Michael Gray, CPA's Tax and Business Insight

November 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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Kyan and Clive Baker in front of a neighbor's Monster House.
Kyan and Clive Baker in front of a neighbor's Monster House.

Happy Thanksgiving!

Thanksgiving is going to be late this year, on November 28. That day will also be the first day of Hanukkah for those of the Jewish faith.

We wish you a very happy and safe holiday and hope you are able to spend the day with your family or loved ones.

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Family celebrations.

My brother, Stephen, and I are celebrating our 62nd birthday this month. It's good to still be here in good health!

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We have upgraded security when sending your sensitive documents.

You should notice that our procedure has changed for when we send documents with identification numbers or otherwise sensitive documents. The service is called Share File. The good news it's easy for clients to use because no password is required and there is no involved procedure for uploading documents to a portal.

Clients can also use the service to send documents to us via a link at our web site, www.taxtrimmers.com, or via a link that will eventually be nested in our emails.

This is a much simpler process than the portal that we have been using, so we hope you like it better and use it.

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Attention tax professionals! Michael Gray gives a live presentation on November 7.

Michael Gray, CPA will give a live lunchtime presentation, "Tax Planning Issues for IRAs and Retirement Plans", for the Tax Interest Group, Silicon Valley San Jose chapter, California Society of Certified Public Accountants. It will be located at Abbott, Stringham and Lynch in San Jose. The investment is only $20 for CalCPA members or $25 for nonmembers. Here's a link with details, or call Stephanie Stewart at 408-983-1122.

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IRS processing delayed by federal shutdown.

The IRS has announced that they won't be able to start processing 2013 income tax returns on time, because they were shut down for 16 days during October. They need more time to prepare for processing the tax returns. The expected date for the IRS to start processing 2013 income tax returns is about January 28, 2014, but no later than February 4.

The April 15 filing deadline won't be changed.

Despite the delay in being able to submit income tax returns, we urge our readers and our clients to go ahead as you normally would and get your information to your tax return preparer early to avoid a bottleneck and applying for an extension of time to file your income tax returns.

(IR-2013-82.)

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Should you buy business equipment before December 31?

Remember the increased expense election and bonus depreciation are scheduled to expire after December 31, 2013. Congress might extend these incentives, but we don't know if they will. Consider making your business equipment purchases before the end of the year. See your tax advisor for details.

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Seniors, remember to take your required minimum distributions.

Generally when a participant in a retirement plan or an IRA reaches age 70 ½, minimum distributions are required to be made by December 31 each year. The distributions are also required to be made for inherited accounts. Roth accounts are excluded from this rule during the original owner's lifetime. See your tax advisor for details.

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District court will rule whether Premium Assistance Tax Credit will be allowed.

A federal district court will hear a lawsuit challenging whether residents of states that use the federal website exchange to purchase medical insurance under Health Care reform will be eligible to receive tax credits for a portion of the premium. The IRS said in regulations that residents of those states should receive the same tax benefits as residents of states that provide their own web site exchanges, like California. That doesn't seem to agree to the strict language of the law.

Congress could clean up this issue with a technical correction, but the Republicans in the House of Representatives haven't expressed any interest in preserving the Health Care legislation.

This issue probably won't be resolved for a while.

(Halbig v. Sibelius, D-D.C., No. 13-00623.)

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U.S. Supreme Court will rule whether severance pay is exempt from FICA.

The U.S. Supreme Court has resolved a split among the federal circuit courts of appeal about the FICA treatment of severance pay. It will review the case, In re Quality Stores, 2012-2 USTC 50,551.

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Value of gifts can be reduced by a promise to pay related estate tax.

The Tax Court has ruled that the value of a mother's gift for gift tax reporting can be reduced by the value of the donees' promise to pay the estate tax that could result. Although this case may continue to be significant for families with very high net worths, recent tax law changes have eliminated the estate tax as a concern for most U.S. residents.

(Steinberg, 141 TC No. 8.)

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Deduction for long-distance commuting expenses denied.

The Tax Court upheld the IRS in disallowing deductions claimed for commuting to a long-term job site. Only expenses for commuting to a temporary job site are tax-deductible.

(Cor, TC Memo. 2013-240.)

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Tax advisors should renew their IRS registration.

Under the IRS PTIN program, tax return preparers are required to renew their registration each year. You can do it at the IRS web site, www.irs.gov. I had some trouble being thrown out of the system, but succeeded in my renewal early in the morning, possibly when there was less traffic on the site.

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Financial Insider Weekly broadcast schedule for November and December.

Financial Insider Weekly is broadcast in San Jose and Campbell on Fridays at 9:30 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 the rest of November and December:

November 8, 2013, attorney William Mahan, of counsel to Gates Eisenhart Dawson, "Tax considerations of title"
November 15, 2013, attorney Bettie Baker Marshall, "Legal considerations of caring for incapacitated persons"
November 22, 2013, Emmett Carson, PhD, CEO, Silicon Valley Community Foundation, "Promoting Community Giving as a Family Value"
November 29, 2013, Geraldine Barry, President, San Jose Real Estate Investors Association, "How I got started investing in real estate"
December 6, 2013, Greg Carpenter, BTI Group Mergers & Acquisitiions, "Preparing to sell a business"
December 13, 2013, Greg Carpenter, BTI Group Mergers & Acquisitions, "Buying a business"
December 20, 2013, attorney James V. Quillinan, Hopkins & Carley, "Should a family trust be terminated considering recent tax law changes?"
December 27, 2013, Peter Moss, Wymac Capital, Inc., "Mortgage market developments"

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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