Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘taxfacts’

TaxFacts Intelligence Weekly for May 2 – May 8

Posted by William Byrnes on May 6, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Family Attribution Rules Do Not Impair Deductibility of S Corporation Employee Health Insurance

The IRS released a CCM providing that an S corporation employee who was considered a 2-percent shareholder via the family attribution rules was entitled to deduct the cost of health insurance premiums paid by the S corporation and included in the employee’s income. Here, the S corporation paid the premium costs and included those amounts in the individual’s income, who was, in turn, entitled to the deduction. For more information on the tax treatment of S corporation health insurance, visit Tax Facts Online. Read More

IRS Rules Loan Availability Does Not Jeopardize Employee Stock Purchase Plan Qualification

The IRS released a PLR providing that a plan participant’s eligibility to obtain a loan from the employer (or a third party) to purchase shares under an employee stock purchase plan does not jeopardize the plan’s qualification under IRC Section 423(b). In this case, loan availability was premised on the fact that the loan could not violate the Sarbanes-Oxley Act of 2002, meaning that some participants may have been rendered ineligible to take out a loan to purchase employee shares through the plan. This PLR indicates the IRS’ view that provisions allowing purchase of shares via loans do not prevent qualification even if some employees are ineligible. For more information on the ownership of employer stock in an employer-sponsored plan, visit Tax Facts Online. Read More

Received a 226J Letter? Here’s How to Respond

Employers have recently begun receiving 226J letters detailing employer mandate compliance issues from the IRS with respect to the 2016 tax year. Importantly, employers must remember that the employer mandate continues in effect despite the repeal of the individual mandate and despite pending challenges to the ACA itself. An employer may receive a 226J letter with respect to two types of failures: failure to offer minimum essential coverage to at least 95% of full-time employees or failure to: (1) offer coverage to the employee, (2) provide affordable coverage or (3) offer coverage that satisfied minimum value requirements, in all cases if the FTE received a tax credit. Letter 226J should contain a deadline for a response, usually 30 days after the letter was issued (employers may request a 30-day extension). It is important to get expert advice when drafting the response, but issues to consider include whether the IRS was using the correct data (i.e., was a corrected Form 1094 filed with the IRS in 2016?), whether the plan was a calendar year plan (transition relief may apply) and whether the employer did, in fact, offer minimum coverage during each month. For more information on the employer mandate, visit Tax Facts Online. Read More

LL.M. or M.Jur. Curriculum in Wealth Management at Texas A&M Law

Our Wealth Management program gives you the knowledge and skills you need to advise wealthy clients and help manage their assets. Because wealth management involves professionals with various backgrounds, we’ve designed the program with both lawyers and non-lawyers in mind. This program is offered completely online, which gives professionals the flexibility they need to learn and to meet the increasing need of being versed in the legal aspects of financial transactions and in the legal aspects of financial investment and portfolio management. Contact us to learn more

Posted in Taxation | Tagged: , , , , | Leave a Comment »

TaxFacts Intelligence Weekly Client Questions Answered on April 29

Posted by William Byrnes on April 29, 2019


2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

William Byrnes and Robert Bloink reduce complicated tax questions to understandable client answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

IRS Releases FAQ on Section 199A Shedding Light on Impact of S Corporation Health Insurance Deductions

The IRS has released a set of FAQs based upon the regulations governing the new Section 199A deduction for pass-through entities, such as S corporations. One potentially overlooked issue in the S corporation context is the impact of health insurance premium payments on QBI. The FAQ provides that health insurance premiums paid by the S corporation for a greater-than-2-percent shareholder reduce QBI at the entity level (by reducing the ordinary income used to calculate QBI). Similarly, when a self-employed individual takes a deduction for health insurance attributable to the trade or business, this will be a deduction in determining QBI and can reduce QBI at the entity and individual levels. For more information on the treatment of health insurance premiums in the S corporation context, visit Tax Facts Online. Read More

Post-Reform Life Insurance Reporting Regs Provide Relief for Certain Contacts Acquired in Business Combinations

The proposed regulations governing the new life insurance reporting requirements created by the 2017 tax reform legislation (which do not become effective until finalized) would exclude from the new rules situations where one entity acquires a C corporation that owns life insurance contracts, so long as the life insurance contracts do not represent more than half of the corporation’s assets. Generally, the new rule created by tax reform would make cause certain life insurance contracts to lose their tax-preferred status if transferred in a reportable policy sale (and most business combinations would qualify as such). Under the proposed rules, however, the pre-tax reform exceptions to the transfer for value rule could apply when a C corporation is acquired. For more information on the future reporting requirements that will apply, visit Tax Facts Online. Read More

Missed the April 15 Tax Filing Deadline? Tips for Obtaining an Extension After the Fact

With the 2018 tax filing deadline behind us, many taxpayers who were unable to complete their returns may be wondering what steps to take to file those returns after the deadline has expired. Most taxpayers can easily request an extension through October 15 by using Form 4868 (available at irs.gov) to request the extension. The form will require that the client provide his or her estimated tax liability–remembering that the filing extension only extends the time for filing a return, so that the client’s 2018 tax payment was still due April 15. If the client was impacted by certain recent disasters, including the California wildfires, severe storms in Alabama, and storms and flooding in Nebraska or Iowa, have automatically been granted various extensions, so are not required to complete the paperwork necessary to obtain the extension. For more information on federal income tax filing requirements, visit Tax Facts Online. Read More

Posted in Taxation | Tagged: , , , | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on April 12, 2019


Tax Reform Impact on Performance Goal Certification Requirements in Executive Compensation Context

Prior to tax reform, companies were afforded special treatment for certain compensation in excess of the $1 million limit so long as the compensation was based on performance goals certified by the company’s compensation committee. Tax reform eliminated that exception so that companies cannot deduct this excess compensation even if it is performance based–therefore, there is no tangible benefit to having a compensation committee certify that those goals were met in many cases. Despite this, in order to qualify under tax reform’s grandfathering provisions, performance-based compensation must continue to satisfy all of the standards that existed prior to the reform, so many companies may wish to continue their certification practice if they otherwise qualify for grandfathering treatment. For more information on the post-reform rules governing the deduction for executive compensation and the grandfathering rules, visit Tax Facts Online. Read More

2019 Tax Season Preview: Now is the Time to Check Withholding

As we near the end of the 2018 tax season, many clients may have been disappointed by the amount of their refunds or even unexpectedly owed taxes because of the changes brought about by the 2017 tax reform legislation. Many of these surprises were caused by the new withholding tables developed by the IRS because the personal exemption was suspended from 2018-2025. Because of this, taxpayers should be advised to check their withholding now even though it may seem early in order to make any adjustments necessary to avoid unpleasant tax surprises next year. Taxpayers are entitled to have their employers withhold more or less depending upon their personal preferences, and the IRS website provides a calculator designed to help taxpayers anticipate how their withholding choices will impact their refund next year. For more information on the federal tax rules that apply this year post-reform, visit Tax Facts Online. Read More

IRS Provides Last-Minute Penalty Relief for Taxpayers Who Underpaid in 2018

The IRS released last minute penalty relief for certain taxpayers whose tax withholding or estimated tax payments were insufficient in 2018. Usually, a penalty will apply if the taxpayer did not pay at least 90 percent of his or her tax liability for the year. For the 2018 tax year only, the IRS lowered the threshold to 80 percent to account for the significant changes made to the tax code late in 2017. Under previous guidance released in January, the relief was to apply for taxpayers who paid at least 85 percent of their total tax liability. This relief applies both to taxpayers who paid through employer withholding and those who paid quarterly estimated payments (or any combination). If the taxpayer qualifies for this relief but has already filed a return, the taxpayer can request a refund using Form 843, which must be filed in paper format. For more information on the underpayment penalty, visit Tax Facts Online. Read More

Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
Senior Manager, Editorial Operations
Alexis Long, J.D.
Senior Contributor
Patti O’Leary
Senior Editorial Assistant
Danielle Birdsail
Digital Marketing Manager
Emily Brunner
Editorial Assistant

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Taxation | Tagged: , | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on April 10, 2019


IRS Explains Impact of SALT Cap on Taxpayers Receiving State and Local Tax Refunds

The IRS has provided guidance explaining the relevance of the “tax benefit rule” for taxpayers who receive a refund of state and local taxes in years when the post-reform limit on deducting state and local taxes (the “SALT cap”) is in effect. For more information on the impact of the SALT cap, visit Tax Facts Online. Read More

Federal Court Invalidates DOL Rules Expanding Association Health Plans

A Washington, D.C. federal court struck down the final regulations released by the DOL in effort to expand the availability of association health plans for various smaller employers and owner-employees, which would have given these groups access to less expensive plans that offered fewer benefits and did not satisfy ACA requirements. The fate of the actual expansion of association health plans remains unclear, however, as the DOL has indicated it will explore all available options and continue to work toward expanding access. For more information on the tax rules for self-employed business owners’ health coverage, visit Tax Facts Online. Read More

Employer Stock & 401(k) Plans: The Bad, the Ugly…and the Potentially Good?

In recent years, many employers have begun shying away from offering employer stock to employees as 401(k) investments. Fiduciary liability concerns and lack of diversification, especially amid dramatic decreases in value in some cases, have made the strategy risky for some companies. However, this does not mean that any client who currently holds employer stock in a 401(k) should immediately liquidate all employer stock. Clients should first be advised that the potential to take advantage of a net unrealized appreciation (NUA) strategy could provide a more valuable way to sell off employer stock. For more information on the NUA strategy, visit Tax Facts Online. Read More

Tax Facts Team
Molly Miller
Publisher
William H. Byrnes, J.D., LL.M
Tax Facts Author
Jason Gilbert, J.D.
Senior Editor
Robert Bloink, J.D., LL.M.
Tax Facts Author
Connie L. Jump
Senior Manager, Editorial Operations
Alexis Long, J.D.
Senior Contributor
Patti O’Leary
Senior Editorial Assistant
Danielle Birdsail
Digital Marketing Manager
Emily Brunner
Editorial Assistant
For questions, contact Customer Service at 1-800-543-0874.

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Taxation, Uncategorized | Tagged: , | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on March 29, 2019


EDITOR’S NOTE FOR ONLINE SUBSCRIBERS
You will notice a new orange banner appearing at the top of your screen called “Latest Developments”. In this section we are offering new features, and we will introduce other features later in the year….

· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive by email as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing lots of value-added commentary and analysis. I am always interested in your feedback so feel free to email me at williambyrnes@gmail.com.

Sixth Circuit Confirms Insurance Agents Remain Independent Contractors

The Sixth Circuit Court of Appeals recently confirmed that life insurance agents were properly classified as independent contractors, rather than employees. The case involved eligibility for benefits under ERISA, and a district court, using the traditional Darden factors for determining classification status, had ruled in 2017 that the agents were employees who were eligible for ERISA benefits. For more information on insurance agents and employment classification issues, visit Tax Facts Online. Read More

Renewed Importance of Checking “Compensation” Definition in Retirement Plans Post-Tax Reform

The definition of “compensation” is important for many reasons in the retirement planning arena, but has gained new importance in light of suspended deductions and exclusions post-tax reform. Retirement plans generally must use the IRC’s definition of compensation for nondiscrimination testing purposes, which includes, for example, nondeductible moving expenses (but excludes deductible moving expenses). Post-reform, however, all moving expenses are nondeductible. Despite this, the moving expense deduction was only suspended, not eliminated. This is one example of how tax reform has created a level of uncertainty regarding the appropriate definition of compensation while all tax reform provisions remain (at least temporarily) in effect. For more information on the definition of compensation for qualified plan purposes, visit Tax Facts Online. Read More

Grandfathered Health Plan Status: Still Important for Employers

In the years that have passed since the ACA became effective, many employers may have forgotten the importance of maintaining the grandfathered status of their health insurance plans. Grandfathered health plans remain exempt from many of the ACA market reform provisions and help employers avoid some of the more difficult compliance issues presented by the ACA. To maintain grandfathered status, employers should be sure to maintain proper documentation of the plan coverage extending from March 23, 2010 to the present. If and when the plan enters a new policy or contract, it should provide the health insurance company with documents governing the plan terms to make sure the change will not cause loss of grandfathered status. Adding new employees or new contributing employers will not impact the grandfathered status of the plan, so long as the principal purpose of any restructuring of the business was not to cover additional people under a grandfathered plan. Amendments to the plan that eliminate certain benefits can cause loss of grandfathered status, as can increases in certain cost-sharing requirements and copayments. For more information on grandfathered health plans, visit Tax Facts Online. Read More

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

Posted in Taxation | Tagged: , | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on March 27, 2019


EDITOR’S NOTE FOR ONLINE SUBSCRIBERS
You will notice a new orange banner appearing at the top of your TaxFacts & App screen called “Latest Developments”. In this section we are offering new features, and we will introduce other features later in the year….

· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive by email as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing value-added commentary and analysis. I am always interested in your feedback and “practitioner note” submissions so feel free to email me at williambyrnes@gmail.com.

IRS Releases New Safe Harbor for Depreciating Passenger Autos Under Tax Reform 

Post-reform, taxpayers are generally entitled to an additional depreciation deduction for qualified property, including passenger automobiles, if that property was placed in service after September 27, 2017 (and before 2027). If the passenger auto qualifies for 100% depreciation deduction in year one, the tax legislation increased the first-year limitation by $8,000. Assuming the depreciable basis is less than the first year limitation, the additional amount is deductible in the first tax year after the end of the recovery period. Under the safe harbor, however, the taxpayer can take the depreciation deductible for the excess amounts during the recovery period up to the limits applicable to passenger autos during this time frame. The IRS will publish a depreciation table in Appendix A of Publication 946, which taxpayers must use to apply the safe harbor. The safe harbor only applies to passenger autos placed into service before 2023, and does not apply if (1) the taxpayer elected out of 100% first year depreciation or (2) elected to expense the automobile under Section 179. For more information on the rules that apply in determining the depreciation deduction for passenger automobiles, visit Tax Facts Online. Read More

PBGC Proposes Regulations to Simplify Calculating Withdrawal Liability Under the Multi-Employer Pension Reform Act

PBGC recently released a set of proposed regulations to amend the rules on calculating withdrawal liability and annual withdrawal liability payments when an employer withdraws from a multi-employer pension plan. Under the regulations, in calculating withdrawal liability, plan sponsors must disregard benefit suspensions for the ten plan years following the plan year in which the suspension of benefits became effective, and include the suspended benefits when determining the plans unvested benefit liability (UVBs) during that period. The proposed regulations would also require plan sponsors to disregard surcharges when determining how to allocate UVBs to a withdrawing employer, as well as certain increases in contribution rates. The regulations provide detailed guidance on how each element necessary to calculate a withdrawing employer’s liability could be calculated. For more information on benefit reductions under the MPRA, visit Tax Facts Online. Read More

Court Clarifies When Disabled Employees May be Entitled to Disability Benefits

A district court recently clarified that an employee’s request for reasonable accommodations for a disability does not necessarily mean that the employee will also qualify for benefits under a short-term disability plan. In this case, the employee provided evidence from his doctor that stated he was unable to drive in traffic, but the employer’s plan required that he be unable to perform essential duties of his job in order to qualify for disability benefits. The employer denied the claim for benefits because the employee’s job did not involve driving, although he was entitled to work from home so that he could avoid driving into an office (the “reasonable accommodation” in this case). The court agreed with the employer that the employee’s ability to perform his job was not impaired, so he was not entitled to disability benefits. The key takeaway from this case is that, even if an employee has a disability that requires reasonable accommodation, that employee is not necessarily entitled to receive employer-sponsored disability benefits. For more information on employer-sponsored disability benefits, visit Tax Facts Online. Read More

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Posted in Taxation | Tagged: , | Leave a Comment »

TaxFacts Intelligence Weekly

Posted by William Byrnes on March 25, 2019


EDITOR’S NOTE FOR ONLINE SUBSCRIBERS
You will notice a new orange banner appearing at the top of your screen called “Latest Developments”. In this section we are offering new features, and we will introduce other features later in the year….· Tax Facts Intelligence Weekly – current as well as archive weekly newsletters you receive in email today as another way to access our latest developments.

· Thumbs Up/Thumbs Down – a debate each week between Robert Bloink and myself (William Byrnes) whereby we take opposing viewpoints on tax policy and argue our opinions. Find out if you agree or disagree and, eventually, you will be able to vote on whose side you are on for that week.

· Featured Articles – a weekly article with archives written by Robert Bloink and myself, thought leaders in finding customer needs for new products and how to make new practice tools work with your clients, perhaps in ways you may not have thought about.

· Recent Updates – as you may know, our digital version of Tax Facts is updated weekly and not annually like our print version of Tax Facts. You can now see any significant changes made to a Tax Facts question that week as it will appear in the “Latest Developments” section, so you are aware of changes. These changes can even be delivered to your smartphone should you choose.

We are looking for another big year providing lots of value-added commentary and analysis. I am always interested in your feedback so feel free to email me at williambyrnes@gmail.com.

IMPORTANT TAX DEVELOPMENTS

IRS Provides Additional Rules for Employers’ Ability to Recover Mistaken HSA Contributions
The IRS clarified when an employer can recover health savings account (HSA) contributions made in error. Generally, erroneous HSA contributions must be corrected by reducing future contributions. The IRS Office of the Chief Counsel released an information letter stating an employer can recover mistaken contributions if the employer has clear documentary evidence that demonstrates an administrative or process error that caused the mistaken contribution. Examples of correctable mistakes provided by the IRS include situations where the participants’ names were confused, mathematical errors and duplicate payroll transmittals. For more information on excess HSA contributions, visit Tax Facts Online and Read More.

8th Circuit Denies Bankruptcy Exemption for Retirement Accounts Transferred Incident to Divorce 
The 8th Circuit denied the bankruptcy exemption for retirement plan assets that the debtor acquired incident to divorce. Qualified plan assets and up to about $1.3 million in IRA assets are usually protected from creditors in bankruptcy. In this case, the debtor received a portion of his former spouse’s 401(k) and her entire IRA in their divorce settlement, via a domestic relations order. The courts relied upon the Supreme Court’s prior ruling that inherited IRAs are not exempt in bankruptcy in concluding that assets acquired through a divorce are not primarily retirement assets of the debtor. Instead, the assets represented a property settlement, so were not entitled to any type of special treatment in bankruptcy. For more information on the treatment of qualified plans in divorce, visit Tax Facts Online and Read More.
LITIGATION WATCH

Wellness Programs Post-EEOC: What Remains Important 
EEOC regulations that were recently vacated and removed focused incentives an employer could offer without rendering the program impermissibly involuntary. Although the incentive based regulations were removed, the remaining regulations provide some clarity on this “voluntariness” issue. The program may not require employees to participate, and the employer is not permitted to deny health coverage or limit group health plan or other benefits if the employee chooses not to participate in the program. The employer cannot take an action that would be considered retaliation or take any adverse employment actions for non-participation. For more information on the rules that currently govern employer-sponsored wellness programs, visit Tax Facts Online and Read More.

 

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Posted in Taxation | Tagged: , | Leave a Comment »

TaxFacts Intelligence (Week of March 14, 2019)

Posted by William Byrnes on March 14, 2019


William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

Mar 14, 2019

View in Browser

IRS: Employers Must Exercise Caution in Providing “Free Lunch” for Employees 

The IRS has released a technical advice memorandum (TAM) that sheds light on the potential tax implications when employers provide employees with free meals in the office. Post-tax reform, meals provided “for the convenience of the employer” may receive favorable tax treatment. In the TAM, the IRS denied exclusion of the meals’ value from employee compensation. Here, the employer provided free meals to all employees in snack areas, at their desks and in the cafeteria, justifying provision of these meals by citing need for a secure business environment for confidential discussions, employee protection, improvement of employee health and a shortened meal period policy. The IRS rejected these rationales, stating that the employer was required to show that the policies existed in practice, not just in form, and that they were enforced upon specific employees. In this case, the employer had no policies relating to employee discussion of confidential information and provided no factual support for its other claims. General goals of improving employee health were found to be insufficient. The IRS also considered the availability of meal delivery services a factor in denying the exclusion, but indicated that if the employees were provided meals because they had to remain on the premises to respond to emergencies, that would be a factor indicating that the exclusion should be granted. For more information on “de minimis” type fringe benefits, visit Tax Facts Online. Read More

Common Scenarios in Client Retirement Planning: Account Consolidation and the Rules of the Road

Most clients will change jobs a few times in their lives, which often means they wind up with multiple 401(k) and other types of retirement plans. Consolidating can produce many benefits–namely, making it easier to manage retirement assets and easing RMD calculations, but there are rules to consolidating and clients also need to be aware of benefits that may be unique to any one type of plan. Clients should evaluate their goals with respect to eventual withdrawals, as the rules for penalty-free withdrawals–for example, via using an IRA to establish a series of substantially equal periodic payments to provide penalty-free withdrawals prior to age 591/2. For more information on the rollover rules and how they may impact clients considering retirement account consolidation, visit Tax Facts Online. Read More

April 1 is Fast Approaching: Important Deadline for Clients With First-Time RMD Obligations

While April 15 is a well-known and understood deadline, most clients don’t associate April 1 with any important tax-related deadlines—but April 1 is, in fact, one of the most important deadlines for clients who turned 701/2 years old in the previous year. For those clients who maintain traditional retirement accounts, such as 401(k)s and IRAs, April 1 is the date by which they must take their first required minimum distribution (RMD) from the account if they turned 701/2 in the previous year. For example, a client who turned 701/2 in 2018 must take their first RMD by April 1, 2019. This April 1 deadline is a special rule that applies only to first-time RMDs–a client’s 2019 RMD will be due by December 31, 2019. This means that clients who choose to wait until the April 1 deadline will be required to take two RMDs in 2019. For each subsequent year, the generally applicable December 31 deadline is the relevant date for RMDs. For more information on lifetime RMD requirements, visit Tax Facts Online. Read More

 

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Posted in Taxation | Tagged: , , | Leave a Comment »

TaxFacts Intelligence Weekly (Feb 7, 2019)

Posted by William Byrnes on February 8, 2019


William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

TAX REFORM DEVELOPMENTS

IRS Provides New 199A Safe Harbor for Rental Real Estate Activities
Since the introduction of Section 199A, business owners engaged in real estate activities have been confused by the new 20 percent deduction for qualified business income of certain pass-through entities. IRS proposed Revenue Procedure 2019-07 provide a safe harbor so that rental real estate businesses will qualify as “trades or businesses” if it: (1) maintains separate books and records for each rental enterprise, (2) involves the performance of at least 250 hours of rental real estate activities, and (3) maintains contemporaneous records regarding the rental real estate services. The safe harbor is effective for tax years ending after December 31, 2017. For more information, visit Tax Facts Online and Read More.

Final 199A Guidance on Tracking W-2 Wages Provides Guidance for Short Tax Years
The IRS has recently finalized the methods that a business owner can use to track W-2 wages for calculating the Section 199A deduction. The new guidance clarifies that, in the case of short taxable years, the business owner is required to use the “tracking wages method” with certain modifications. The total amount of wages subject to income tax withholding and reported on Form W-2 can only include amounts that are actually or constructively paid to the employee during the short tax year and reported on a Form W-2 for the calendar year with or within that short tax year. For more information on the methods available for calculating W-2 wages for Section 199A purposes, visit Tax Facts Online and Read More.

LITIGATION WATCH

Court Requires Employer to Pay Dependent Life Insurance Benefits After Failure to Provide SPD
A court recently ruled that an employer was required to pay life insurance benefits to an employee under a life insurance policy insuring her former spouse, which was offered by the employer as a dependent life insurance benefit. When the employee’s former husband died within three months’ of their divorce, her claim for benefits under the policy was denied because she was not an “eligible dependent” because of the divorce. The employee made several claims, including one that the she was not provided a summary plan description (SPD) with respect to the policy. The court agreed with the plaintiff’s claim that failure to provide the SPD was a breach of fiduciary duty under ERISA. For more information on employer-sponsored life insurance, visit Tax Facts Online and Read More.

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone.  Questions? Contact customer service: TaxFactsHelp@alm.com800-543-0874

 

Tax Facts Team

  • William H. Byrnes, J.D., LL.M, Tax Facts Author
  • Robert Bloink, J.D., LL.M., Tax Facts Author
  • Alexis Long, J.D., Senior Contributor
  • Richard Cline, J.D. Senior Director, Practical Insights
  • Jason Gilbert, J.D., Senior Editor
  • Patti O’Leary, Senior Editorial Assistant
  • Connie L. Jump, Senior Manager, Editorial Operations
  • Molly Miller, Publisher
  • Danielle Birdsail, Digital Marketing Manager
  • Emily Brunner, Editorial Assistant

Posted in Taxation | Tagged: , , , | Leave a Comment »

TaxFacts Intelligence Weekly Nov 16th

Posted by William Byrnes on November 16, 2018


IRS Releases Guidance on Impact of Personal Exemption Suspension on Premium Tax Credit
The 2017 tax reform legislation suspended the personal exemption for tax years beginning after 2017 and before 2026. Relatedly, taxpayers are entitled to claim the Affordable Care Act premium tax credit with respect to an individual if the taxpayer has claimed an exemption with respect to that taxpayer (i.e., the personal or dependency exemption). A taxpayer is entitled to claim the premium tax credit with respect to another individual if the taxpayer would otherwise be entitled to claim a dependency exemption with respect to that individual, and includes the individual’s name and TIN on his or her Form 1040. For more information, visit Tax Facts Online and Read More.
OTHER IMPORTANT DEVELOPMENTS

Grandfathering Potential May Still Exist Under Section 162(m) Post-Regulations
The IRS regulations governing the new limitations on the Section 162(m) executive compensation deduction limits may have curtailed grandfathering opportunities that some had expected under the new tax law, but possibilities still remain. The test for determining whether grandfather treatment is permitted involves whether the company was legally obligated to pay the compensation under state law (meaning contract law) as of November 2, 2017. For more information on the new rules governing the deductibility of executive compensation, visit Tax Facts Online and Read More.

LITIGATION WATCH

Tax Court Rules Business-Provided Life Insurance Taxable to Insured Individual Under Split Dollar Rules
The Tax Court recently ruled that the “economic benefit” of business-sponsored life insurance provided to a key employee through a multiple-employer welfare benefit fund was taxable income to the employee. The Tax Court agreed with the IRS that this structure required current income inclusion under the split dollar life insurance principles, so that the economic benefit received by the employee was required to be included in his gross income for the year in question despite the fact that no actual cash benefits were received during that year. For more information on the rules governing split dollar life insurance, visit Tax Facts Online and Read More.

Posted in Retirement Planning, Taxation | Tagged: | Leave a Comment »

 
%d bloggers like this: