Michael Gray, CPA's Tax and Business Insight
April 2, 2024
© 2024 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
- Milestone for the birth of the U.S.A.
- Family celebrations.
- Due date for 2023 individual, calendar year estates and trusts, and calendar year corporation income tax returns is April 15, 2024.
- What if you don't have the money to pay the tax?
- Should calendar year tax returns for businesses be extended?
- Remember that an estimated tax payment is also due on April 15.
- Remember the second California real estate tax payment is due April 10.
- Remember the Foreign Financial Accounts Report, FinCEN Form 114, is also due on April 15 with an automatic extension (no form required) to October 15.
- Michael Gray's tax update presentation for Santa Clara County Estate Planning Council on April 22, 2024.
- District Court rules Beneficial Ownership Reporting Requirements are Unconconstitutional.
- IRS to focus on corporate aircraft.
- IRS to require Listed Transaction disclosure for certain CRATs.
- Do you sell products, services or software to CPAs?
- Attention CPAs-would you like help with marketing your services?
- Attention CPAs-do you need support for tax issues?
- Attention Accountants! Speed up processing your business closings!
- Please share your good experiences with Michael Gray, CPA.
- Financial Insider Weekly past episodes.
- Visit our new book review: Three Feet From Gold
- Follow me on social media!
- Check out my blogs.
- Subscribe/Remove from Michael Gray, CPA's Tax & Business Insight
Calla Lily in our front yard. Happy Spring! Milestone for the birth of the U.S.A.
On April 1775, American colonists faced British troops at Lexington and Concord, Massachusetts, and the first shots of the American Revolution were fired - "The Shot Heard 'Round the World."
Family celebrations.
April is a big birthday month for my family. My daughter and office manager, Dawn Siemer, her husband John and her daughter, Kara, all have April birthdays! Allen Le, Thi Nguyen's husband, is also celebrating his birthday this month. Happy Birthdays!
Due date for 2023 individual, calendar year estates and trusts, and calendar year corporation income tax returns is April 15, 2024.
What if you don't have the money to pay the tax?
The IRS will allow you to file an extension without paying the tax. You are still required to include an estimate of the tax due on the form. (The extension will not be accepted without this amount being entered.) The late filing penalty will be waived provided your income tax returns are filed on the extended due date, which is October 15, 2024 for most individuals.
Remember the payment date has also been extended for taxpayers who are residents in a disaster area where the IRS has announced filing relief, so late payment penalties won't apply provided the balance of the tax is paid by the designated date for the disaster. Here is the URL for the IRS web page summarizing disaster relief: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
At this time, San Diego County is the only California county eligible for relief. The automatic extended due date is June 17, 2024. The California Franchise Tax Board has announced it will conform to the federal extension for San Diego County.
California automatically allows the extension without filing a form.
A late payment penalty of 1/2% per month will apply for any tax due not paid by April 15, 2024, unless at least 90% of the tax finally determined was paid by that date.
Interest will also be charged for the unpaid tax and can't be waived. (The current rate is 7.71% for individuals.)
If a 2023 individual income tax return isn't filed by April 15, 2024 and a valid extension isn't filed by that date or the due date hasn't been extended as disaster relief, the late filing penalty is 5% of the unpaid tax per month filed late, to a maximum of 25%. (In some cases, California will assess a penalty on the entire tax without reduction for payments received. See your tax advisor for details.)
Should calendar year tax returns for businesses be extended?
Remember Congress has a stalemate for tax legislation, The American Families Workers Act of 2024 that would restore the current tax deduction for research and experimental costs and would restore 100% bonus depreciation. The legislation would also cut off employee retention credit claims after January 31, 2024. The legislation passed the House of Representatives on January 31, 2024 and is currently stuck in the Senate. To avoid potentially filing an amended return, consider filing for an extension of time to file.
Remember that an estimated tax payment is also due on April 15.
The first 2024 estimated tax payment for individuals and most other calendar year entities is also due on April 15, 2024. The penalties for late payment of estimated taxes are computed as simple interest, but the interest rate has been increasing. The federal estimated payment can be based on 25% of last year's tax liability. California "front loads" the first estimated tax payment as 30% of last year's tax liability. California taxpayers with taxable income of $1 million or more must make their estimated tax payments based on their actual income and deductions.
Remember the second California real estate tax payment is due April 10.
Remember the Foreign Financial Accounts Report, FinCEN Form 114, is also due on April 15 with an automatic extension (no form required) to October 15.
Here's a link to an IRS explanation for when you are required to report ($10,000 or more of foreign financial accounts): https://www.irs.gov/pub/foia/fincen-form114-fbar.pdf
Michael Gray's tax update presentation for Santa Clara County Estate Planning Council on April 22, 2024.
Michael Gray is giving a tax update presentation for the Santa Clara County Estate Planning Council on April 22, 2024. The presentation will include highlights of tax developments for the past year and proposed tax legislation. The dinner meeting will be at Delta Hotels by Marriott - 2151 Laurelwood Rd, Santa Clara from 5:30 p.m. to 8:00 p.m. You can also access the event via streaming. Here is a link with details and for registration: https://www.sccepc.org/events/event/24599
District Court rules Beneficial Ownership Reporting Requirements are Unconconstitutional.
A federal district court upheld the National Small Business Association's claim the new Beneficial Ownership Reporting Requirements under the Corporate Transparency Act are unconstitutional.
The court found the reporting requirements relate to future events (suspicious activities to happen in the future) and that creating an entity within a state doesn't relate to interstate commerce, and Congress doesn't have the authority to regulate those acts.
FinCEN has responded that members of the National Small Business Association won't have to file a Beneficial Ownership Statement, but it will continue to require them for other businesses.
This probably isn't the final word on this issue. With the support of this ruling, more businesses will contest the requirement.
(National Small Business Association, et. al. v. Yellen, United States District Court, Northern District of Alabama, Northeastern Division Case No. 5:22-cv-1448-LCB.)
IRS to focus on corporate aircraft.
On February 21, 2024, the IRS announced plans to initiate audits focusing on the allocation between business and personal use of corporate aircraft by executives, partners, shareholders and others for tax purposes. Personal use should be reported as income for employees and may result in disallowance of deductions for use by other persons.
(Checkpoint Newsstand, Week of March 25, 2024, "Corporate Jet Audits: What the IRS is Looking For," by Tim Shaw.)
IRS to require Listed Transaction disclosure for certain CRATs.
The IRS has issued proposed regulations that would require disclosure of certain transactions with a charitable remainder annuity trust (CRAT). Taxpayers are claiming they permanently avoid recognition of ordinary income and/or capital gain for transfers to a CRAT in exchange for a single premium immediate annuity. The IRS has identified these transactions as potentially abusive.
(Checkpoint Newsstand, Week of March 25, 2024, "Prop Regs: Som CRATs to be Listed Transactions", REG-117542-22.)
Do you sell products, services or software to CPAs?
Maybe I can help with writing promotional material and marketing ideas. Call me, Michael Gray, at 408-918-3161 or email mgray@taxtrimmers.com.
Attention CPAs-would you like help with marketing your services?
Maybe I can help with writing promotional material and marketing ideas, including encouraging referrals from your current clients. Call me, Michael Gray, at 408-918-3161 or email mgray@profitadvisors.com.
Attention CPAs-do you need support for tax issues?
Michael Gray, CPA can help you with research and guidance on complex tax planning and tax return reporting issues. mgray@taxtrimmers.com.
Attention Accountants! Speed up processing your 2019 business closings!
Do you still have 2019 business income tax returns on extension that need to be done? Check out this trial balance software, EZ Trial Balance, that's super-easy to set up and use. There is a desktop version and an online version. The online version includes consolidations and ratio analysis for analytical review. http://www.eztrialbalance.com
Please share your good experiences with Michael Gray, CPA.
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Financial Insider Weekly past episodes
After eight years of production, I have discontinued 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. Back episodes 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.
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Michael Gray, CPA2482 Wooding Ct.San Jose, CA 95128(408) 918-3162FAX: (408) 938-0610email: mgray@taxtrimmers.comHours: 8am - 5pm PDT Monday - Friday
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