Michael Gray, CPA's Tax and Business Insight

March 6, 2013

© 2013 by Michael C. Gray

ISSN 1539-395X

A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!

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Kara Siemer at Lover's Point
Kara Siemer at Lover's Point, Pacific Grove, California.

Happy St. Patrick’s Day and Happy Easter

With an early Easter, this year March will be especially busy.

St. Patrick’s Day will be Sunday, March 17. Enjoy the wearin’ of the green!

Easter will be Sunday, March 31. I like it better when Easter falls after April 15! Hope you enjoy the holiday with family and friends. Travel safely.

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Family birthdays

During March, birthdays will be celebrated by brothers-in-law Wade Allison and Lane Johnston, and my sister Arlene Gray McLean. Happy birthdays!

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Tax season is here! Make your tax preparation appointment now.

If you would like to schedule an appointment for a tax preparation interview, please call Dawn Siemer on a Monday, Wednesday or Friday at 408-918-3162. (Appointments are generally scheduled on Tuesdays and Thursdays.)

We will do our best to have tax returns submitted to us by March 15 completed by April 15. We will probably apply to extend the due dates for any tax returns for which we receive the information after March 15.

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IRS efiling delayed for some tax returns.

IRS efiling programming has been delayed for several forms. The IRS says it should be able to process most of them by the end of this week. The software vendors will also have to update their software to process the forms for efiling. Unfortunately that will delay completing the tax returns and delivering them to clients.

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Unhappy results from late filing of income tax returns.

I have been having some new clients coming to me to catch up on filing late income tax returns, and also have some continuing clients who have gotten behind.

Be aware that the IRS and Franchise Tax Board can prepare income tax returns for you, called a Substitute For Return. Although you can amend a Substitute For Return, any tax due for that year can’t be discharged in bankruptcy.

Also, when a tax return is more than two years late, you lose any refund that you may be entitled to.

Avoid being late with your tax return filing. It leads to continuing to be late in future years, and is a very bad habit.

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Calendar year corporation due date is March 15.

Remember the due date for income tax returns for 2012 calendar-year corporations is March 15, 2013. If you haven’t done it already, get your corporate tax information to your tax return preparer now, so that at least an extension can be done. Remember, there is no extension for paying the tax.

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Remember the second California real estate tax payment is due April 10.

There is a nasty penalty for late payment, and the due date is weird.

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Amended returns deadlines.

Sometimes corrections need to be made for tax returns that have already been filed. For example, a refundable minimum tax credit may have been missed. Another example is a taxpayer may wish to make a claim for a refund for an aggressive tax position with limited time for the tax authorities to raise other issues.

The deadline for filing an amended return for a 2009 federal individual income tax return filed by April 15, 2010 is April 15, 2013. The California deadline is one year later, April 15, 2014. (So amended 2008 California individual income tax returns are due April 15, 2013.)

The deadline for a 2009 federal corporate income tax return filed by March 15, 2010 is March 15, 2013. The California deadline is one year later, March 15, 2014. (So amended calendar year 2008 California corporate income tax returns are due March 15, 2013.)

Tax season is a hard time for working on amended income tax returns, but sometimes it’s necessary. If you think you might need an amended income tax return prepared, tell your tax return preparer now.

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Some California businesses are required to file use tax returns.

California businesses that reported more than $100,000 in gross receipts from a business or rental property on their 2012 federal income tax returns and that don't file sales tax returns are required to electronically file a California use tax return for 2012. Businesses that previously registered with the State Board of Equalization should also file, unless notified otherwise. Some businesses that reported no transactions for three years no longer need to file. The use tax returns and tax payments are due April 15, 2013. A use tax return must be filed even if there is no tax due.

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John Carlton offers a Marketing Rebel Action Seminar.

John Carlton and Stan Dahl are offering a three day Action Seminar on March 22-24 in San Diego, California. John is a top-flight advertising copywriter.

This seminar will be devoted to helping business owners experience explosive growth in their businesses. They have issued a No Pitch Fest Guarantee, so the seminar will be pure content.

Seminar participants will develop a personal Action Plan for 2013. Registration includes a one-year membership in the Marketing Rebel Insider’s Club to assure that you implement your plan.

In addition to copywriting star John Carlton, the seminar will feature Simple Writing System faculty, including “A List” writer David Deutsch.

Seating is very limited.

For details, click this link – https://m190.infusionsoft.com/go/asdv/dgsiemer/

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Please share your good experiences with Michael Gray, CPA.

As you know, more and more people are going to the internet to find information about service providers. We hope you will share some good words about experiences that you have had with our firm. Some of the sites where you can share your experiences include yelp.com, siliconvalley.citysearch.com, and Google+.

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IRS offers simplified safe harbor method for home office deduction.

The IRS has announced an optional safe-harbor method for claiming a home office deduction. The new method is available for tax years beginning on or after January 1, 2013.

Instead of accounting for the various expenses for the home office, the taxpayer simply multiplies the number of square feet used as a home office by a prescribed rate, which is $5 for 2013. The maximum deduction is $1,500.

Most taxpayers would probably have a bigger deduction by detailing their expenses, but the home office deduction also is a “flag” item for IRS audits.

No carryover of disallowed previous year deductions is allowed for a year when the simplified method is elected.

If depreciation is claimed relating to the residence for any other reason, such as rental of a room, the simplified method isn’t allowed.

(Revenue Procedure 2013-13.)

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Fight California assessment for small business stock?

The California Franchise Tax Board is sending Notices of Proposed Assessment (NPA) to taxpayers who claimed an exclusion from taxable income for gain from selling small business stock, based on the decision in Cutler v. Franchise Tax Board (August 28, 2012.)

Some taxpayers and their advisors don’t agree with the Franchise Tax Board’s interpretation that the entire California small business stock statute is invalid, and want to contest the NPA.

In order to contest the NPA, taxpayers who receive one should consider filing a waiver for the statute of limitations for the applicable tax year.

Consult with a tax attorney about whether to contest the assessment and whether extending the statute of limitations makes sense for you. Contesting this issue will be expensive, so it may be less expensive to simply pay the bill.

(Spidell’s California Taxletter®, March, 2013, page 9, “Late-breaking developments on the small business stock issue”.)

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IRS extends effective date for new consent requirements.

The IRS has announced a one-year extension of the deadline for tax return preparers to use new language for a taxpayer’s consent to disclose and use tax return information for individuals. The new forms should be adopted by January 14, 2014. Tax return preparers may continue during this tax season to use the disclosure and use formats previously specified in Revenue Procedure 2008-35.

(Rev Proc 2013-19.)

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Community public access television needs our help.

As you can see below, public access television is a vital part of our educational outreach to various communities. These are usually nonprofit, charitable organizations, like public television stations. Unlike those stations, most of the programming for the public access stations comes from local producers.

This programming includes the local arts, productions by students at local schools, community outreach by churches, independent local producers discussing current social issues, educational programming by local providers like ourselves and much more. In other words, public access television makes a unique, important contribution to the communities it serves.

With the difficult times we are experiencing, many public access stations are facing severe financial challenges, and might not survive without more community financial support. I urge you to consider making a donation to your local public access television station. Here is a link for a list of public access television stations in California: www.communitymedia.se/cat/linksca.htm.

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Financial Insider Weekly broadcast schedule for March and April.

Financial Insider Weekly is broadcast in San Jose and Campbell on Fridays at 8:00 p.m., Pacific Time. You can watch it on Comcast channel 15 for San Jose and Campbell. The show is broadcast as streaming video at the same time at www.creatvsj.org.

Here are the scheduled interviews for March and April:

March 8, 2013, attorney G. Scott Haislet, “Short sale and foreclosure wars”
March 15, 2013, attorney Bernard Vogel III, Silicon Valley Law Group, “Alternative forms for businesses”
March 22, 2013, attorney Michael W. Malter, Binder & Malter, LLP, “What you should know about bankruptcy for individuals”
March 29, 2013, Tom W. Anderson, President, Retirement Industry Trust Association, “How to invest in real estate using your Roth or IRA account”
April 5, 2013, Tom W. Anderson, President, Retirement Industry Trust Association, “How to make alternative investments besides real estate in your Roth or IRA account”
April 12, 2013, Michael Jones, CPA, Thompson Jones LLP, “Community property issues for retirement accounts”
April 19, 2013, attorney Jeffrey Hare, APC, “How to settle legal disputes out of court”
April 26, 2013, attorney Jeffrey Hare, APC, “Using a checkbook LLC to invest Roth & IRA funds”

Financial Insider Weekly is also broadcast as follows:

Past episodes of Financial Insider Weekly are posted on YouTube. One way to watch them is to go to our web site, www.financialinsiderweekly.com, and click on "Past Episodes."

Let me know any ideas that you have for topics or guests. Guests will usually have to be located in or near the Silicon Valley in California.

Hope you can watch or record the show. Please tell your friends about it!

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Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.

For your questions about dependent exemptions, see IRS Publication 501 at www.irs.gov.

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Visit our new article!

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Follow me on Social Media!

Want to see new episodes of Financial Insider Weekly as soon as they're posted on Youtube? Want to see Michael Gray's blog posts as soon as they're live? We post them (and more) on social media!

If you enjoy Twitter, please follow me at www.twitter.com/michaelgraycpa. I would especially appreciate retweets of our messages announcing episodes of Financial Insider Weekly.

I'm also on Facebook, LinkedIn, and Google+.

you can also follow me on other social media sites, Facebook, LinkedIn, and Google+.

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If you have employee stock options, have you subscribed to Michael Gray, CPA's Option Alert at no charge or obligation?

To learn more, visit stockoptionadvisors.com/subscribe.shtml

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Real estate investors, have you subscribed to Michael Gray, CPA’s Real Estate Tax Letter at no charge or obligation?

For details, visit www.realestatetaxletter.com

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Check out my blog.

I have also started a blog at michaelgraycpa.com. Check it out!

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P.S.

My daughter and her husband, Holly and Dan Baker, have a Southern French Restaurant at 23 Ross Common, Ross, California, about 15 minutes north of the Golden Gate Bridge. The name of the restaurant is Marché Aux Fleurs and their website address is marcheauxfleursrestaurant.com. For the best meal of your life, call 415-925-9200 for a reservation and give them a try! For directions, visit our website at www.taxtrimmers.com/directions.shtml.

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Michael Gray, CPA
2190 Stokes St. Ste. 102
San Jose, CA 95128
(408) 918-3162
FAX: (408) 998-2766
Hours: 8am - 5pm PDT Monday - Friday

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