By Robert S. Keebler, CPA, MST, AEP (Distinguished) Section 3 of the Defense of Marriage Act (DOMA) provided that in determining the meaning of any Act of Congress, the word “marriage” meant only the legal union between one man and one woman as husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife. On June 26, 2013, the U.S. Supreme Court invalidated this section of the Act in United States v. Windsor. The decision has far reaching planning implications for married same-sex couples whose marriage is recognized under…
“Green Book” Proposals and Income Tax Planning
By Robert S. Keebler, CPA, MST, AEP (Distinguished) On April 13, the Treasury Department issued its annual Revenue Raising Proposals, commonly referred to as the“Green Book”. In this column we will summarize the key income tax proposals and suggest some planning ideas. These proposals include: (1) Implementing the Buffett Rule by imposing a new “Fair Share Tax;” (2) Reducing the value of certain income tax deductions and exclusions; (3) Limiting the total amount a taxpayer can accrue in tax favored retirement plans; (4) Shortening the deferral period for inherited IRAs; and (5) Taxing carried interests as ordinary income. INCOME TAX…
Tax Planning for 2013 Under the New Laws
By Robert S. Keebler, CPA, MST, AEP (Distinguished) As you probably know all too well, tax rates increase substantially in 2013 and later years for high income taxpayers. Not only did the top income tax rate increase from 35% to 39.6%, but a 3.8% Medicare surtax is now imposed on net investment income (NII). The 39.6% rate now applies to taxable income over $450,000 for married taxpayers and $400,000 for single taxpayers. In addition, net investment income is subject to a new 3.8% Medicare surtax to the extent modified adjusted gross income exceeds $250,000 for married taxpayers and $200,000 for…
New Tax – Unearned Income Medicare Contribution Tax (UIMCT)
The Ultimate Estate Planner, Inc. is pleased to share with you a copy the article, “Tax Planning for the New 3.8-Percent Medicare Tax” by Robert S. Keebler, CPA, MST, AEP (Distinguished) found in the Family Tax Planning Forum that appeared in TAXES – The Tax Magazine®’s October 2012 edition. The Health Care and Education Reconciliation Act of 2010 created a 3.8% tax, referred to as an Unearned Income Medicare Contribution Tax (UIMCT), on certain passive investment income of individuals, trusts and estates scheduled to begin in 2013. The attached article provides an overview of the new tax, explains how it…
New IRS Form 706 Implements 2 Major Changes in the Law
At The Ultimate Estate Planner, Inc. it’s important to us to keep our customers and the rest of the estate planning community informed about very important and exciting updates as it happens. A special thank you to Joseph C. Mahon featured on WealthManagement.com. IRA Issues Draft Form 706 by Joseph C. Mahon The revisions implement two major changes in the law On Aug. 16, the Internal Revenue Service released a draft version of a revised Form 706 (the 706), “United States Estate (and Generation Skipping Transfer Tax) Return.” www.irs.gov/pub/irs-dft/f706–dft.pdf. It didn’t release instructions. The revisions implement two major changes in…
Healthcare Surtax Examples from Robert S. Keebler, CPA, MST, AEP (Distinguished)
In an effort to help fellow advisors better understand the 3.8% HealthCare Surtax, nationally renowned CPA, Robert S. Keebler, has issued the examples below to help you. John, single, has $100,000 of salary and $50,000 of net investment income. The 3.8% surtax would not apply (MAGI <$200,000). Mary, single has $225,000 of net investment income and no other income. The 3.8% surtax would apply to $25,000 of income (excess of $225,000 MAGI over $200,000 “threshold amount”). Terry and Tina, married filing jointly, have $300,000 of salaries and no other income. The 3.8% surtax would not apply (no net investment income)….
IRS Issues Long-Awaited Portability Guidance
On June 15, 2012 the Internal Revenue Service issued temporary regulations (T.D. 9593) and proposed rules (REG-141832-11) on the portability of a deceased spousal unused exclusion amount applicable where the death of the first spouse occurs on or after Jan. 1, 2011. Here are the highlights. Election Required Portability must be elected on a “timely filed” Form 706, which, regardless of the size of the estate, is a return filed within nine months of death or, if an extension has been granted, the last day of the extension period. The IRS has required that the portability election be made on…
Attract, Engage & Work with Families with Taxable Estates and Their Advisors
For decades many of us, as wealth strategies planners, have wondered not only how but if we should attract, engage and work with affluent families and those with complex taxable estates. Their advisors are more protective. The solutions are more complicated and create larger liability. Though the fees may be greater, are they enough to cover the time and effort – especially if we only do it occasionally? The Laureate Center for Wealth Advisors has the training and education needed to attract, engage, and implement work in the taxable estate arena. You owe it to yourself and your clients to…
How Do You Convince Clients to Actually Do GRATs (and Other Estate Tax Planning)?
Most practitioners know about the estate tax planning “window of opportunity” that may be closing soon. We’ve only got the $5.12 million gift tax exemption until year-end and President Obama’s budget proposal has targeted “loopholes” like GRATs and valuation discounts. You would think these urgencies would be enough to convince high net worth clients to move forward with advanced-level planning (like Dynasty Trusts, GRATs, LLCs, installment sales and completed gift DAPTs) — but it’s still difficult to get people to take action! Having run into this client procrastination problem too many times, I realized that this has less to do…
Paul Hood on Wandry v. Commissioner: A Significant Taxpayer Win in another Defined Value Case
Reproduced with Permission by and Courtesy of Leimberg Information Services, Inc. (LISI) and L. Paul Hood, Jr.. For information about how to subscribe to LISI, click here. “Congratulations to counsel to the taxpayers for a slam dunk taxpayer victory! You should read this opinion. It is an important extension of defined value gifts and proves that one doesn’t need a charitable or marital “wrapper” for these things to work properly as I have argued in published articles for almost ten years. In my opinion, the bottom line is that properly designed and implemented defined value transfers are more legitimate now…