Newsletter Topics

2013 OOPS.. Mortgage not deductible

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If you don't record the mortgage, the interest is not deductible.  In the case of DeFrancis, TC Summ. Op. 2013-88, while the mother-in-law had a mortgage secured by the home, the mortgage was not recorded.  Since a potential buyer would not know of this mortgage, the Tax Court ruled an unrecorded mortgage is not deductible.

2013 HSA Contribution Limits

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2013 HSA (Heath Savings Account) Contribution Limits

Self only plan                             Family plan

Under age 55         $3,250                                         $6,450

Age 55 or over       $4,250                                         $7,450

Age 65 or over (1)     n/a                                             n/a

(1    (1)    This does not mean you cannot contribute during the year. 

             The calculation is done on a monthly basis. You can contribute

             until you are 65 but it gets very complicated depending on the day of which month you turn 65.

China in 2012

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China is the world’s second largest economy….

2012 sales in China accounted for 11.2% of revenue reported by U.S. companies listed on Standard & Poor’s 500

(research by The Economist… quoted in the Journal of Accountancy..a  publication of the American Institute of CPAs).

2013 Gift Basket - special tax court case

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There is a recent tax court case that applies to gift baskets.

For a number of years there has been something called the Production Activities Deduction (PAD).  It generally applies to MANUFACTURING.  This tax court case may open a deduction for flower shops and other companies that assemble gift baskets.

If your bottom line income to the company is $50k from the applicable sales, the PAD is 9% (for 2012 and 2013).  That is a $4,500 deduction.  Apply a tax bracket of 25% and the savings is $1,125.

If the company showed a loss, the PAD would not apply.

It would not apply to just flowers.  It would apply to gift baskets when you purchase other items (candy, cheese, etc) and ‘assemble’ them.

If this is the case, then we would need to know…..

Sales total for these items.  Let’s say this is 20% of your sales.  We would then also ask if 20% of wages, 20% of all expenses applies.  A different percentage could very well apply especially for the real manufacturing entities.

In 10 minutes we could calculate what the savings would be.

http://www.warner-robinson.com/blog/taxpayer-gets-a-gift-basket-new-section-199-case-domestic-production-deduction/

In 2010 and 2011 the PAD was 6%. The statute of limitations would not allow amendments back further than 2010.

We can help prepare these amendments at www.USATaxHelp.com

 

2013 Form 1099 Late Filing Penalty

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This has never been easy to explain.... here is the latest....             

The penalties were increased two years ago to the following amounts:

  • $30 per form, or per statement, if it was corrected within 30 days (maximum $250,000 per year),
  • $60 per form, or per statement, if corrected more than 30 days after the filing due date by August 1 of the same year (maximum $500,000 per year),
  • $100 per form, or  per statement, if corrected later than August 1 of the same year or if not corrected (maximum $1,500,000 per year),
  • Where intentional disregard of the requirements is found: $250 per return, or per statement, or 10% of the total amount that should have been reported (5% if amounts should have been reported of Form 1099-B), whichever is greater with no maximum cap,
  • Payers with annual gross receipts of $5 million or less may qualify as “small business” payers for which the penalties may be reduced by 30% to 44% for various types of failures.

Just file on time and you won't have to worry about these.....

or we can help.