Michael Gray, CPA's Tax and Business Insight

March 10, 2014

© 2014 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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Dawn Siemer and family at Lover's Point, Pacific Grove
My daughter Dawn Siemer with her husband, John, and her daughters, Kara and Minerva, at Lover's Point, Pacific Grove.

Happy St. Patrick's Day!

St. Patrick's Day falls on March 17. We celebrate everything Irish in America on that day. It's a great day to play George M. Cohan music. The four leaf clover that we talk about in the United States isn't popular in Ireland. St. Patrick used the three-leaf clover as an analogy for the Holy Trinity.

May the luck of the Irish be with you!

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Sorry for our power outage.

If you tried to call us on Monday, March 3, you probably didn't even hear a phone ring. We had a power outage, which knocked out our telephone system. Sorry for any inconvenience to you. We lost a day during tax season. Yuck!

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March celebrations.

My sister, Arlene Gray McLean and my brothers in law, Wade Allison and Lane Johnston, are celebrating birthdays during March. Happy birthday!

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Please send your tax information now.

Our priority for tax return preparation is mostly on a first-in, first-out basis. If we haven't received your tax information by March 15, we will probably apply for an extension of time to file your income tax returns. If you are missing some 1099 forms from an investment account or a Schedule K-1 for a partnership, please send the rest of your information now and the rest when you receive it to be "in the queue" and have your information otherwise processed in case an extension is required.

Thank you!

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March 17 is the due date for calendar year corporations.

Remember March 17 is the due date for calendar-year corporations. March 15 falls on Saturday; the next "business day" is Monday. Accrual basis calendar-year corporations should have accrued expenses such as bonuses for 2013 payable to unrelated employees, paid by March 15, 2014.

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Second real estate payment date is April 10.

This is a date that's easy to slip by. Remember to make the second California real estate property tax payment by April 10, 2014. There is a nasty penalty for late payments. Why not take care of it now?

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Business personal property tax report is due April 1.

The annual California business personal property tax report is due to the County Assessor by April 1. These forms are now usually efiled.

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Here are our interns this tax season, Brooke Narin and Hien Nguyen.

Welcome Brooke and Hien!

Our interns this tax season are Brooke Narin and Hien Nguyen.

Brooke graduated as a Dean's Scholar from San Jose State University with a Bachelors of Science in Accounting degree in December 2013. She met her husband, Bill Narin, who is an American citizen, in Vietnam in 2003. They were married there in 2006 and came to the United States in 2007. Bill works in sales and is starting a business in broadband wireless services. They have two children, Lani, age 4 and Brian, age 1 ½. Brooke's hobby is knitting sweaters for her children. Her goal is to pass the CPA exam and become a CPA as soon as possible.

Hien came to the United States by herself in 2008. She is working on her final class, Auditing, to graduate with a Bachelor's Degree in Accounting from San Jose State University. She met her husband, Binh Nguyen, in 2013 and they were married last June. Binh grew up in the United States, so Hien is teaching him Vietnamese. They are planning a big wedding celebration in Vietnam next December. Hien enjoys traveling and has visited many destinations in the United States.

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Jay Abraham offers FREE information downloads.

Marketing guru Jay Abraham is offering FREE ebooks and videos at abraham.com/2014gifts/. Much of the material is about crowd funding. There are no strings attached! Check it out.

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Atlanta Journal-Constitution has a series of inspirational articles.

Dan Kennedy recently shared a series of inspirational "Horatio Alger" articles being published in The Atlanta Journal-Constitution about local entrepreneurs. Here are true stories of "regular folks" taking control of their own lives with "low tech" businesses. Check this link out often for new additions. www.myajc.com/list/business/secrets-success/aKKx/.

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IRS releases instructions for net investment income tax form.

The IRS has finally issued 20 pages of instructions for Form 8960, Net Investment Income Tax - Individuals, Estates and Trusts. This is the 3.8% tax on net investment income for high-income taxpayers, which became effective in 2013. You can get the instructions at www.irs.gov.

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Foreign account report changes for 2013.

The form number for reporting foreign accounts has changed to Form 114 from Form 90-22.1 for 2013. The form should only be efiled for 2013. Remember the due date for the form for 2013 is June 30, 2014, and no extensions are permitted. The "timely mailed is timely filed rule" also didn't apply to this form, but the issue should be eliminated with efiling.

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Tax Court disallows IRA rollovers from separate IRA accounts during a one-year period.

A taxpayer rolled over IRA distributions made from separate IRA accounts during a taxable year. The Tax Court upheld the IRS in finding that only one distribution from one account may be rolled over during a one-year period. The Tax Court clearly states that only one distribution from an IRA during a twelve-month period can be rolled over by redepositing it to an IRA. Any subsequent distributions during the twelve-month period won't qualify. According to CCH's commentary, the ruling contradicts previous guidance from the IRS in proposed regulations and in Publication 590.

(Bobrow, T.C. Memo. 2014-21, January 28, 2014.)

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Court of Appeals says IRS registration program exceeds authority.

The U.S. Court of Appeals for the District of Columbia has affirmed a federal district court decision against the IRS's registered tax return preparer program. The IRS attempted to establish minimum competency and annual continuing education requirements for all tax return preparers. The competency and continuing education requirements don't apply for CPAs, enrolled agents, and attorneys because they have their own requirements to fulfill.

(Loving, CA-D.C., February 11, 2014.)

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Does your group need a speaker?

We are seeking opportunities to speak before groups. Topics include recent tax developments, tax issues relating to real estate, how estate planning has changed recently, tax issues relating to alternative investments using retirement accounts, and marketing topics such as "How I created a public access television show broadcast on eleven Bay Area stations." To make arrangements, call Michael Gray at 408-918-3161.

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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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Financial Insider Weekly broadcast schedule for March and April.

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 March and April.

March 14, 2014, Dick Blakeley, The Blakeley Group, "Setting family financial goals and reaching them"
March 21, 2014, Alan Nobler, attorney at law, "How a collaborative team can help preserve your legacy"
March 28, 2014, Stephen H. Salmeyer, attorney at law and psychologist, "Why emotions matter when resolving financial disputes"
April 4, 2014, attorney Mary Russell, Stock Option Counsel, "Employee Stock Option Basics"
April 11, 2014, attorney Francis Burton Doyle, WealthPlan, "Developments for family limited partnerships and LLCs"
April 18, 2014, attorney Francis Burton Doyle, WealthPlan, "Elder abuse issues in estate planning"
April 25, 2014, Judy Barber, Family Money Consultants, LLC, "Raising money-smart kids in the midst of affluence"

Financial Insider Weekly is also broadcast as follows:

Past episodes are available at https://www.youtube.com/user/financialinsiderweek.

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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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
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

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