Medical Expense Deduction Threshold

With rising health care costs, claiming whatever tax breaks related to health care that you can is more important than ever. But there’s a threshold for deducting medical expenses that was already difficult for many taxpayers to meet, and it may be even harder to meet this year.

The TCJA temporarily reduced the threshold from 10% of adjusted gross income (AGI) to 7.5% of AGI. Unfortunately, the reduction applies only to 2017 and 2018. So for 2019, the threshold returns to 10% — unless legislation is signed into law extending the 7.5% threshold. Only qualified, unreimbursed expenses exceeding the threshold can be deducted.

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Topics: TAX TALK

T&E TALK: Review Your Powers of Attorney at Least Every 5 Years

Posted by Scott T. Ditman, CPA/PFS on Jan 14, 2019 7:00:00 AM

Powers of attorney are critical components of an effective estate plan. After you’ve executed powers of attorney, it’s important to review them periodically — at least every five years and preferably more frequently — and consider executing new ones.

2 Types

A sound estate plan should include two types of powers of attorney:

  1. Financial power of attorney. Also referred to as a power of attorney for property, this document appoints someone to make financial decisions or execute transactions on your behalf under certain circumstances. For example, a power of attorney might authorize your agent to handle your affairs while you’re out of the country or, in the case of a “durable” power of attorney, incapacitated.
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Topics: T&E TALK

SALT TALK: Statutory Residency, Permanent Place of Abode, May Hinge on Love or Loneliness

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jan 7, 2019 11:30:00 AM

I start this blog with a disclaimer. The same disclaimer provided by the New York State Department of Taxation and Finance (“Department”) at the end of every Advisory Opinion issued. The disclaimer states in part:

An Advisory Opinion is issued at the request of a person or entity. It is limited to the facts set forth therein and is binding on the Department only with respect to the person or entity to whom it is issued and only if the person or entity fully and accurately describes all relevant facts.

Why would I disavow the conclusion before even reaching one? Keep reading (and go back and read my posts from 11.9.15 through 12.28.15) and you will understand:

We have discussed many times in the past that in New York State (and City) as well as numerous other tax jurisdictions there are two ways to be considered a resident (and thereby taxed on worldwide income) for income tax purposes. First, the domicile test. It is 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” (“PPA,” a term of art, which is at the center of this blog) and are “present” in the jurisdiction for more than 183 days, you are a resident.

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