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We have always been told it’s important to take ownership of your work, your actions, and sometimes even the actions of others. However, when it comes to determining whether you have a permanent place of abode (PPA), ownership just doesn’t matter.

Countless times, I have been asked by clients and potential clients whether they should buy, lease, rent, etc. a home, condominium, or cooperative in their own name, their spouse’s name, a relative’s name, in a business entity, or any other permutation. While there may be other important reasons to evaluate this decision, determining whether one has a PPA just isn’t one of them.

Perhaps you’re an investor in mutual funds or you’re interested in putting some money into them. You’re not alone. The Investment Company Institute estimates that 56.2 million households owned mutual funds in mid-2017. But despite their popularity, the tax rules involved in selling mutual fund shares can be complex.

Tax Basics

If you sell appreciated mutual fund shares that you’ve owned for more than one year, the resulting profit will be a long-term capital gain. As such, the maximum federal income tax rate will be 20%, and you may also owe the 3.8% net investment income tax.

When a mutual fund investor sells shares, gain or loss is measured by the difference between the amount realized from the sale and the investor’s basis in the shares. One difficulty is that certain mutual fund transactions are treated as sales even though they might not be thought of as such. Another problem may arise in determining your basis for shares sold.

For 2020, the lifetime gift and estate tax exemption has reached a whopping $11.58 million ($23.16 million for married couples). As a result, few people will be subject to federal gift taxes.

If your wealth is well within the exemption amount, does that mean there’s no need to file gift tax returns? Not necessarily. There are many situations in which it’s necessary (or desirable) to file Form 709 — “United States Gift (and Generation-Skipping Transfer) Tax Return” — even if you’re not liable for any gift taxes.

If you’re required to file, keep in mind that the deadline for Form 709 is April 15 of the year after you make a gift.

While we all know that most jurisdictions have a “carve-out” from the sales tax for capital improvements, often-times mandated services related to such improvements can tag along for the exemption.

If you’re getting ready to file your 2019 tax return, and your tax bill is higher than you’d like, there may still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the Wednesday, April 15, 2020, filing date and benefit from the resulting tax savings on your 2019 return.

Do You Qualify?

You can make a deductible contribution to a traditional IRA if:

• You (and your spouse) aren’t an active participant in an employer-sponsored retirement plan, or
• You (or your spouse) are an active participant in an employer plan, and your modified adjusted gross income (AGI) doesn’t exceed certain levels that vary from year-to-year by filing status.

For 2019, if you’re a joint tax return filer covered by an employer plan, your deductible IRA contribution phases out over $103,000 to $123,000 of modified AGI. If you’re single or a head of household, the phaseout range is $64,000 to $74,000 for 2019. For married filing separately, the phaseout range is $0 to $10,000. For 2019, if you’re not an active participant in an employer-sponsored retirement plan, but your spouse is, your deductible IRA contribution phases out with modified AGI of between $193,000 and $203,000.

Traditional estate planning strategies generally are based on the assumption that all family members involved are U.S. citizens. However, if you or your spouse is a noncitizen, special rules apply that may require additional planning.

Defining “Residency” And “Domicile”

If you’re a U.S. resident, but not a citizen, you’re treated similarly to a U.S. citizen by the Internal Revenue Code. You’re subject to federal gift and estate taxes on your worldwide assets, but you also enjoy the benefits of the $11.58 million (for 2020) gift and estate tax exemption and the $15,000 annual gift tax exclusion. And you can double the annual exclusion to $30,000 through gift-splitting with your spouse, so long as your spouse is a U.S. citizen or resident. (Special rules apply to the marital deduction, however, as will be discussed below.)

We are all going to need a drink after this.  So, in the spirit of helping New Yorkers determine their favorite fermented beverage, Governor Cuomo signed into law a measure exempting certain beer tastings from New York State Sales Tax.  If you consume a beer tasting of not more than five different samples, each being five ounces or less, no tax applies. Such samplings are commonly referred to as “beer flights”.

The liquor laws in virtually every state tend to be unique, complicated, and arcane.  I’ll never forget my first visit to a brewery about fifteen years ago.  It was in Saratoga, New York and the rules were so outdated that the brewery wasn’t even allowed to charge for a tasting, let alone tax it.  Not wanting to be one of the many moochers in the room there for the free beer, I bought a growler full of my favorite brew.  I sat down at my table and proceeded to open the growler.  Next thing I knew, the “mature” woman behind the bar literally jumped over the mahogany top and took a dive on top of me and my open growler.  Here I was trying to support the brewery and show up the freeloaders.  How was I supposed to know you were only allowed to drink the free beer in the tasting room and not the beer you paid for.

An array of tax-related limits that affect businesses are annually indexed for inflation, and many have increased for 2020. Here are some that may be important to you and your business.

Social Security Tax

The amount of employees’ earnings that are subject to Social Security tax is capped for 2020 at $137,700 (up from $132,900 for 2019).

Deductions

• Section 179 expensing:
  • Limit: $1.04 million (up from $1.02 million for 2019)
  • Phaseout: $2.59 million (up from $2.55 million)
• Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:

If you’re in line to inherit property from a parent or other loved one, it’s critical to understand the basis consistency rules. Current tax law, passed in 2015, provides that the income tax basis of property received from a deceased person can’t exceed the property’s fair market value (FMV) as finally determined for estate tax purposes.

Prior Law

Before the 2015 tax law change, estates and their beneficiaries had conflicting incentives when it came to the valuation of a deceased person’s property. Executors had an incentive to value property as low as possible to minimize estate taxes, while beneficiaries had an incentive to value property as high as possible to minimize capital gains, if they decided to sell the property.

You’re trying to do your share to stop global warming, so you persuade your employer to let you work from home. Think of the gas you will save, and the burden lifted from the environment. Well, not so fast, if you live in one of the few states with a so-called “Convenience of the Employer” rule. You are going to be so mad when you realize the consequences that the steam rising from the top of your head is going to create more environmental damage than any reduction in carbon output from working at home.

Delaware, Nebraska, New York, Pennsylvania and Connecticut all have a “convenience rule.”  However, Connecticut will only apply its rule if the nonresident taxpayer in question lives in a jurisdiction that has its own version of the rule.