Roth IRA Conversion Deserves Second Look
If you’re holding money in a traditional IRA, maybe it’s time for you to take another look at a Roth conversion. Since the $100,000 income limitation was removed in 2010, you have no restriction on your ability to transfer funds from a traditional IRA to a Roth IRA – and no limit on the amount…
Diapers – To Tax or Not To Tax?
Infants may be the latest victims of discrimination. Children’s diapers are subject to sales and use tax, while adult diapers are tax-exempt, according to the Connecticut Department of Revenue Services. The department reasons that children’s diapers are in the nature of clothing, which is generally taxable. On the other hand, adult diapers used for incontinence…
Deducting Retirement Contributions: Nice Try – But No!
Christine Peterson was an independent beauty consultant for Mary Kay, Inc. She earned commissions on wholesale purchases of Mary Kay products by her network of independent beauty consultants. Peterson and Mary Kay entered into a nonqualified deferred compensation arrangement, whereby Peterson would continue to receive a portion of her commissions after retirement. Christine Peterson and…
Tax Deduction Depends on Performance
The Tax Court has determined that payments to a qualified settlement fund may be deducted by an accrual method S corporation only when economic performance occurs and payments are actually made to the fund. A qualified settlement fund (QSF) is a fund, account or trust established under governmental order or approval to resolve or satisfy…
New Medicare Tax Info and 2014 Mileage Rates
The IRS has issued final and proposed regulations on the calculation of the new 3.8 percent tax on net investment income that took effect Jan. 1, 2013. The new tax, also known as the “3.8 percent Medicare surtax,” or “net investment income tax,” can affect joint filers and surviving spouses with modified adjusted gross income…
Year-End Tax Planning: Time Slipping Away
With 2013 coming to an end, it is time to complete your year-end tax planning and make your New Year’s resolutions. Here are planning points you might want to consider: 1. If you reached age 70 1/2 on or before Dec. 31, 2013, you may need to take a required minimum distribution from your traditional…
Protestors Make a Naked Threat?
Local tax protestors are threatening a Lady Godiva-style protest outside the capitol in Albany to make their point, reports the Oneida Daily Dispatch in upstate New York. Lady Godiva was an 11th century Anglo-Saxon noblewoman who, according to legend, rode naked through the streets of Coventry, England, to gain a remission of the oppressive taxation imposed by…
Energy Credits Depend on Property and Year
If you’ve been making energy improvements around your house, be sure to consider the available residential energy tax credits. To claim a credit for 2013, the improvements must be installed by the end of this year. Some residential energy tax credits are scheduled to expire at the end of 2013, while others will remain in…
Securities Trading Not Substantial Enough
The Tax Court determined in a recent case that a mortgage broker was not in the trade or business of trading securities because she did not execute enough trades. The court upheld the IRS’s disallowance of over $800,000 in expenses claimed in connection with these activities over two tax years. It also determined that Sharon…
IRS Auditors Zero in on Small Businesses
The IRS is working to better train its small business auditors and do a better job of selecting small business returns for audit, according to Faris Fink, who represents the Small Business/Self-Employed Division of the IRS. CFO Magazine reported on Fink’s remarks in his presentation at the American Institute of Certified Public Accountants tax conference in…