Michael Gray, CPA's Tax and Business Insight

April 2, 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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Clive Baker in a tree
Clive Baker enjoys some Spring fun!

Happy Easter!

Easter falls on April 20 this year, so I will be able to enjoy it after Tax Season is over. Hurrah! Hope you get to enjoy the holiday with family and/or friends. Travel safely!

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Family celebrations.

April is a big birthday month for our family. Fortunately, most of them are after April 15. My daughter, Dawn Siemer, her husband John and daughter Kara Siemer all have birthdays within a week of each other. Happy birthdays!

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It's extension time.

If you want us to prepare your 2013 income tax returns and we haven't already received the information to do so, we will probably have to prepare extensions. Please call Dawn Siemer immediately on Mondays, Wednesdays or Fridays at 408-918-3162 to make an appointment if a meeting is essential.

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April 15 is coming!

April 15, 2014 is the due date for 2013 calendar year individual income tax returns, fiduciary income tax returns and partnership income tax returns. You can usually apply for extensions of time to file the tax returns and there can be advantages for doing it, such as extending the time for making a contribution to a qualified retirement plan. Remember, the time is not extended for paying the income tax. Even if you are applying for an extension, you still need to make a good estimate of the tax.

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What if you don't have the money to pay the tax?

If you don't pay at least 90% of the tax by April 15, there is a potential penalty for filing the tax return late. That's 5% per month to a maximum of 25%. There are even more serious penalties that can sometimes apply.

If you don't have the money to pay the taxes, I recommend that you file as good of a tax return as you can by April 15 and "fine tune" it with an amended tax return later. This should help you avoid the penalty for filing a late income tax return.

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Remember that an estimated tax payment is also due.

The first 2014 estimated tax payment for individuals and most other calendar year entities is also due on April 15, 2014. The penalties for late payment of estimated taxes are computed as simple interest, currently at low interest rates.

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

There is a nasty penalty for paying real estate taxes late, and the date slips past us because we're thinking about April 15. Why not make this payment now, so you don't forget it?

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U.S. Supreme Court says severance pay is subject to FICA tax.

The U.S. Supreme Court reversed the Sixth Circuit Court of Appeals and ruled that supplemental unemployment benefits paid to terminated employees and not tied to the receipt of state unemployment benefits are wages subject to social security tax.

(U.S. v. Quality Stores, Inc., 2014-1 USTC 50,228, March 25, 2014.)

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Virtual currency is property.

The IRS has issued guidance about how to treat virtual currency, like Bit-Coin. The IRS says to treat is as property, like for bartering transactions. The currency transactions should be converted to U.S. dollars.

(Notice 2014-2.)

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Philippine relief donations can be accelerated.

President Obama has approved the Philippines Charitable Giving Assistance Act (HR 3771.) Under the Act, taxpayers have the option of accelerating into 2013 charitable donations made for the relief of victims of Typhoon Haiyan when the donations are made after the date of enactment, March 25, 2014, and before April 15, 2014.

Kind of late in the game for a tax law change like this, and the window is awfully short.

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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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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 April and May.

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 April and May:

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"
May 2, 2014, Judy Barber, Family Money Consultants, LLC, "The transfer of family wealth to the next generation: What's the money for?"
May 9, 2014, attorney Jeffrey B. Hare, P.C., "Legal due diligence for real estate transactions"
May 16, 2014, Phil Price, E.A., The Price Company, "Retirement plan alternatives for small businesses"
May 23, 2014, Mayuri Onerheim, "Money, Spirituality, Consciousness"
May 30, 2014, attorney Michael Desmarais, "Your rights as a beneficiary"

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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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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