Berdon Blogs

TAX TALK: Donating Artwork: Know the Tax Deduction Ins and Outs

Posted by Michael Eagan, J.D., LL.M. on Sep 24, 2018 9:20:00 AM

If you’re charitably inclined and you collect art, appreciated artwork can make one of the best charitable gifts from a tax perspective. In general, donating appreciated property is doubly beneficial because you can both enjoy a valuable tax deduction and avoid the capital gains taxes you’d owe if you sold the property. The extra benefit from donating artwork comes from the fact that the top long-term capital gains rate for art and other “collectibles” is 28%, as opposed to 20% for most other appreciated property.

Requirements

The first thing to keep in mind if you’re considering a donation of artwork is that you must itemize deductions to deduct charitable contributions. Now that the Tax Cuts and Jobs Act has nearly doubled the standard deduction and put tighter limits on many itemized deductions (but not the charitable deduction), many taxpayers who have itemized in the past will no longer benefit from itemizing.

For 2018, the standard deduction is $12,000 for singles, $18,000 for heads of households and $24,000 for married couples filing jointly. Your total itemized deductions must exceed the applicable standard deduction for you to enjoy a tax benefit from donating artwork.

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Topics: TAX TALK

T&E TALK: Do you have Significant Wealth Concentrated in a Single Stock?

Posted by Scott T. Ditman, CPA/PFS on Sep 24, 2018 7:00:00 AM

Estate planning and investment risk management go hand in hand. After all, an estate plan is effective only if you have some wealth to transfer to the next generation. One of the best ways to reduce your investment risk is to diversify your holdings. But it’s not unusual for affluent people to end up with a significant portion of their wealth concentrated in one or two stocks.

There are many ways this can happen, including the exercise of stock options, participation in equity-based compensation programs, or receipt of stock in a merger or acquisition.

Sell the Stock

To reduce your investment risk, the simplest option is to sell some or most of the stock and reinvest in a more diversified portfolio. This may not be an option, however, if you’re not willing to pay the resulting capital gains taxes, if there are legal restrictions on the amount you can sell and the timing of a sale, or if you simply wish to hold on to the stock.

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Topics: T&E TALK

SALT TALK:  Losing Interest or Don’t Always Trust Your State K-1

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 17, 2018 11:30:00 AM

As my marketing department knows, SALT TALK is often written at the very last minute.  The reason being is that I like to capture current events, whether that be the latest news or what I am currently experiencing.  Hence the subject of today’s blog.

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Topics: SALT TALK

TAX TALK: 2018 Q4 Deadlines for Businesses and other Employers

Posted by Michael Eagan, J.D., LL.M. on Sep 17, 2018 9:20:00 AM

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth 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.

October 15

  • If a calendar-year C corporation that filed an automatic six-month extension:
    • File a 2017 income tax return (Form 1120) and pay any tax, interest and penalties due.
    • Make contributions for 2017 to certain employer-sponsored retirement plans.
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Topics: TAX TALK

T&E TALK: Three Reasons to Continue Making Lifetime Gifts

Posted by Scott T. Ditman, CPA/PFS on Sep 17, 2018 7:00:00 AM

Now that the gift and estate tax exemption has reached a record high of $11.18 million (for 2018), it may seem that gifting assets to loved ones is less important than it was in previous years. However, lifetime gifts continue to provide significant benefits, whether your estate is taxable or not.

Let’s examine three reasons why making gifts remains an important part of estate planning:

1. Lifetime Gifts Reduce Estate Taxes. If your estate exceeds the exemption amount — or you believe it will in the future — regular lifetime gifts can substantially reduce your estate tax bill.

The annual gift tax exclusion allows you to give up to $15,000 per recipient ($30,000 if you “split” gifts with your spouse) tax-free without using up any of your gift and estate tax exemption. In addition, direct payments of tuition or medical expenses on behalf of your loved ones are excluded from gift tax.

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Topics: T&E TALK

TAX TALK: Do You Need to Make an Estimated Tax Payment by September 17?

Posted by Michael Eagan, J.D., LL.M. on Sep 10, 2018 9:20:00 AM
To avoid interest and penalties, you must make sufficient federal income tax payments long before your April filing deadline through withholding, estimated tax payments, or a combination of the two. The third 2018 estimated tax payment deadline for individuals is September 17.

If you don’t have an employer withholding tax from your pay, you likely need to make estimated tax payments. But even if you do have withholding, you might need to pay estimated tax. It can be necessary if you have more than a nominal amount of income from sources such as self-employment, interest, dividends, alimony, rent, prizes, awards or the sales of assets.

A Two-Prong Test

Generally, you must pay estimated tax for 2018 if both of these statements apply:

  1. You expect to owe at least $1,000 in tax after subtracting tax withholding and credits, and
  2. You expect withholding and credits to be less than the smaller of 90% of your tax for 2018 or 100% of the tax on your 2017 return — 110% if your 2017 adjusted gross income was more than $150,000 ($75,000 for married couples filing separately).
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Topics: TAX TALK

T&E TALK: DIY Estate Planning at your Own Risk

Posted by Scott T. Ditman, CPA/PFS on Sep 10, 2018 7:00:00 AM

There’s no law that says you can’t prepare your own estate plan. And with an abundance of online services that automate the creation of wills and other documents, it’s easy to do. But unless your estate is small and your plan is exceedingly simple, the pitfalls of do-it-yourself (DIY) estate planning can be many.

Dotting the i’s and Crossing the t’s

A common mistake people make with DIY estate planning is to neglect the formalities associated with the execution of wills and other documents. Rules vary from state to state regarding the number and type of witnesses who must attest to a will and what, specifically, they must attest to.

Also, states have different rules about interested parties (that is, beneficiaries) serving as witnesses to a will or trust. In many states, interested parties are ineligible to serve as witnesses. In others, an interested-party witness triggers an increase in the required number of witnesses (from two to three, for example).

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Topics: T&E TALK

SALT TALK:  Rock and Roll and the Internet Never Forget

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Sep 4, 2018 11:55:38 AM

The year was 1977 and the internet was barely a glimmer in a 29 year-old Al Gore’s eyes. (In all fairness, I would like to note that the internet says that the rumors that Al Gore claims to have invented the internet are not true.) Accordingly, even though more than forty years ago Bob Seger knew rock and roll never forgets, we simply could not have contemplated that the internet would not.

I have always told my family and friends, do not post anything on the internet you do not want coming back to haunt you, because it will. (Hence, the proliferation of “fake” Facebook accounts acquired under bizarre aliases by all juniors in High School, about to apply to college.) Although it is often difficult to follow your own advice, I try to as often as possible. Generally, having done so with my blog, I was ecstatic to see that one of my March 2017 posts was quoted in last week’s New York Post. (https://nypost.com/2018/08/28/vornado-preparing-for-20m-tax-showdown-with-city/)

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Topics: SALT TALK

TAX TALK: Some Items to Consider When Selling Securities

Posted by Michael Eagan, J.D., LL.M. on Sep 4, 2018 10:13:48 AM

Many factors can affect the tax consequences and your net investment return on the sale of a security. You’re probably focused on factors such as how much you paid for the investment vs. how much you’re selling it for, whether you held the investment long-term (more than one year) and the tax rate that will apply.

There are additional details you should pay attention to that may impact the amount, timing, and tax costs of the gain or loss. If you don’t, the tax consequences of a sale may be different from what you expect.

Here are a few details to consider when selling a security:

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Topics: TAX TALK

T&E TALK: Address Long-Term Care Costs with LTC Insurance

Posted by Scott T. Ditman, CPA/PFS on Sep 4, 2018 7:00:00 AM

No matter how diligently you prepare, your estate plan can quickly be derailed if you or a loved one requires long-term home health care or an extended stay at a nursing home or assisted living facility.

The annual cost of long-term care (LTC) can reach as high as six figures, and this expense isn’t covered by traditional health insurance policies, Social Security, or Medicare. So it’s important to have a plan to finance these costs, either by setting aside some of your savings or purchasing insurance.

LTC Insurance

An LTC insurance policy supplements your traditional health insurance by covering services that assist you or a loved one with one or more activities of daily living (ADLs). Generally, ADLs include eating, bathing and dressing.

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Topics: T&E 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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