Michael Gray, CPA's Tax and Business Insight

February 2, 2016

© 2016 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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(If you find this information valuable, please pass it on to a friend!)

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Kara and Minnie Siemer, Clive and Kyan Baker at Lover's Point.
Here are my grandchildren, Kara, Clive, Minerva and Kyan, at Lover's Point at Pacific Grove, CA.

Happy Valentine's Day!

Remember to show your love and appreciation for your loved ones on Sunday, February 14. (Marché Aux Fleurs restaurant, located in Ross, California, is owned by my daughter, Holly Baker, and her husband, Dan. They are fully booked for Valentine's Day. Book your reservation at your favorite restaurant now!)

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February celebrations.

My grandson, Clive Baker, is celebrating his birthday this month. Happy birthday Clive! My wife's sister, Gail Johnston, and her husband Lane are celebrating their wedding anniversary this month. Congratulations!

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Our new interns Siyu Zheng and Prasanti Mishra.
Here are Siyu and Prashanti!.

Here are our interns for the 2016 tax season.

Welcome to our interns for the 2016 tax season. Siyu Zheng and Prasanti Mishra are Masters of Science in Taxation students at San Jose State University. Siyu is scheduled to graduate during the summer of 2016 and Prasanti is scheduled to graduate in June 2016.

Siyu also earned a Master of Arts in Applied Linguistics and Foreign Linguistics and Bachelor of Arts in Business English at university in China.

Prasanti also earned an MBA and a Bachelors degree in Biotechnology at university in India.

Siyu enjoys playing ping pong (table tennis).

Prasanti enjoys going to the movies.

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Business standard mileage rate correction.

The 2015 standard business mileage rate for 2015 was in error in our last newsletter. The rate for 2015 was 57.5¢ per mile. The rate for 2016 is 54¢. The rate for 2014 was 56¢. (That's where that amount came from.) Sorry for any confusion caused by the article.

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Expect an information return if you book home rentals through an online service.

Airbnb and VRBO will be sending Form 1099-K to people who received rent through their online reservation services.

(The Kiplinger Tax Letter, January 29, 2016)

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Have you received your tax preparation materials?

If you haven't received a tax data organizer or instructions to submit information using the Tax Notebook and want us to prepare your income tax returns, please call Dawn Siemer at 408-918-3162 on Monday, Tuesday or Thursday.

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Make your tax return preparation interview appointment now.

Most personal interview appointments for preparing 2015 individual income tax returns will be scheduled in February. Many clients send their information without having an interview, but if you need that personal attention, you should schedule your interview appointment now. Call Dawn Siemer Monday, Tuesday or Thursday at 408-918-3162.

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IRS Commissioner expects improved taxpayer service this year.

The IRS finally received some additional funding in the recent Tax Extenders legislation. The IRS plans on spending some of those funds improving taxpayer service. They are hiring up to 1,000 additional customer service representatives to answer the toll-free help lines, and expect to answer about 60% of taxpayer calls, compared to 40% last year.

(Federal Tax Weekly, January 21, 2016, Koskinen Predicts Improved Filing Season; The Kiplinger Tax Letter, January 29, 2016)

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W-2s, 1099s and DE 542 reminder.

Remember that most 2015 annual information returns, such as W-2s and 1099s, should be issued to payees by February 1 and sent to the tax authorities by February 29.

Amounts paid using a credit card should not be included on Form 1099. Those amounts are being reported by the merchant companies.

Also remember that Form 542, Report of Independent Contractors, should also be submitted for ongoing independent contractor arrangements by January 20. The due date is the earlier of 20 days after the date $600 or more of payments have been made to the independent contractor or the date a contract has been entered for $600 or more of services during a calendar year.

Although requirements for real estate operators to issue Forms 1099 were repealed, real estate operators that are real estate professionals should prepare them anyway. Some taxpayers who weren't concerned about qualifying as real estate professionals will want to now to avoid the Medicare tax for investment income. See your tax advisor for details.

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California FTB wins Gillette decision.

California's Supreme Court reversed the decision of an appellate court and ruled that California was not bound to allow an equally-weighted three-factor formula for apportioning taxable income of multi-state businesses.

The court said the Multi-State Tax Compact was not binding on the member states, but was essentially a model law that member states were free to follow or not. The was no enforcement mechanism or authority to ensure that member states complied.

More than 1,300 protective refund claims were filed after the appellate decision. Those claims will be denied.

Any business that relied on the Multistate Tax Compact and used the equally-weighted three-factor formula on an income tax return should amend the tax return and pay late-payment penalties plus interest for any tax deficiency.

(Gilletter Co. v. FTB, California Supreme Court, Case No. S206587, December 31, 2015, Spidell's California Taxletter, January 1, 2016, FTB scores big win in Gillette case.)

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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 February and March.

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 February and March:

February 5, Mark Erickson, attorney at law, "How to choose a good divorce lawyer"
February 12, Mark Erickson, attorney at law, "Child custody in divorce"
February 19 and 26, Mark Erickson, attorney at law, "Spousal support for California divorces"
March 4, Peter Moss, Wymac Capital, Inc., "Mortgage market update"
March 11, Phil Price, EA, The Price Company, "Qualified retirement plans for small businesses"
March 18 and 25, Richard H. Lambie, professional fiduciary, "The role of the professional fiduciary"

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 www.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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