Michael Gray, CPA's Tax and Business Insight
September 7, 2017
© 2017 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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Table of Contents
- Happy autumn!
- Family celebrations.
- September 15 due dates.
- Extended fiduciary tax returns due September 30.
- Extended individual income tax returns are due October 16.
- 'Tis the season for extensions.
- Property tax appeal date approaches.
- Michael Gray out of the office on September 7 and 8.
- Tax Court disallows premiums paid to a micro-captive insurance company.
- Estate couldn't deduct gift tax paid by donees.
- Hurricane Harvey victims get tax relief.
- Discharge of indebtedness income of former partner not limited to guarantee.
- Please share your good experiences with Michael Gray, CPA.
- Farewell to Financial Insider Weekly.
- Visit our new article: Traction Review
- Follow me on social media!
- Do you have employee stock options?
- Do you have real estate tax issues?
- Check out my blog.
- PS Marché Aux Fleurs
- Subscribe/Remove from Michael Gray, CPA's Tax & Business Insight
Kyan Baker, who is my grandson, dressed as Wolverine for the San Francisco Comicon Happy autumn!
Summer ends and autumn begins on September 22. The year is 2/3 over! Are you ready for the year end?
Family celebrations.
My daughter, Holly Baker and her son, Kyan, are both celebrating birthdays during September. Happy birthdays!
September 15 due dates.
The due date for extended income tax returns for calendar-year partnerships and S corporations is September 15.
Federal estimated tax payments for individuals are also due September 15. There is no California estimated tax payment due September 15 because estimate payments for April and June are "front loaded."
Extended fiduciary tax returns due September 30.
The extended due date for calendar-year estates and trusts is September 30.
Extended individual income tax returns are due October 16.
Does your tax return preparer have your information to prepare your income tax returns yet? (Congratulations to those who have already filed their income tax returns!)
'Tis the season for extensions.
If you need help preparing your income tax returns for which you have filed an extension, call Dawn Siemer at 408-918-3162 from 9 a.m. to 12 noon weekdays to make an appointment.
Property tax appeal date approaches.
Owners of California real estate may have already received or will soon receive notices of assessed value from the county assessors.
When the county assessor mailed assessment notices to property owners by August 1, 2017, the period to appeal began on July 2, 2017 and ends on September 15, 2017. This filing period applies for Alameda, Alpine, Inyo, Kings, Placer, San Francisco, San Luis Obispo, Santa Clara, Sierra and Ventura counties.
For all other counties, the appeals period ends November 30, 2017.
Here is a link to a video the California State Board of Equalization has prepared to help taxpayers file appeals: www.boe.ca.gov/info/AssessmentVideo/Index.html.
For this year, the appeal is based on the value of the property on January 1, 2017.
(Spidell's California Taxletter®, September, 2017, p. 11, "Appealing property tax assessments".)
Michael Gray out of office on September 7 and 8.
Michael Gray will be out of the office for a conference on Thursday and Friday, September 7 and 8, returning Monday, September 11.
Tax Court disallows premiums paid to a micro-captive insurance company.
The Tax Court found a micro-captive insurance company didn't operate as an insurance company, and disallowed premiums paid to it by related business. The investments of the company were illiquid, long-term related party loans, principally used to purchase real estate. The Court said the insurance company didn't insure a sufficient number of risks to be properly diversified. The Court also said the insurance policies were "less than a model of clarity."
Closely held businesses that insure some of their risks using a micro-captive insurance company should review their operations with their tax advisors and legal counsel in light of this decision.
(Avrahami v. Commissioner, 149 T.C. No. 7, August 21, 2017.)
Estate couldn't deduct gift tax paid by donees.
A decedent transferred interests in a limited liability compay to his nieces shortly before his death. The donees agreed to pay any gift tax for the transfer.
The executor claimed the gift taxes as a deduction on the decedent's federal estate tax return.
The Tax Court upheld the IRS in finding the gift taxes weren't a libility of the taxable estate, so they weren't deductible on the federal estate tax return.
(Sommers Estate v. Commissioner, 149 T.C. No. 8, August 22, 2017.)
Hurricane Harvey victims get tax relief.
The IRS has extended various forms of tax relief for taxpayers in parts of Texas designated for individual assistance. The following due dates have been extended until January 31, 2018.
- Quarterly estimated tax payments due September 15, 2017 and January 16, 2018.
- Extended individual income tax returns otherwise due on October 16, 2017.
- Quarterly payroll and excise tax returns due October 23.
Late deposit penalties will also be waived for late payroll and excise tax deposits normally due on or after August 23, 2017, provided they are made by September 7, 2017.
(IR-2017-135.)
Discharge of indebtedness income of former partner not limited to guarantee.
A former partner in a law firm contributed to a settlement fund relating to winding up the partnership's operations. The former partner didn't report cancellation of indebtedness income from the partnership's liquidation. He claimed that he shouldn't be taxable on that amount because he wasn't personally liable for the indebtedness. The Tax Court upheld the IRS that he was taxable on the cancellation of indebtedness as a partner. Since he contributed 6.2% of the settlement fund, 6.2% of $261,803 discharge of indebtedness, or $16,232, was taxable. That amount is added to his tax basis in the partnership to compute his gain or loss on liquidation.
(Kohn v. Commissioner, T.C. Memo. 2017-59, August 14, 2017.)
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 and siliconvalley.citysearch.com.
We use Angie's List to assess whether we're doing a good job keeping valued customers like you happy. Please visit AngiesList.com/Review/4258970 in order to grade our quality of work and customer service.
Farewell to Financial Insider Weekly.
After eight years of production, I am discontinuing producing new interviews for Financial Insider Weekly. Doing the show has been a rewarding experience and I consider back episodes to be my legacy of financial literacy education to our community. Past episodes are available at https://www.youtube.com/user/financialinsiderweek.
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.
Visit our new article!
- Traction Book Review at www.profitadvisors.com/traction.shtml
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Check out my blog.
I have also started a blog at www.michaelgraycpa.com. Check it out!
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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