Flip Real Estate Ineligible for Section 1031 Exchange

Working with a new real estate investor client yesterday and heard again what I have heard so many times: the real estate agent handling his flip offered him the choice of doing a Section 1031 exchange when selling the property. This is not possible. In a flip the buyer’s intention is clearly to hold the property short term and resell it, usually after making substantial improvements. The intent is not to hold for long-term appreciation. Therefore, the property is dealer property, not investment property, and ineligible for Section 1031 deferral of the tax gain. As dealer property, the gain is ordinary income, not capital gain, self-employment tax is usually owed.

Military Spouses Residency Relief Act

Under the new Military Spouses Residency Relief Act, signed into law on November 11, 2009, spouses of military service members who relocate from one state to another on military orders do not become residents of the new state for income tax purposes. This means that the military spouse’s wage/salary and self-employment income is not taxable by the new state. This new law will result in big California tax savings for some military families. This makes the income tax treatment of the military spouse similar to that of the service member, who does not acquire residency in the new state because of the Servicemembers Civil Relief Act. This new law is effective January 1, 2009.

Previously, a military spouse would acquire California tax residency when moving to California under the service member’s Permanent Change of Station (PCS) orders. The military service member would not, so the spouses had different state tax residency and the spouse’s wage/salary and self-employment income was taxed by California.

S-Corporation Officer Reasonable Salary

IRS launches in February 2010 random employment tax audits. The goal of this Employment Tax National Research Project, the first in 25 years, is to figure out where the IRS can get the most money through audits. One key issue is S-Corporation owner / officer / shareholder reasonable compensation / salary / wages. The IRS loses huge amounts of money when S-Corporation owners take unreasonably low salaries, mainly due to loss of the 6.2% Social Security portion of the FICA tax. Social Security tax applies to the first $106,800 of salary but does not apply to S-corporation distributions / dividends.

S-Corporation Tax Court Case on Basis and Losses

In the tax court case Rodney Jordan v. Commissioner, shareholder loans were bona fide, as reported on the S-corporation tax return, but some repayments were taxable income because S-corporation tax losses had reduced the shareholder’s cost basis in the debt. It was also determined that the debt was open-account debt and that some S-corporation tax losses were disallowed for lack of basis.

LLC Member Not Limited Partner – Deductions Allowed

The Tax Court again rejected IRS's position that an LLC member must be treated as a “limited partner” under passive activity loss rules. In the Hegarty case, taxpayers were allowed to deduct losses from their limited liability company tax return under a rule generally not applicable to limited partners. This follows similar decisions against the IRS on this issue by both the full tax court, in Garnett (2009), and the Court of Federal Claims, in Thompson (7/20/2009).

Home Energy Credits

Current tax law provides two credits for energy-efficient improvements to a taxpayer’s residence: the Nonbusiness Energy Property Credit and the Residential Energy Efficient Property Credit. These tax credits reduce a taxpayer’s tax bill dollar-for-dollar for 30% of the cost of qualifying energy-efficient home improvements. The credits apply for years 2009-2010 and 2008-2017, respectively. Qualifying property includes common improvements such as windows, doors, and roofs, furnaces & water heaters. Also available for the credit are solar electric and water heating, fuel cell, small wind energy, and geothermal heat pump property.

LLC to S-Corporation Conversion Clarified

The IRS has issued a new ruling that applies to a Limited Liability Company (LLC) electing to be taxed as an S-corporation. The ruling clarifies that there does not need to be a short tax year as a C-corporation in the middle of the process of converting from a “partnership” (the default tax status of an LLC) to an S-corporation. Avoidance of the accounting and tax burdens of an intervening C-corporation tax year is welcome to all involved.

Foreign Financial Account Reporting (FBAR – TD F 90-22.1)

“United States persons”, and foreign persons that were located in and doing business in the United States during the calendar year, must report to the United States Treasury their foreign financial accounts if the total value of all such accounts on any day of the year exceeded $10,000. The report, Form TD F 90-22.1, also known as FBAR, must be mailed before July 1 of the following year and no extension of this deadline is possible. “United States persons” are U.S. citizens and residents, including partnerships, LLC’s, corporations, estates, and trusts. Even individuals who are not U.S. residents under immigration law may be considered residents because of the number of days they spent in the U.S. in the last 3 years. An account is foreign based on the geographical location of the account, not the nationality of the financial institution; exceptions exist for US military banking facilities. The penalty for failure to file the report on time is $10,000. FBAR isn't an income tax return, and it shouldn't be mailed with any income tax return.

Beginning of Estate for Tax Purposes

Although a decedent’s estate is created at the moment of death, its income tax year begins the next day. The timing of appointment of personal representative or administrator or executor has no effect on the beginning of the estate tax year. The date of death, therefore, is the last day of the decedent’s personal income tax year. Income received after the date of death is generally reportable on the estate income tax return using the estate’s tax ID#, not the decedent’s personal income tax return and Social Security number. This is true even though many payers issue tax forms, such as 1099’s and W-2’s, in the name and tax ID# of the decedent.

Real Estate Tax Assessment Appeals in San Diego, California

The California State Board of Equalization Letter to Assessors 2009/021, 04/29/2009, confirmed that San Diego County has certified the last day of the real estate tax assessment filing period. The regular appeals filing period for San Diego real estate tax assessments will begin on July 2, 2009 and will end on November 30, 2009.

Small Business Tax Net Operating Loss Election Clarified

The IRS has issued clarification on the election to carry back a small business tax net operating (NOL) loss 3, 4, or 5 years. In this case the IRS has taken the pro-taxpayer interpretation regarding which years’ revenues are used to determine whether the loss is a qualifying small business tax NOL. The election may be made by filing the applicable refund claim forms, by attaching a statement to the tax return for the year in which the small business tax NOL arose.

Updated Life Expectancy for Gift Tax / Estate Tax Valuations

IRS has issued new tables for valuing life estates, term interests, remainders and reversions for estate, gift and income tax purposes. The new tables reflect today’s longer life expectancies. For gifts made in May or June 2009, or deaths occurring then, the gift donor or estate executor may choose to use either the old or new tables.

Unmarried Co-Owners of Residence with > $1 Million Mortgage

Home mortgage interest is only deductible on up to $1 million of debt used to buy or improve a taxpayer’s primary residence. If two unmarried persons are co-owners of a home they both use as their primary residence, the question arises as to whether each owner has a separate $1 million limit. The IRS recently took the position (no surprise) that the $1 million limit applies per property, not per taxpayer. Therefore, the $1 million has to be split among the owners based on their percentages of ownership. IRS office of Chief Counsel Internal Legal Memorandum 200911007.

S-Corporation Built-In Gains Period Now 7 Years

The new stimulus law, the American Recovery and Reinvestment Act of 2009, signed into law by President Obama on Feb. 17, temporarily reduced the S-Corporation built-in gains period from 10 to 7 years. For tax years 2009 and 2010, S-corporations can avoid C-corporation maximum-rate income tax on built-in gains. Built-in gains are generally gains that were unrealized at time of conversion from C-corporation to S-corporation. Generally these gains are subject to the maximum C-corporation tax rate if realized (the property is sold) by the S-corporation within 10 years of S-election.

Employee-Shareholder Reasonable Compensation

In addressing the issue of employee-shareholder reasonable compensation in the Menard Inc. tax court case, the Court of Appeals for the Seventh Circuit rejected the Tax Court's multi-factor approach in favor a single “independent investor” test. Under the independent investor test, if a hypothetical independent investor would consider the rate of return on his investment to be far higher than he had any reason to expect, the compensation paid is presumptively reasonable [regarding whether the compensation is unreasonably high, in the case of a C-corporation]. However, the presumption may be rebutted by evidence that the company's success was the result of extraneous factors, such as an unexpected discovery of oil under the company's land, or that the company intended to pay the owner/employee a disguised dividend rather than salary. Menard Inc. v Commissioner (CA 7 3/10/2009).

California Releases Tax Refunds

California State Controller announced he has begun releasing more than $2.8 billion in payments that he was forced to delay in February, due to the state's cash shortage. Both personal and corporate tax refunds have now resumed.

Who Really Pays Income Tax

According to the IRS Winter 2009 Statistics of Income Bulletin, taxpayers in the top 1% of Adjusted Gross Income (AGI) reported AGI of at least $388,806. This group accounted for 40% of the total income tax reported, compared to 39% in 2005. Taxpayers in the top 5% of AGI reported AGI of at least $153,542 and this group accounted for 60% of total income tax.

California Real Estate Agent is a Qualifying Real Estate Professional

The IRS argued that a rental property owner who held a California real estate agent’s license, but not a California real estate broker’s license, was not engaged in the real estate brokerage trade or business. The IRS said that the agent was not a qualifying real estate professional entitled to the exception from the passive activity loss rules that generally apply to rental real estate losses, and disallowed the loss deductions on the agent’s tax returns. This is completely contrary to the way that this issue has been handled for many years by taxpayer, CPA’s, and the IRS. In the Tax Court case Agarwal, TC Summary Opinion 2009-29, the Tax Court summarily slapped down the IRS for this nonsense and determined that the taxpayer didn't even have to be licensed as a real estate agent, let alone a broker, to be treated as engaged in the real estate brokerage trade or business and eligible for the qualifying real estate professional exception to the passive activity loss rules on rental real estate.

Energy Efficient Home Improvements Tax Credit

The new stimulus law, the American Recovery and Reinvestment Act of 2009, signed into law by President Obama on Feb. 17, provides homeowners more tax credits for energy efficient home improvements. Previously, the credit was 10% with a lifetime maximum of $500 and ended after 2009. Now a credit can be claimed on 2009 and 2010 purchases and the maximum is $1,500 for 2009 and 2010 combined.

California Homebuyer’s Credit

California taxpayers who purchase a new home (new construction) March 1, 2009 through February 28, 2010 and use it as their primary residence for the following two years can get a tax credit of 5% of the purchase price (maximum $10,000). 1/3 of the credit is claimed in the year of purchase and each of the two succeeding years. To apply for the credit, the escrow person, on behalf of the seller and buyer, must fax the completed Form 3528-A, Application for New Home Credit, to the FTB , within seven calendar days after the close of escrow. Only the first $100 million of valid credit applications will be approved. (FTB—Tax Credit for New Home Purchase, 02/27/200).

Real Estate Section 1031 Exchange QI Conversion

Conversion of Qualified Subchapter S-corporation Subsidiaries (QSSS or QSub) serving as real estate tax-deferred Section 1031 exchange Qualified Intermediary (QI) to C-corporations will not cause the corporations to be treated as new or different Section 1031 QI’s. Therefore, S-Corporation subsidiary conversion to C-Corporation will not cause pending real estate tax Section 1031 exchanges to fail. (PLR 200908005).

Qualified Small Business Stock Gain Exclusion 75%

Under the American Recovery and Reinvestment Act of 2009, signed by President Obama on 2/17/2009, noncorporate taxpayers can exclude 75% (rather than 50% or 60%) of gain on the sale or exchange of Qualified Small Business Stock (QSBS) held for more than 5 years if acquired after Feb. 17, 2009 and before Jan. 1, 2011. Beware that Alternative minimum Tax (AMT) may eliminate some of the benefit. Does not apply to S-Corporation stock, only to regular C-Corporation stock.

California Budget Tax Changes

HIGHER PERSONAL INCOME TAX RATES: personal income tax rates increased by 0.125% to 0.25% for tax years 2009 through 2012. HIGHER SALES TAX RATES: sales tax rates go up by 1%. San Diego’s 7.75% rate becomes 8.75%. AUTOMOBILE REGISTRATION / VEHICLE LICENSE FEE INCREASE: the vehicle license fee portion of automobile registration, which is a “property tax” on the value of the vehicle, increased from 0.65% to 1.15% for registrations beginning May 19, 2009. NEW HOME BUYER TAX CREDIT: purchase of a new home (new construction) March 1, 2009 through February 28, 2010 used as personal residence for two years results in a tax credit of 5% of the purchase price (maximum $10,000); once $100 million of credits have been claimed, no more credits will be issued.

New Motor Vehicle Tax Deduction

The stimulus act signed into law by President Obama, on Feb. 17, called the American Recovery and Reinvestment Act of 2009, allows an itemized deduction for state or local sales or excise taxes on the purchase of a new motor vehicle between 2/17/2009 and 12/31/2009. The deduction is the amount of taxes on up to $49,500 of the purchase price of a passenger automobile, light truck or motorcycle (gross vehicle rating not more than 8,500 pounds), or a motor home. Even taxpayers who claim the standard deduction can use this deduction in addition to the standard deduction. Taxpayers with Modified Adjusted Gross Income (MAGI) over $125,000 ($250,000 married filing jointly) get reduced or no benefit. Unlike other state/local tax deductions, this one is allowed for AMT. However, the deduction is not available to a taxpayer who elects to deduct state and local sales and use taxes in lieu of income taxes as an itemized deduction.

First-Time Homebuyer Tax Credit

The new stimulus law, the American Recovery and Reinvestment Act of 2009, changed the first-time homebuyer tax credit. Gone is the 15-year recapture, which rendered the old credit somewhat useless. Now there is no recapture unless the home ceases to be the taxpayer’s or spouse’s principal residence within 3 years. The credit of 10% of the purchase price (maximum of $8,000) is a dollar-for dollar reduction in federal income taxes. If the credit is larger than the tax liability, the rest simply paid to the first-time homebuyer as a “tax refund”. Either way, the government is essentially giving the first-time homebuyer cash of 10% of the purchase price of the new home. This is a huge benefit, and I highly recommend claiming the credit. The home purchase must close before December 1, 2009. Even better, if you buy the home in 2009, you can claim the tax credit on your 2008 tax return. This way you get the money much sooner

Longer Net Operating Loss Carry-Backs for Business Tax

The new tax law, the American Recovery and Reinvestment Act of 2009, allows small businesses that incur Net Operating Losses (NOL’s) in 2008 and later years to carry the loss back 2, 3, 4, or 5 years. Previously only a 2-year carry-back was allowed. For businesses that paid taxes in any of these years but incurred a loss in 2008, this carry-back can result in an immediate tax refund. The new rules apply to all small business tax returns, including S-Corporation tax returns, C-Corporation tax returns, Limited Liability Company (LLC) tax returns, partnership tax returns, and sole proprietorship / Schedule C tax returns. The rules also apply to losses from rental real estate.

Section 179 Business Equipment Deduction Increased

The new tax act increased 2009 Section 179 limits to $250,000 deduction for businesses buying less than $800,000 of equipment. Section 179 allows a taxpayer, other than an estate, trust, and certain noncorporate lessors, to deduct the cost of equipment as an expense instead of claiming depreciation over a number of years.

Bonus Depreciation on Automobiles

Under the new stimulus law, the American Recovery and Reinvestment Act of 2009, a business can increase the first-year depreciation deduction by $8,000 of bonus depreciation for new passenger automobiles, light trucks, and vans placed in service in 2009 is. Since depreciation of passenger automobiles is severely limited by the tax law, this is a good opportunity to accelerate deductions. Applies to all business tax returns: corporate tax returns, S-corporation tax returns, partnership & Limited Liability Company / LLC tax returns, and sole proprietor tax returns.

Bonus Depreciation Under the New Tax Act

Businesses can deduct 50% of the cost of most types of new property other than buildings. Used property does not qualify. Ordinary depreciation is deducted on the remainder of the cost basis, so total first year depreciation deduction is more than 50%. Alternatively, the Section 179 expense election can be used to deduct the entire cost of the property in the first year, if the taxpayer qualifies.

American Recovery and Reinvestment Act of 2009

The new stimulus law extended to 2009 the 50% bonus depreciation and the Section 179 deduction limit of $250,000 -- big tax savings for business. Tax breaks for individuals include a refundable “making work pay” stimulus credit, enhanced child tax credit and earned income tax credit, an improved homebuyer credit, a new deduction for state sales and excise taxes paid on new vehicles, and a sweetened higher education credit. There's also a one-year AMT patch.

Employee or Independent Contractor?

Treasury Inspector General for Tax Administration (TIGTA) stated in a new audit that “misclassification of employees as independent contractors is a nationwide issue affecting millions of workers that continues to grow and contribute to the tax gap.” Treating a worker as an independent contractor typically saves money for both the employer and the worker. The employer avoids payroll taxes, including FICA taxes of up to 15%, and the worker is able to claim more tax deductions as an independent contractor than an employee.

Donating Money to a Charity or Non-Profit Organization

Charitable contributions of money (cash, check, or credit/debit card) are deductible on your income tax return if the right records are kept. Record-keeping rules changed over the past several years for these tax deductions. For contributions of less than $250 each, the taxpayer must keep either a bank record (i.e., cancelled check or credit card receipt) or a written communication from the charity showing the name of the organization, date of contribution, and dollar amount. Contributions of $250 or more require a written acknowledgement from the organization received by the taxpayer before the tax return is filed showing:

• Dollar amount of money contributed.
• Whether or not the organization provided any goods or services in exchange for all or a part of the donation.
• Description and estimation of value of any goods or services that the organization provided.
• Statement that the organization provides intangible religious benefits, if applicable.

Trust Distributions Deduction Late Election

The IRS issued a Private Letter Ruling allowing a trust to make a late election to deduct a charitable contribution in one year on the tax return for the prior year. PLR 200905027.

Estate Tax Discount for S-Corporation Built-In Gains

Estate tax valuation discounts continue to be an effective tool to dramatically lower estate taxes. Recently the tax court ruled in the case of Estate of Marjorie Degreeff Litchfield that estate could claim significant discounts for S-Corporation built-in gains taxes and accepted the amounts calculated by the taxpayer’s expert witness.

Executive Deferred Compensation Donated to Charity is Deductible by Employer

The IRS has privately ruled that a company can claim a tax deduction when an executive donates his deferred compensation to a charity. PLR 200905016.

Computer Programmer was Independent Contractor

Court of appeals determined that a computer programmer was an independent contractor and not an employee. Decision based upon control over the details of work, duration of projects only six to twelve months each, accounting and tax reporting by both parties (1099-MISC form and Form 1040 Schedule C / Sole Proprietorship), beliefs of the parties regarding the relationship, “distinct occupation or business” factor, the “kind of occupation” factor, and the “skill required” factor. Suskovich v. Anthem Health Plans of Virginia, Inc., (CA 7 1/22/2009).

Trust as IRA Beneficiary

Heirs lost the ability to benefit from many years of tax free buildup of IRA value because the beneficiary designation was too vague. The IRA owner wrote “as stated in will” for his IRA beneficiary, intending the money to go into a trust. Specifically identifying the trust would have achieved the desired result.

Taxpayer Can Claim Home Tax Deductions Even if Not on Title or Loan

The tax court in the Njenge case recently validated something I’ve been telling clients for years: a taxpayer can deduct personal residence mortgage interest and property taxes even though loan and/or title to the home are in someone else’s name, under the right circumstances. The person who lived in the home, made the payments, and bore all benefits and burdens of ownership is treated as the “equitable owner” and can deduct the property tax and interest payments.

IRA Rollover 60-Day Period Waivers

IRS has issued Private Letter Rulings to allows IRA rollovers even though the 60-day period expired. The rulings covered cases of mistakes by financial institutions and financial advisors, and mental condition of taxpayer. PLR 200904030, PLR 200904027, PLR 200904028, PLR 200904032, PLR 200904034.

Late S-Corporation Election Allowed

IRS has again issued a Private Letter Ruling allowing a retroactive late S-corporation election when a corporation and its shareholders have reported income as if an S-Corporation election has been timely made, where reasonable cause was shown for failure to timely make the election. PLR 200904018.

Splitting Trust into 4 Separate Trusts Ruled Non-Taxable

In 3 Private Letter Rulings the IRS has recently ruled that splitting a trust into 4 separate trusts won't cause taxable gain or loss to any beneficiary, trust, or severed trust. The rulings addressed testamentary trusts and an irrevocable inter vivos trust. PLR 200904014, PLR 200904015, PLR 200904016.

S-Corporation Election Not Terminated by Convertible Debt

IRS privately ruled that an S-corporation that inadvertently created a second class of stock by issuing notes convertible into stock was allowed to continue as S-corporation as long as corrective adjustment were made.

Estate Credited for Additional Charity Deduction

Estate was given credit for additional charitable contributions for portion of settlement payments that were made to charitable beneficiaries and involved stock willed to non-charitable beneficiaries, who were alleged to have manipulated stock/stock's disposition so as to keep decedent from selling it and to preserve it for their benefit. (Estate Of Eugenia F. Williams, et al. v. Commissioner, (2009) TC Memo 2009-5)

"Luxury" Auto Tax Values 2009

IRS has released the 2009 maximum fair market values (FMVs) for employer-provided autos ($15,000), trucks and vans ($15,200) the personal use of which can be valued for fringe benefit purposes at the mileage allowance rate (55¢ per mile for 2009).

Employee vs. Independent Contractor: 1099-MISC or W-2?

Court case Peno Trucking: Appeals Court found that contracts that say workers aren’t employees can be disregarded in determining whether they are independent contractors. Instead, it is the degree of control that a company exerts over workers that determines whether they are employees or independent contractors. However, some exceptions may allow a company to still treat workers as independent contractors and avoid IRS penalties and back taxes.

S-Corporation Shareholder-Guaranteed Debt = No Basis to Deduct Losses

Tax court case Russell, TC Memo. 2008-246, reaffirms AGAIN that shareholder cannot deduct losses financed with debt in the name of the corporation. The S-corporation borrowed money from a bank and the shareholder guaranteed the debt. When the S-corporation incurred losses, the shareholder was not allowed to use the debt guarantee as basis to deduct the losses, which were suspended.

Non-Resident Partners or Shareholders?

S-Corporations, partnerships, and LLC’s: March 16, 2009 is the Franchise Tax Board deadline for first-time filers and remitters of nonwage withholding for nonresidents to apply under the FTB's 2008 Nonresident Withholding Incentive Program and avoid penalties. Can send in past-due 2008 withholding as additional compensation on behalf of the nonresident payee and pay interest by March 16, 2009 and the FTB will waive some failure-to-file penalties and will not audit withholding for tax year 2007 and earlier.

E-File Season Opens Tomorrow

IRS announced that 2009 e-filing season will open on 1/16.

Rental Owners Under-Reporting Income

Government Accountability Office estimates that 50% of rental property owners either underreported revenues or overstated expenses, costing the government $13 billion in lost tax collections in 2001. Look for reminder letters from the IRS on this issue – their weak attempt to increase collections.

S-Corporation Continues Despite Trustee’s Mistake

IRS privately ruled that an S-corporation election was not terminated in spite of trustee’s inadvertent failure to make ESBT (Electing Small Business Trust) election.

S-Corporation Continues Despite Beneficiary’s Failure

IRS ruled privately that an S-corporation could continue even though a trust beneficiary did not make the QSST (Qualified Subchapter S Trust) on time. When the case is effectively presented by a CPA, the IRS continues to allow S-corporations to continue despite technicalities that should cause termination of the S-elections.

California Limits NOL’s and Business Credits

For 2008 & 2009, California taxpayers with net business incomes of $500,000 or more cannot take a net operating loss (NOL) deduction and their use of business credits is limited to 50% of their tax liability. Common credits involved include the Research and Development Credit, Low Income Housing Credit, and Enterprise Zone Credit, and credits not allowed are carried over to future years.

IRS Tax Per Diem Meals & Travel Deductions

Effective Oct. 1, 2008. Reimbursements of an employee's business travel costs (lodging, meal and incidental expenses (M&IE)) at a per diem rate are payroll-and income-tax free if simplified substantiation is provided and the daily rate doesn't exceed the federal per diem rate (the maximum amount that the federal government reimburses its employees) for the locality of travel for that day. While the per diem rates vary by travel destination, employers can make reimbursements at the simplified “high-low” per diem rates, which assign one per diem rate to high-cost areas within the continental U.S., and another to non-high-cost areas. The IRS has issued the “high-low” simplified per diem rates for post-Sept. 30, 2008, travel. An employer may reimburse up to $256 for high-cost localities ($198 for lodging and $58 for M&IE) and $158 for other localities ($113 for lodging and $45 for M&IE). The list of high-cost areas is also updated.

Standard mileage rates down for 2009

The optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) is 55¢ per mile for business travel after 2008. That's 3.5¢ less than the 58.5¢ allowance for business mileage that applied in the last six months of 2008. Further, the rate for using a car to get medical care or in connection with a move that qualifies for the moving expense deduction is 24¢ per mile, down 3¢ from the 27¢ per mile allowance for the last half of 2008.

Late Election to Treat All Rental Properties as Single Activity for Material Participation / Loss Deductions

Married taxpayers who acted reasonably in good faith allowed by IRS in Private Letter Ruling to make a late election to treat all their interests in rental real estate as single rental real estate activity, allowing them to meet active participation requirement to deduct losses. – San Diego CPA Michael Fitzsimmons

60-Day IRA Rollover Extended

IRS waived 60-day rollover requirement for failure to roll over funds within 60 days because medical condition impacted taxpayer’s ability to manage his financial affairs. – San Diego CPA Michael Fitzsimmons

Alzheimer’s Patient Guardianship Deductible

IRS has ruled that the costs of establishing a guardianship for an Alzheimer’s patient are deductible medical expenses. [2008-0033]

Energy Efficient Home Improvements Tax Credit

Effective for 2009 (but NOT 2008) Congress reinstated a tax credit for energy efficient home improvements and expanded the credit to cover biomass fuel stoves (whatever those are!). – San Diego CPA Michael Fitzsimmons