Michael Gray, CPA's Tax and Business Insight

March 5, 2015

© 2015 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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Jay Panergo and Tam Bui
Our interns this Tax Season are Jay Panergo and Tam Bui.

The luck of the Irish be with ye!

St. Patrick's Day is Tuesday, March 17. It's the day of the year Americans like to be Irish. It's the day for "the wearin' of the Green," drinking Guinness and eating corned beef and cabbage. It's interesting to know that corned beef and cabbage isn't popular in Ireland. It was "poor people's food" brought by the Irish immigrants to the United States, mostly during the Potato Famine. Like many immigrant groups, the Irish weren't initially welcome in the United States, but they are now well assimilated Americans. The Irish in Ireland are very proud that John Kennedy was a President of the United States of Irish descent.

By the way, the symbol of St. Patrick in Ireland is the three- (not four!) leaf clover. St. Patrick used the three-leaf clover as an analogy for the Holy Trinity.

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Family celebrations.

My sister Arlene Gray McLean and my brothers-in-law Wade Allison and Lane Johnston, are celebrating birthdays this month. Happy Birthdays!

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Make your tax return preparation reservation now!

It's tax season! Before we know it, it will be April 15!

Our clients should have received their organizers and many have already brought their tax information to us. If you bring your information after March 15, plan on having an extension done.

To make your appointment for a meeting now, call 408-918-3162.

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Dawn Siemer returns!

After being away for a month recovering from surgery on her wrist, Dawn Siemer returns today. We are happy and relieved that she will be here for the rest of Tax Season!

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Welcome to our Tax Season Interns!

Our tax return preparation interns working with us this Tax Season are Jay Panergo and Tam Bui.

Jay graduated from San Jose State University with a Bachelor's Degree in Accounting in May 2014. He is a Nutrition Care Specialist in the U.S. Army Reserve. Jay is originally from the Philippines, came to the United States in 2009 and is now a U.S. Citizen. Jay enjoys hiking and running.

Tam graduated from San Jose State University with a Bachelor's Degree in Accounting in December 2014. He previously received a Bachelor's Degree in Accounting from the University of Economics in Saigon, Vietnam. Tam is originally from Vietnam, came to the United States in 2005, and is now a U.S. Citizen. He is married to Doan Le and has two sons, Anthony and Timothy. Tam enjoys playing soccer.

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Calendar-year corporation tax deadline is March 16.

The due date for income tax returns of calendar-year corporations, including most S corporations, is March 16. Hopefully these businesses have already submitted information to their tax return preparers for preparing their income tax returns and extensions!

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IRS issues regulations for Alternative Simplified Research Credit.

The IRS has issued final regulations for the Alternative Simplified Research Credit (ASRC). Under the regulations, taxpayers may elect the ASRC on an amended income tax return. See your tax consultant for details.

(TD 9712.)

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IRS gives penalty relief for certain small employer health care plans.

Great news for small employers that reimbursed their employees for the cost of individual health coverage during 2014! The IRS has announced it will waive the $100 per day, per employee penalty for violating rules under Health Care Reform under Internal Revenue Code Section 4980D in this situation. The penalty, which could be $36,500 per applicable employee is very onerous. Many tax return preparers will also be relieved that they won't have to give this terrible news to their clients.

The employers that qualify for the waiver aren't required to file IRS Form 8928 for 2014.

(The reimbursement should have been included in the employee's W-2 wages for 2014.)

The relief doesn't apply to "Applicable Large Employers."

The IRS is providing this relief to give small employers time to either discontinue the practice of paying for individual medical insurance for their employees or putting a qualified group health plan in place. The waiver applies to payments up to June 30, 2015.

(IRS Notice 2015-17, February 18, 2015.)

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Most small businesses excused from filing change of accounting method form for repair and capitalization rules.

The IRS has announced relief in Revenue Procedure 2015-20 for small businesses and real estate investors relating to its new rules for repairs, materials and supplies, and capitalization.

Small business taxpayers with total assets of less than $10 million and average annual gross receipts of $10 million or less in the three years preceding 2014 (2011 - 2013) won't have to file a change of accounting form, Form 3115, for 2014 after all.

The new rules will generally only apply for small business taxpayers to expenses incurred starting in 2014, and not retroactively as previously announced. The change of accounting will still be required to be made in statements included in the 2014 income tax return.

Some small business taxpayers still might decide to file the change of accounting method form if they want to take advantage of a new rule to claim a tax deduction for the undepreciated cost of a part of a building that was replaced, such as a roof replacement.

Small business taxpayers and real estate investors should still consult with tax advisors familiar with the rules to understand them and to make necessary elections on their 2014 income tax returns.

Tax return preparers and taxpayers will all have a sigh of relief from this announcement. This announcement will also save a forest for the mountain of paper forms that would have been required to be sent to the IRS and reduce the number of extensions for 2014 income tax returns.

We should all thank groups like the American Institute of Certified Public Accountants that tirelessly worked with the IRS for this modification of the requirements.

(Revenue Procedure 2015-20.)

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California exclusion for cancellation of residential debt not yet extended.

The federal government recently extended the exclusion from taxable income of cancellation of debt for acquisition or improvement of a principal residence through 2014. California has had different limitations for the exclusion and hasn't yet conformed to the federal change. California taxpayers who had a cancellation of debt for the acquisition or improvement of their principal residence should consider extending the filing date for their 2014 income tax returns, because California has conformed to the federal dates in the past. Alternatively, the taxpayer might qualify for the insolvency exclusion.

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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 6, 2015, Michael Malter, attorney at law, Binder & Malter, LLP, "Personal bankruptcy"
March 13, 2015, Michael Malter, attorney at law, Binder & Malter, LLP, "Corporate bankruptcy"
March 20, 2015, Greg Carpenter, BTI Group Mergers & Acquisitiions, "Buying a business"
March 27, 2015, Greg Carpenter, BTI Group Mergers & Acquisitions, "Selling a business"
April 3 and 10, 2015, James Brown, ASA, CFO®, Perisho, Tombor & Brown, PC, "The role of the business valuation specialist"
April 17 and 24, 2015, David Howard, CPA and attorney at law, Loomis & Co CPAs, LLP, "Foreign account reporting update"

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 www.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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