MM&C Estate Planning Attorneys to Give Seminar on Wills & Trusts for National Business Institute


Glenn Anderson and Helen Whelan of Miller, Miller & Canby’s Trusts & Estates Practice Group will be speaking at the National Business Institute’s CLE Program on Tuesday, October 18.  Titled “Wills & Trusts: Mistakes to Avoid”, their talk will focus on how to prevent and correct estate planning mistakes. It’s designed for attorneys, accountants, estate and financial planners, trust officers and paralegals. Among other topics, the program will include information on correcting errors in will drafting, trust administration and trust structure documents. It will highlight the differences between wills and revocable living trusts, and will also delve into legal ethics. Practical tips for understanding and anticipating client needs, as well as finding the right balance between broad and restrictive trust language will also be explored. For more information or to register for the program, which will be held in Frederick, MD, click here.

Glenn Anderson leads the firm’s Business & Tax and Estates & Trusts Practice Groups.  As both a CPA and apracticing attorney, he has developed a recognized expertise in estate planning with an emphasis on tax law and business succession planning. 

Helen Whelan is a Principal in the firm’s Estates & Trusts Practice Group, and is also a CPA and practicing attorney. She has earned a recognized expertise in estate planning with an emphasis in Elder Law (special needs for the elderly and disabled) and is also certified by the Department of Veterans Affairs to counsel clients with respect to veterans’ benefits.

Miller, Miller & Canby has assisted clients with estate planning for 70 years.  Please feel free to contact Glenn or Helen at 301-762-5212 for estates & trusts and elder law planning needs.  View more information about Miller, Miller & Canby's Elder Law and Estates & Trusts practice by clicking here.
 





Valuation Discount for Gift & Estate Tax Planning May Be Ending;Take Advantage of Current Tax Law


A popular technique used by some business owners to reduce estate taxes and facilitate business succession planning may soon be closing.  On August 2, 2016, the IRS issued proposed regulations which, if adopted, would substantially reduce the ability of business owners to achieve certain valuation discounts on the transfers of minority interests in family owned businesses for gift and estate tax purposes.  As the proposed regulations must go through a 90-day public comment period, and will not go into effect until 30 days after being finalized, these changes will not likely take effect until early 2017.  That creates an excellent planning opportunity now until the end of the year to take advantage of the existing law before potential changes take effect.

Current Business Valuation Law Benefit for Estate & Gift Tax Planning

Under current law, the value of a fractional share in a business is not as a mere fraction of the value of the whole business, but factors in certain discounts that a neutral third-party buyer would normally require.  For example, a buyer would generally expect a discount to compensate that buyer for lack of control of the business if receiving less than a controlling interest.  In addition, that buyer would also want a discount for the lack of marketability of a fractional interest if there were restrictions on his or her ability to sell that interest.  Depending on the facts and circumstances, these discounts could be as much as fifty (50%) percent of the proportionate part of the business.  For purposes of simplicity, I will use a 50% discount in my example below.

Assume I own a one hundred (100%) percent ownership interest in a business which as a whole is worth $10 million. That interest is worth $10 million.  However, if a majority vote in interest (more than fifty percent (50%)) is needed to approve any action in the business, and that no interest in the business can be transferred without the consent of a majority vote in interest a neutral third-party buyer would expect discounts for anything less than a controlling interest.

 If I gift a twenty-four (24%) percent in the business to each of my three children and retain the remaining twenty-eight percent (28%), none of us will have control of the business and none of us will be able to make any further transfers of interest without consent (one of my three children will need to vote with me on any issue to reach a majority interest). Based on the lack of control and substantial restrictions on transfer, the interest owned by each of my three children is not worth $2.4 million, but rather is worth $1.2 million. Further, the interest that I have retained is not worth $2.8 million, but rather is worth $1.4 million.

I have therefore gifted seventy-two (72%) of the business to my children utilizing only $3.6 million dollars of my gift tax exclusion and the value of the interest retained by me is now worth only $1.4 million dollars.  Instead of having a $10 million taxable estate on my death with a marginal federal tax rate as high as forty (40%) percent and a marginal Maryland estate tax rate as high as sixteen (16%) percent, I would now have a federal estate below the $5 million dollar exemption and may have a Maryland estate below the applicable exemption amount (which is currently $2 million and will be gradually increased to $5 million dollars (indexed for inflation) by 2019).  I have therefore avoided the federal and Maryland estate taxes involved in passing my business down to my children.

Take Advantage of Current Tax Planning Opportunity Before 2017

The IRS proposal, if adopted in its current form, would make it more difficult for owners of family businesses to utilize these types of valuation discounts as part of their business planning/estate planning strategies.  

There is also uncertainty with an upcoming November election.  Democratic presidential candidate, Hillary Clinton, has indicated that if elected she would work towards changing the gift and estate tax laws back to the way they existed in 2009.  At that time, the estate tax exclusion was only $3.5 million per person, the gift tax exclusion was only $1 million per person, and the marginal federal gift/estate tax rate was 45%.  Republican presidential candidate, Donald Trump, has indicated that he does not support these proposals.

In this time of uncertainty, the one thing we can be certain of is that a planning opportunity exists now to take advantage of the existing law before potential changes could take effect in 2017.  Contact Glenn Anderson at 301-762-5212  to take advantage of this tax planning opportunity.

Miller, Miller & Canby has assisted clients with business law, tax planning and estates & trusts for 70 years. Glenn Anderson leads the Business & Tax and Estates & Trusts practice groups at Miller, Miller & Canby.  As both a CPA and a practicing attorney, he has developed a recognized expertise in taxation law.

Please feel free to contact Glenn or any of the business & tax planning attorneys at Miller, Miller & Canby to take advantage of current business succession planning tax law and other tax planning needs.  View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.  View more information about Miller, Miller & Canby's Elder Law and Estates & Trusts practice by clicking here.
 





Changes Coming in Veterans' Benefits for 2016


2016 will be bringing numerous changes to both process and eligibility with respect to levels of benefits for which veterans may apply.

Miller, Miller & Canby attorney, Helen M. Whelan is accredited by the Department of Veterans Affairs to advise veterans and their families on financial benefits for which they may qualify.

Applying for benefits is often a long and difficult process. Because many VA laws are complex, it is helpful to have guidance in navigating through the regulations and the steps involved. Helen will advise you on the levels of financial benefits for which you may qualify and we strive to make the claims process easier so you can focus on providing for your family and successfully navigating your future.

Not only does Helen outline the steps necessary to qualify for benefits and assist in the process, she also helps with putting together a subsequent strategy. There are specific instances where counsel is helpful in implementing long-term planning.  For example, it may be advantageous to move assets into a trust as part of a detailed financial plan. 

For more information about our Veterans' Benefits practice, please click here.  If you or a family member needs guidance regarding benefits, please contact Helen Whelan.  

Helen M. Whelan
is a principal with Miller, Miller & Canby and concentrates her practice in Veterans Benefits, Elder Law, Estate and Tax Planning and Trust & Estate Administration. She is licensed to practice law in Maryland, the District of Columbia and West Virginia and is also a CPA with a Masters’ Degree in Taxation.





Take Advantage of Gun Trusts Before Regulatory Changes Take Place in July 2016


What is a Gun Trust?

A Gun Trust is a trust created specifically to own firearms in compliance with the National Firearms Act (NFA) and specific state and local laws.  The purposes of a Gun Trust are several fold:  it reduces the red tape necessary to acquire certain firearms, it allows the beneficiaries to use and enjoy the firearms, and it avoids the difficulties of transferring firearms on the death of a primary beneficiary.

If an individual wishes to acquire certain firearms, federal law requires that he or she must be fingerprinted, have background checks performed, and have the Chief Law Enforcement Officer (CLEO) in the individual’s jurisdiction sign off on the necessary paperwork and send to the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).  This red tape is not only burdensome, but in many jurisdictions, CLEO’s simply refuse to sign off on the necessary paperwork.  These requirements currently only apply to individuals and not to entities.

Why Create a Gun Trust?

By creating a proper Gun Trust, the trust itself (an entity) can own the firearms thus avoiding much of the red tape that an individual would go through.  If drafted properly, a Gun Trust can avoid a transfer upon the death of a primary beneficiary (as the trust itself continues to own the firearms).

Gun Trusts have been gaining in popularity.  According to the ATF, the Bureau received over 235,000 NFA applications in 2014.  The rise in the use of Gun Trusts has caused the ATF to adopt a new regulation (27 CFR Part 479 Docket No. ATF 41F; AG Order No. 3608-2016) which will require Gun Trusts to comply with the same requirements as individuals on the transfer of certain firearms occurring after July 13, 2016.  This means that transfers into Gun Trusts after July 13, 2016 will require fingerprints, background checks, and CLEO approval.

Concerned about the upcoming regulatory change, many gun owners are now creating Gun Trusts and are transferring their firearms into one or more Gun Trusts prior to July of 2016.  While the next several months present an excellent planning opportunity to establish a Gun Trust and transfer firearms into that trust before the regulatory change takes effect, care must be taken in establishing a proper Gun Trust.  

Many people have tried to use garden variety revocable trusts (also known as living trusts) or have obtained forms over the internet.  Keep in mind that a copy of the executed Gun Trust must be submitted to the ATF along with the transfer application and the Gun Trust needs to comply with federal law as well as applicable state and local law.  Many generic revocable trusts and internet forms do not meet these requirements.    

The law firm of Miller, Miller and Canby has been assisting clients with their estate planning needs for 70 years.  Our estate planning attorneys continuously take continuing legal education courses to stay on top of new developments in this area of law, including the regulatory changes concerning Gun Trusts.  Glenn Anderson heads the Trusts and Estates Practice Group at Miller, Miller & Canby and has recently completed several continuing legal education courses on Gun Trusts.  Contact Glenn Anderson here.





The “What, Why and How” of Advance Medical Directives


Advance Medical Directives are familiar to most of us. As written statements that detail a person’s wishes regarding medical treatment, they are prepared to ensure those wishes will be carried out if he or she becomes incapacitated and incapable of communicating them.

Most of us understand that it will be important to prepare these documents at some point in our lives. By thinking ahead, we can spare our loved ones the unnecessary stress of having to make difficult decisions on our behalf.

In Miller, Miller & Canby's estate planning law practice (planning for the management and transfer of a person’s assets with an emphasis on minimizing applicable taxes) and our elder law practice (planning for a person’s disability with an emphasis Medicaid, VA benefits, and long-term care issues) we typically see clients come in to plan these documents because one of two things has happened. The client's parents may have had no instructions in place and, as a result, the client experienced firsthand the anxiety of having to make difficult decisions, and would want to spare loved ones the same fate.  On the other hand, the client may have experienced peace of mind in a situation where instructions were prepared and, therefore, wants to ensure the same positive experience for loved ones.

Equally as important as creating the Advanced Medical Directive is planning for what to do after the paperwork is prepared. Where should the directive be stored? If the directive is prepared, but cannot be accessed or found at the appropriate time, it might as well not exist. Unfortunately, this happens more often than it should.

You’ve Prepared the Directive…What’s Next?
Clients will want to provide copies of their Advance Medical Directive to their doctors and to the person designated to make the medical decisions for them (or let their agent know where the original is located).  If your preference is for your children or other loved ones not to see the Advance Medical Directive ahead of time, as it might cause unnecessary stress, they should at least know that you have one and where to find it or the attorney who prepared it in the event it does become necessary to access the documents.   Your attorney may also retain a duplicate of the original for you.  There are also programs that allow for storing the Advance Medical Directive in the cloud so it may be accessed by any medical personnel universally.  

Advance Medical Directives can be drafted to give clients a choice: (i) do they want to give the agent flexibility, e.g. the ability to do something different than stated in the document, in the event something "unforeseeable" occurs and the agent believes it is in the principal's best interests, or (ii) do they want to stipulate that the agent simply follow the instructions as set forth.  Most of the time, clients will know whether or not their agent is likely to follow their instructions and choose accordingly. The document can be revoked orally or in writing, which allows you to make changes if desired.

Thinking Beyond the Advance Medical Directive
The Advance Medical Directive is only one of the documents that should be in place when planning for disability or incapacity.  There are additional documents that are equally important, such as a Financial Power of Attorney.  But the Advance Medical Directive and Financial Power of Attorney both terminate in the event of death...which is why it is also necessary to plan for how your estate will be distributed when you pass away.

The bottom line is…it is always better to plan than to allow fate (or someone who ultimately may not make the decisions you would want) to make decisions for you and spare your loved ones any additional anxiety during what is already an extremely difficult time.

For more information about the preparation and planning of Advance Medical Directives, please contact Helen Whelan.  To learn more about Miller, Miller & Canby’s Estates & Trusts and Elder Law practice click here.

Helen Whelan is a principal with Miller, Miller & Canby and concentrates her practice in Elder Law, Estate and Tax Planning and Trust & Estate Administration. She is licensed to practice law in Maryland, the District of Columbia and West Virginia and is also a CPA with a Masters’ Degree in Taxation.

May is National Elder Law Month.  Learn more about this fast-growing area of the law here.

 





MM&C Welcomes New Business & Tax Attorney Michael S. Spencer


Miller, Miller & Canby welcomes Michael S. Spencer as an attorney in the Business and Tax Practice Group. Mr. Spencer brings experience in tax law and corporate transactional law to the firm.

Prior to joining Miller, Miller & Canby, Mr. Spencer served as an Associate Tax Attorney for Frost & Associates, LLC, where he focused on tax controversy, serving clients on a wide range of matters related to IRS examinations. His experience includes representation on tax liens, tax levies, wage garnishments, collection due process hearings, collection appeals, offer in compromises, requests for penalty abatement, and tax court petitions. 

Mr. Spencer is a native of Montgomery County. He has a Master of Laws in Taxation from the New York University School of Law and earned his J.D. degree from the University of Baltimore School of Law, where he was Managing Editor of The Law Review. He is a member of the Maryland State Bar Association, the U.S. Tax Court Bar Association, the U.S. District Court for the District of Maryland Bar Association, the Montgomery County Bar Association, and is an associate member of the American Association of Attorney-Certified Public Accounts. Mr. Spencer clerked for the Honorable John W. Debelius III, of the Montgomery County Circuit Court.

We are pleased to welcome Mike to our team.  To find out how his expertise may be of benefit to you, contact Michael Spencer.





Achieving a Better Life Experience Act of 2014 Provides Tax Advantages for the Disabled


On December 19, 2014, the Tax Increase Prevention Act of 2014 (the Act) was signed into law. Within the Act there was another bill, the "Achieving a Better Life Experience Act (ABLE) of 2014." ABLE establishes a new type of tax-advantaged account for persons with disabilities; which allows them to save money for future needs while remaining eligible for government benefit programs.  

ABLE Accounts
Beginning in 2015, the Act allows states to establish tax-exempt Achieving a Better Life Experience (ABLE) accounts to assist persons with disabilities in building an account to pay for qualified disability expenses. An ABLE account can be set up for an individual (1) who is entitled to benefits under the Social Security Disability Insurance (SSDI) program or the Supplemental Security Income (SSI) program due to blindness or disability occurring before the age of 26 or (2) for whom a disability certificate has been filed with IRS for the tax year.  

Annual contributions are limited to the amount of the annual gift tax exclusion for that tax year ($14,000 for 2015). Distributions are tax-free to the extent they don't exceed the beneficiary's qualified disability expenses for the year. Distributions that exceed qualified disability expenses are included in taxable income and are generally subject to a 10% penalty tax. However, distributions can be rolled over tax-free within 60 days to another ABLE account for the benefit of the beneficiary or an eligible family member. Similarly, an ABLE account's beneficiary can be changed, as long as the new beneficiary is an eligible family member.  

Except for SSI, ABLE accounts are disregarded for federal means-tested programs. Additionally, some ABLE accounts are provided limited bankruptcy protection.

Miller, Miller & Canby has assisted clients with estate & tax planning for over 65 years. Helen Whelan, a Principal with Miller, Miller & Canby, is an estate and trusts and Elder Law attorney who works closely with clients to assist them in planning for their care.  She can recommend valuable resources to help individuals who may begin caring for a person who is elderly, disabled, or with special needs.  She is a member of The National Academy of Elder Law Attorneys (NAELA), which was founded in 1987 as a professional association of attorneys who are dedicated to improving the quality of legal services to seniors and people with special needs.  Helen is a member of Elder Counsel, a network of professionals who center their attention on the needs of the elderly, disabled and those with special needs.  She also holds the accreditation from the Department of Veterans Affairs (VA) to provide counsel and representation to veterans and their families.  As both a CPA and a practicing attorney, Helen has developed a recognized expertise in elder law and taxation law.

View more information
on Miller, Miller & Canby’s Elder Law Practice.  Contact Helen Whelan at 301-762-5212 or send her an email to schedule a meeting or discuss the benefits of ABLE accounts.





The Tax Increase Prevention Act of 2014: Tax Tips for Businesses


On December 19, 2014, the Tax Increase Prevention Act of 2014 (the Act) was signed into law. The Act retroactively extends many expiring tax provisions.

Extended Cost Recovery Provisions

50% Bonus Depreciation: The Act extends 50% first-year bonus depreciation for an additional year to cover qualifying new (not used) assets that are placed in service in calendar-year 2014. However, the placed-in-service deadline is extended to December 31, 2015, for certain assets that have longer production periods. Under the extended deadline privilege, only the portion of a qualifying asset's basis that is allocable to costs incurred before 2015 is eligible for 50% bonus depreciation. For a new passenger auto or light truck that is subject to the luxury auto depreciation limitations, the 50% bonus depreciation provision increases the maximum first-year depreciation deduction by $8,000.  

Generous Section 179 Rules: For qualifying assets placed in service in the tax year beginning in 2014, the Act restores the maximum Section 179 deduction to $500,000 (same as for tax years beginning in 2013). Without this change, the maximum deduction would have been only $25,000 for 2014. The Act also restores the Section 179 deduction phase-out threshold to $2 million for tax years beginning in 2014 (same as for tax years beginning in 2013). Without this change, the phase-out threshold would have been only $200,000 for 2014. The temporary rule that allowed up to $250,000 of Section 179 deductions for qualifying real property placed in service in tax years beginning in 2013 was also retroactively restored for tax years beginning in 2014.  

15-year Depreciation for Leasehold Improvements, Restaurant Property, and Retail Space Improvements: The Act retroactively restores the 15-year straight-line depreciation privilege for qualified leasehold improvements, qualified restaurant property, and qualified retail space improvements for property placed in service in 2014.  


Extended Tax Credit Provisions for Business

Research Credit: The Act retroactively restores the research credit to cover qualifying expenses paid or accrued before 2015.  

Work Opportunity Credit Hiring Deadline: The Act retroactively extends the deadline for employing eligible individuals for purposes of claiming the Work Opportunity Tax Credit to cover qualifying hires that begin work in 2014.  

Differential Pay Credit for Small Employers: The Act retroactively restores the credit for eligible small employers that provide differential pay to employees while they serve in the military to cover payments made in 2014. The credit equals 20% of differential pay of up to $20,000 paid to each qualifying employee.  

Credit for Building Energy-efficient Homes: The Act retroactively extends the $2,000 or $1,000 (depending on the projected level of fuel consumption) per-home contractor tax credit for building new energy-efficient homes in the U.S. to qualifying homes sold by December 31, 2014 for use as a residence.  

Credits for Renewable Energy Production Facilities: The Act retroactively restores the renewable energy production credit for one year to cover facilities that begin construction before 2015.  


Extended Provisions on Charitable Donations

Enhanced Deduction for Food Donations: The Act retroactively restores, for 2014, the enhanced charitable contribution deduction for non-C corporation businesses that donate food (it must be apparently wholesome when donated). This provision is intended for non-C corporation businesses that have food inventories, such as restaurants. For non-C corporation taxpayers, deductions for donated food are normally limited to the taxpayer's basis in the food or FMV, whichever is lower. In contrast, the enhanced deduction equals the lesser of: (1) basis plus half the value in excess of basis or (2) two times the basis. (The same enhanced deduction rule has been available to C corporations for years.)  

Favorable Rule for S Corporation Donations of Appreciated Assets: The Act retroactively restores for tax years beginning in 2014 the favorable shareholder basis rule for stock in S corporations that make charitable donations of appreciated assets. For such donations, each shareholder's tax basis in the S corporation's stock is only reduced by the shareholder's prorata percentage of the company's tax basis in the donated assets. Without the extended provision, a shareholder's basis reduction would equal the passed- through write-off for the donation (a larger amount). The extended provision is taxpayer-friendly because it leaves shareholders with higher tax basis in their S corporation shares.  


Other Extended Provisions

Parity for Employer-provided Parking and Transit Benefits: The Act extends for one year, through 2014, the parity provision that requires the tax exclusion for transit benefits to be the same as the exclusion for parking benefits. Thus, for 2014, employees can be given tax-free transit benefits of up to $250 a month-the same as for tax-free parking benefits.   

Break for S Corporation Built-in Gains: When a C Corporation converts to S corporation status, the corporate-level built-in gains tax generally applies when built-in gain assets (including receivables and inventories) are turned into cash or sold within the recognition period. The tax is only assessed on built-in gains (excess of FMV over basis) that exist on the conversion date. The recognition period is normally the 10-year period that begins on the conversion date. However, for S corporation tax years beginning in 2012 and 2013, the recognition period was five years. The Act retroactively restores the five-year recognition period for tax years beginning in 2014. In other words, for gains recognized in 2014, the built-in gains tax won't apply if the fifth year of the recognition period has gone by before the start of 2014.  

Energy Efficient Commercial Buildings Deduction: The Act retroactively restores the deduction for the cost of an "energy efficient commercial building property" placed in service during the tax year for one year, for property placed in service before 2015. The maximum deduction for any building for any tax year is the excess (if any) of the product of $1.80, and the square footage of the building, over the total amount of the Section 179 deductions claimed for the building for all earlier tax years.  

Miller, Miller & Canby has assisted clients with business law, tax planning and estates & trusts for over 65 years. Glenn Anderson leads the Business & Tax and Estates & Trusts practice groups at Miller, Miller & Canby.  As both a CPA and a practicing attorney, he has developed a recognized expertise in taxation law. 

Please feel free to contact Glenn or any of the business & tax planning attorneys at Miller, Miller & Canby with your tax planning needs.  View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.
 





The Tax Increase Prevention Act of 2014: Tax Tips for Individuals


On December 19, 2014, the Tax Increase Prevention Act of 2014 (the Act) was signed into law. The Act retroactively extends many expiring tax provisions.

Extended Tax Provisions for Individuals

Qualified Tuition Deduction: This write-off, which can be as much as $4,000 or $2,000 for higher income taxpayers, expired at the end of 2013. The Act retroactively restores it for 2014.  

Tax-free Treatment for Forgiven Principal Residence Mortgage Debt: For federal income tax purposes, a forgiven debt generally counts as taxable Cancellation of Debt (COD) income. However, a temporary exception applied to COD income from cancelled mortgage debt that was used to acquire a principal residence. Under the temporary rule, up to $2 million of COD income from principal residence acquisition debt that was cancelled in 2007-2013 was treated as a tax-free item. The Act retroactively extends this break to cover eligible debt cancellations that occur in 2014.  

$500 Energy-efficient Home Improvement Credit: In past years, taxpayers could claim a tax credit of up to $500 for certain energy-saving improvements to a principal residence. The credit equals 10% of eligible costs for energy-efficient insulation, windows, doors, and roof, plus 100% of eligible costs for energy- efficient heating and cooling equipment, subject to a $500 lifetime cap. This break expired at the end of 2013, but the Act retroactively restores it for 2014.  

Mortgage Insurance Premium Deduction: Premiums for qualified mortgage insurance on debt to acquire, construct, or improve a first or second residence can potentially be treated as deductible qualified residence interest. The deduction is phased out for higher-income taxpayers. Before the Act, this break wasn't available for premiums paid after 2013. The Act retroactively restores the break for premiums paid in 2014.  

Option to Deduct State and Local Sales Taxes: In past years, individuals, who paid little or no state income taxes, had the option of claiming an itemized deduction for state and local general sales taxes. The option expired at the end of 2013, but the Act retroactively restores it for 2014.  

IRA Qualified Charitable Contributions: For 2006-2013, IRA owners who had reached age 70 1/2 were allowed to make tax-free charitable contributions of up to $100,000 directly out of their IRAs. These contributions counted as IRA Required Minimum Distributions (RMDs). Thus, charitably inclined seniors with more IRA money than they needed could reduce their income tax by arranging for tax-free QCDs to take the place of taxable RMDs. This break expired at the end of 2013, but the Act retroactively restores it for 2014, so that it's available for qualifying distributions made before 2015.  

$250 Deduction for K-12 Educators: For the last few years, teachers and other eligible personnel at K12 schools could deduct up to $250 of school-related expenses paid out of their own pockets whether they itemized or not. This break expired at the end of 2013. The Act retroactively restores it for 2014.  

Qualified Conservation Contribution Breaks: Qualified conservation contributions are charitable donations of real property interests, including remainder interests and easements that restrict the use of real property. Liberalized deduction rules applied through 2013 that increased the maximum write-off for these contributions. The Act retroactively restores these liberalized rules for contributions made in 2014.

100% Gain Exclusion for Qualified Small Business Corporation (QSBC) Stock: The Act retroactively restores the temporary 100% gain exclusion (within limits) and the exception from alternative minimum tax preference treatment for sales of QSBC stock acquired in 2014. Note that you must hold QSBC shares for more than five years to be eligible for the 100% gain exclusion privilege.  

Miller, Miller & Canby has assisted clients with estate & tax planning for over 65 years. Glenn Anderson leads the Business & Tax and Estates & Trusts practice groups at Miller, Miller & Canby.  As both a CPA and a practicing attorney, he has developed a recognized expertise in taxation law. 

Please feel free to contact Glenn or any of the business & tax planning attorneys at Miller, Miller & Canby with your tax planning needs.  View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.

 





2014 Year-End Tax Tips for Individuals


The National Society of Accountants has suggested some year-end tax tips to help individuals and families save money on taxes for this year and beyond, as outlined below:

Current individual income tax rates of 10, 15, 25, 28, 33, 35 and 39.6 percent will be in place for 2015, as will current tax treatment of capital gains and dividends. The limitation on itemized deductions and the personal exemption phase-out are also expected to remain unchanged for 2015.

One traditional planning tactic is to spread recognition of your income between years by postponing year-end bonuses, maximizing deductible retirement contributions, and delaying your year-end billings. You may also want to pre-pay real estate taxes or mortgage interest. Timing recognition of your capital gains and losses at year’s end may minimize your net capital gains tax and maximize deductible capital losses.

Life changes: Did you get married or divorced? Change jobs or retire? Review events in 2014. A change in employment, for example, may bring about severance pay, sign-on bonuses, stock options, moving expenses, and COBRA health benefits, among other changes that affect your taxes.

Retirement savings: You can contribute up to $5,500 to an individual retirement account or Roth IRA for 2014 and, if you’re 50 or older, make catch-up contributions of an additional $1,000. You also have until April 15, 2015, to make an IRA contribution for 2014. A myRA account—a new type of retirement savings vehicle from the federal government for people who don’t have an employer-sponsored retirement plan—might also receive contribution tax benefits.

Giving: You can make tax-free gifts of $14,000 per recipient (unlimited in number) for 2014. You and your spouse can also combine gift-tax exclusions and make tax-free gifts per recipient of up to $28,000. Bear in mind too that you can make unlimited tax-free gifts for qualified tuition or medical expenses of another person (must be paid directly to a medical or educational institution).

New Developments
The new net investment income (NII) tax may become part of your tax planning. The Affordable Care Act created the NII to help fund health-care reform. There are three categories of NII:

• Gross income from interest, dividends, annuities, royalties, and rents if the income is not derived in a trade or business;

• Income from a “trade or business” that’s a passive activity under Code Sec. 469, or is from a business as a financial trader; and

• Net gains from the sale of property, unless the property is held in a non-passive trade or business.

Certain income thresholds trigger the NII: $200,000 for single taxpayers; $250,000 for married couples filing a joint return; and $125,000 for married couples filing separately.

Extenders: Among popular extenders (aka tax breaks) still in effect: deductions for state and local general sales tax, mortgage insurance premiums, and teachers’ classroom expenses; and breaks for qualified charitable distributions from IRAs, higher education tuition, and charitable contributions of real property for conservation purposes.

Permanent extenders include the student loan-interest deduction, special enhancements to the earned income tax credit, the child tax credit, and the child and dependent care credit, and special enhancements to the adoption credit and adoption assistance programs.

Health Insurance
The ACA now mandates that you carry health insurance or make a shared responsibility payment, unless you’re exempt. For many, employer-provided health insurance, Medicare, or Medicaid satisfies this mandate.

If you must make a responsibility payment with your 2014 return, you owe 1/12th of the annual payment for each month that you or your dependents are not covered and not exempt.

For 2014, the total annual payment is generally the greater of:

• 1 percent of your household income above the tax return threshold for your filing status (for example, your income above $10,150 if you are younger than 65 and file using Single status, or your income above $22,700 if you file Married Filing Jointly with your spouse and you’re both 65 or older).

• A flat dollar amount of $95 per adult and $47.50 per child, to a maximum of $285.

The annual payment maxes out at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014 ($2,448 per individual, $12,240 for a family of five or more).

Miller, Miller & Canby has assisted clients with estate & tax planning for over 65 years. Glenn Anderson leads the Business & Tax and Estates & Trusts practice groups at Miller, Miller & Canby.  As both a CPA and a practicing attorney, he has developed a recognized expertise in taxation law.  Please feel free to contact Glenn or any of the business & tax planning attorneys at Miller, Miller & Canby with your tax planning needs.  View more information about Miller, Miller & Canby's Business & Tax practice by clicking here.





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