Loopholes

Charitable Contributions From Your IRA: Tips and Traps

A really neat thing happens when you turn 70 and ½. Your IRAs essentially turn into donor advised funds if you don’t need all the money in them to make ends meet. Rather than withdraw money from your IRA to make charitable contributions, you can make them out of the IRA. So instead of an itemized deduction, you get an exclusion from adjusted gross income. For some people this might be a wash, but for most it probably isn’t. Besides the possibility of not being over the standard deduction threshold, there are a host of computations and thresholds that involve AGI. There are some things you need to watch out for, but first let’s go over the basics.

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CURRENT EDITION

Navigating IRS Penalty Relief and Forgiveness

Timalyn Bowens, EA

Yes, the IRS does forgive some tax penalties. The IRS refers to this forgiveness as penalty abatement. Abatement is the act or process of reducing or removing something. In this case it is removing or reducing a penalty. But penalty forgiveness is not a blanket offer that everyone qualifies for the way the radio ads make it seem. There is a process that the IRS has for requesting and granting abatement. It is up to the taxpayer to prove that they qualify for abatement. That’s where you come in.

From The Government And Not There To Help You

Peter J Reilly CPA

The story of James J. Maggard has some interesting and possibly valuable lessons. The one that strikes me as particularly important is that it makes it crystal clear that disproportionate distributions contrary to a corporation’s governing documents will not blow its S election. That does not mean that disproportionate distributions are just fine and that you don’t need to address them. There is a practical lesson about being careful who you take on as fellow shareholders. And there is another slightly odd lesson, that almost makes me want to create a new law of tax planning: Don’t deliberately involve the IRS in your business disputes. Their job is not to help you.

Tax Policy and Reform Considerations for the Next President and 119th Congress

Annette Nellen, CPA, CGMA, Esq.

Something we never have a shortage of are proposals to change our tax systems. When it’s election time, we hear even more proposals, as well as how various parts of our tax system are flawed, usually due to actions or inactions of the opposing party. We also hear lots of incomplete statements, promises of tax changes too costly to be enacted, and ideas that will be replaced by the time the winner gets down to crafting a real set of tax and budget proposals. This article describes some of the tax proposals of the two presidential candidates along with suggestions on how we should analyze them against principles supporting effective tax systems, with highlights of some important facts seemingly missing from current tax discussions. These proposals are also relevant to members of Congress as to whether they support any of them and how they align with tax changes that the member would like to see enacted.