Highlights of 2011 Tax Law Changes

In our Annual Summary of Tax Law Changes, we have included changes that may affect your 2011 tax filing, tax provisions that will expire after 2011, and changes that will affect your 2012 taxes. Hopefully this will help you with some last minute tax planning for 2011 and projections beyond 2011. We expect some significant changes to the tax code in 2012 and 2013. We’ll keep you posted ... Read More

Highlights of 2010 Tax Law Changes
Limit on Personal exemptions and overall itemized deduction is ended regardless of the amount of your AG, first time home-buyer credit extended, adoption credit is now become refundable credit, Corrosive dry wall losses, extended energy saving credits, education credits, personal exemptions & standard deduction, tax brackets are widened ... Read More
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Highlights of 2011 Tax Law Changes
In our Annual Summary of Tax Law Changes, we have included changes that may affect your 2011 tax filing, tax provisions that will expire after 2011, and changes that will affect your 2012 taxes. Hopefully this will help you with some last minute tax planning for 2011 and projections beyond 2011. We expect some significant changes to the tax code in 2012 and 2013. We’ll keep you posted ……

DUE DATE OF RETURN:
File form 1040, 1040A, or 1040EZ by April 17, 2012. The due date is April 17, instead of April 15, because April 15 is a Sunday and April 16 is the Emancipation Day holiday in the District of Columbia.

REPORTING CAPITAL GAINS AND LOSSES ON NEW FORM 8949:
In most cases, you must report your capital gains and losses on new Form 8949. Then you report certain totals from that form on Schedule D (Form 1040). All 2011 sales of stocks, bonds, and mutual funds will need to be reported in detail on new Form 8949 “Sales and Other Disposition of Capital Assets”. The totals will be rolled-up to Schedule D.

STANDARD MILEAGE RATES:
The 2011 rate for business use of your car is 51 cents a mile for miles driven before July 1, 2011, and 55½ cents a mile for miles driven after June 30, 2011.

The 2011 rate for use of your car to get medical care is 19 cents a mile for miles driven before July 1,2011, and 23½ cents a mile for miles driven after 30, 2011.

The 2011 rate for use of your car to move is 19 cents a mile for miles driven before July 1, 2011, and 23½ cents a mile for miles driven after June 30, 2011.

STANDARD DEDUCTION INCREASED:
The standard deduction for some taxpayers who do not itemize their deductions on Schedule A (Form A) is higher for 2011 than it was for 2010. The amount depends on your filing status.

EXEMPTION AMOUNT:
The amount you can deduct for each exemption has increased. It was $3650 for 2010. It is $3700 for 2011.

SELF-EMPLOYMENT HEALTH INSURANCE DEDUCTION:
This deduction is no longer allowed on Schedule SE (Form 1040). However, you can still take it on Form 1040, line 29.

ALTERNATIVE MINIMUM TAX (AMT) EXEMPTION AMOUNT INCREASED:
The AMT exemption amount has increased to $48,450 ($74,450 if married filing jointly or a qualifying widow(er); $37,225 if married filing separately).

HEALTH SAVINGS ACCOUNTS (HSAs) AND ARCHER MSAs:
For distributions after 2010, the additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses has increased to 20%.

Also beginning in 2011, amounts paid for medicine or a drug are qualified medical expenses only if the medicine or drug is a prescribed drug or is insulin.

Over-the-counter medicines are no longer eligible under a Flexible Spending Account (FSA) or Health Savings Account (HSA). Prescription medicines and other medical supplies are still acceptable.
The penalty for non-qualified distributions from an HSA account has increased to 20%.

ROTH IRAs:
If you converted or rolled over an amount to a Roth IRA in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.

DESIGNATED ROTH ACCOUNTS:
If you rolled over an amount from a 401(k) or 403(b) plan to a designated Roth account in 2010 and did not elect to report the taxable amount on your 2010 return, you generally must report half of it on your 2011 return and the rest on your 2012 return.

ALTERNATIVE MOTOR VEHICLE CREDIT:
You cannot claim the alternative motor vehicle credit for a vehicle you bought in 2011, unless the vehicle is a new fuel cell motor vehicle.

FIRST-TIME HOMEBUYER CREDIT:
To claim the first-time homebuyer credit for 2011, you (or your spouse if married) must have been a member of the uniformed services or Foreign Service or an employee of the intelligence community on qualified official extended duty outside the United States for at least 90days during the period beginning after December 31, 2008, and ending before May 1, 2010.

REPAYMENT OF FIRST-TIME HOMEBUYER CREDIT:
If you have to repay the credit, you may be able to do so without attaching Form 5405.

NONBUSINESS ENERGY PROPERTY CREDIT:
This credit is figured differently for 2011 than it was for 2010.

HEALTH COVERAGE TAX CREDIT:
This credit has been extended, and the amount has changed.

FOREIGN FINANCIAL ASSETS:
If you had foreign financial assets in 2011, you may have to file new Form 8938 with your return. U.S. taxpayers holding foreign financial assets outside of the United States with an aggregate value exceeding $50,000 must report these assets on new Form 8939   “Statement of Specified Foreign Financial Assets”, and attach it to their 2011 federal income tax return.

SCHEDULE L:
Schedule L is no longer in use. You do not need it to figure your 2011 standard deductions.

MAKING WORK PAY CREDIT:
The making work pay credit of $400 for taxpayer and $400 for spouse for certain income limit has expired. You cannot claim it on your 2011 return. Schedule M is no longer in use.

CHARITABLE CONTRIBUTIONS:
Taxpayers must have contemporaneous written acknowledgement for charitable contributions over $250.

 Explainations for not filing electronically
Any taxpayer electing not to have his tax return filed electronically must sign and submit Form 8948 , “Preparer Explanation for Not Filing Electronically”.

If Form 8332 , “Release of Claim to Exemption for Child by Custodial Parent” is used, it must be attached to the tax return.

Owners who accept credit/debit cards for their business can expect to receive a Form 1099-K, Merchant Card and Third Party Network Payments”, from the credit/debit card processor showing the amount collected in 2011. This information will need to be entered separately as an income item on the business tax return.

Summary of tax provisions expiring in 2011

Individuals
Once again set to expire at the end of 2011 is the deduction for qualified secondary education expenses up to $4,000 for AGIs up to $130,000 ($65,000 for single filers) or up to $2,000 for AGIs up to $160,000 ($80,000 for single filers).

The Alternative Minimum Tax (AMT) exemption amount currently at $74,450 for joint filers and $45,000 for single filers will decrease in 2012 to $48,450 and 33,750, respectively.  This has been a hot political potato for the last few years, with Congress and the President agreeing to increase the exemption on an annual basis.  Given that the 2012 election process has already begun and as of this writing the Congressional Super Committee has been unable to reach a consensus on the budget, the exemption amount may not be increased in 2012.

In 2012, nonrefundable personal credits, such as the dependent care credit and the elderly and disabled credit will no longer be available to offset the AMT liability.

The provision allowing for nontaxable IRA distributions to a charity, up to a maximum of $100,000 expires at the end of 2011.

The $250 “above the line” deduction for educators’ classroom expenses is due to expire at the end of 2011.

The credit for an energy efficient home and for energy efficient improvements, reduced to a total credit of $500, based on 30% of the cost of the materials, is set to expire at the end of 2011.  If $500 or more of the credit has been used in 2009 or 2010, the 2011 credit is not available.

The credit for Electric Vehicle Credit for Low-Speed Vehicles, Motorcycles, and 3-Wheeled vehicles, of 10% of the purchase price up to $2,500, is available through the end of 2011. The credit for electric vehicle conversion kits is also expiring at the end of 2011.

Up to the end of 2011, taxpayers have the ability to rollover funds from a Flex-Spending Account (FSA) or a Health Reimbursement Account (HRA) to a Health Savings Account (HSA). 

Expiring at the end of 2011 is the ability to utilize state sales tax instead of state income tax as a deduction on Schedule A.  This will make a huge difference for taxpayers that live in states with low or no state income tax – and those that are planning the purchase of high-ticket items subject to sales tax, such as motor homes, boats, and luxury vehicles.

Those who purchased a home with less than a 20% down payment, may have been required to pay mortgage insurance premiums. These previously deductible premiums are set to expire at the end of 2011.
The 2010 Tax Relief Act provided for a reduction in an employee’s social security withholding from 6.2% to 4.2%, providing a little extra cash flow every month.  Unfortunately, this tax benefit expires at the end of 2011 unless extended by Congress.

Small Business
Internal Revenue Code Section 179 is often used by small business to expense equipment purchased during the year.  Through 2011, the maximum amount allowed to be expensed is $500,000 with a total capital expenditure of $2,000,000.  In 2012, the maximum deduction for the purchase of equipment in one year is $139,000 with the maximum capital expenditure limited to $560,000.

The 100% bonus depreciation is also due to expire at the end of 2011.

2012 inflation adjustments for various tax items
Personal exemptions increase from $3,700 to $3,800 per person.

The annual gift exclusion remains unchanged at $13,000 per donee.

The elective deferral limit for employees participating in 401(k), 403(b) or 457(b) plans increase from $16,500 to $17,000 per year.

The Social Security wage base increases from $106,800 to $110,100.

The standard deduction for joint and single filers increases to $11,900 and $5,950, respectively.

Highlights of 2010 Tax Law Changes

Limit on Personal exemptions and overall itemized deduction is ended regardless of the amount of your AG, first time home-buyer credit extended , adoption credit is now become refundable credit, Corrosive dry wall losses, extended energy saving credits, education credits, personal exemptions & standard deduction, tax brackets are widened.

Beware of Bogus E-mails — The IRS does not send unsolicited e-mails about your taxes. If you get an e-mail that appears to be from the IRS, it may be an attempt to steal your private information. Don’t click on any links in the message. Rather, forward the e-mail to phishing@irs.gov using the instructions at www.irs.gov.

Summary of significant Federal Tax Law Changes for 2009 and upcoming years.


Learn how federal tax law changes could impact your 2009 tax return as well as your filings in upcoming tax years.

Many of the tax breaks in recent tax-relief bills were designed to be phased in over a number of years, or are indexed to inflation. To help to find how these tax laws may affect your long-term plans, we try to put up some significant changes scheduled to come into effect through 2017.

To see the how the tax law changes will effect your upcoming years. Pick a year from the list below to learn what tax changes affect that year's returns.


2010 Highlights :


2010 Highlights :

Tax filing due date:
Due date for this tax season has been extended to April 18, 2011


First Time Home Buyers Credit:



Tax Credit of Up to $8,000 for First-Time Homebuyers and $6,500 for Existing Homeowners



In November 2009, the program was broadened to include existing homeowners, meaning those who have lived in the same principal residence for any five-consecutive-year period during the past eight years. Homeowners are eligible for a credit of up to $6,500 if they buy a replacement home to use as their principal residence. They are not required to sell or dispose of their current home, but the new home must become their principal residence. To be eligible, homebuyers must buy, or enter into a binding contract to buy, a replacement principal residence after Nov. 6, 2009, and on or before May 1, 2010 and actually bought/close the home before October 1, 2010

Repayment of First time home buyer credit interest free loan for home purchased in 2008, you generally must repay your credit for home purchased in 2008, 2009 or 2010, if that home has been sold or home stop being used your main home.
The Congress and the Obama Administration have extended and expanded the wildly popular 2008 first-time homebuyer tax credit. Now, existing homebuyers are also eligible to receive a tax credit of up to $6,500 if they buy a replacement home by June 30, 2010. In addition, the income limits have been increased, making even more people eligible for these credits.
If you purchased a primary residence in 2009 before December 1, 2009, and are a “first-time” homebuyer, you can qualify for a tax credit equal to 10 percent of up to $80,000 of the purchase price. To be eligible, you must not have owned a residence in the United States in the previous three years.
The credit is refundable to the extent it exceeds your regular tax liability, which means that if it more than offsets your tax liability, you’ll get a refund check. But it does not offset the Alternative Minimum Tax.
You can even elect to claim the credit for a 2009 home purchase on your 2008 tax return. (If you filed for 2008 before buying, but before the December 1, 2009, deadline, you can claim your credit by filing an amended return using Form 1040X. Doing so will guarantee you a refund check.) The credit for 2009& 2010 purchases generally doesn’t have to be paid back. But you will have to repay it if you sell the house within three years of the date you bought it.

In addition, income limits were expanded from earlier versions of the credit. Homebuyers who file as single or head-of-household taxpayers can claim the full credit if their modified adjusted gross income (MAGI) is less than $125,000. For married couples filing a joint return, the combined income limit is $225,000.
Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit. The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI over $245,000. Also, homes costing more than $800,000 are not eligible for the credit.

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Sales Tax Deduction for New Vehicles

Buyers of new vehicles can deduct the sales tax paid on the purchase, even if they don’t claim sales taxes as itemized deductions. They can add the tax they pay to their standard deduction. This break applies to new cars, motor homes, light trucks and motorcycles purchased after February 16, 2009 and before January 1, 2010. Sales tax paid on the first $49,500 of cost qualifies. The benefit begins phasing out for married couples with AGI over $250,000 and singles with Adjusted Gross Income over $125,000. It is completely gone for single filers with Adjusted Gross Income of $135,000 or more, or joint filers with AGI of at least $260,000.

Itemizers who elect to deduct state sales taxes in lieu of state income taxes get no benefit from this change, since the auto sales tax is already included in the sales tax deduction. Itemizers who deduct state income taxes will get a separate deduction for auto sales taxes; non-itemizers will add the sales tax amount to their standard deduction amount

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Roth IRA’s Conversion

Beginning in 2010 you can make any qualified rollover contribution to Roth IRA regardless of the amount of your modified AGI. Also half of the income from rollover or conversion to Roth IRA or from another retirement plan income in 2010, included in 2011 income and other half included in 2012 income unless you elect to include all of it in 2010 taxes.

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Limit on Personal exemption & Overall Itemized deduction ended

Limit on Personal exemptions and overall itemized deduction is ended regardless of the amount of your AGI.The amount you can deduct for each exemption has not changed for 2010. It is still $3,650. But unlike 2009, when you would lose part of your deduction for personal exemptions if your adjusted gross income (AGI) was more than a certain amount, in 2010 you will not lose any part of your deduction for personal exemptions, regardless of the amount of your AGI.

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Adoption Credit


The adoption credit is now become refundable credit for 2010 & 2011. The adoption credit is extended for one year. The credit limit, special-needs adoption credit amount and the employer-provided adoption assistance exclusion are increased to $13,170 for 2010 and adjusted for inflation in 2011. 

Health Insurance Deduction for SE Tax

Self-employed individuals can deduct health insurance premiums for the following individuals for self-employment taxes as well as for income tax:
For tax payer themselves, their spouse, their dependents and their children under age 27 as of year end, regardless of dependency status. (effective 03/30/10)

Failure to File Penalty – Partnership and S corporation:

The penalty for failure to timely file a partnership return, form 1065 and S corporation, form 1120S, is $195 per partner/ share holder, for each month, that the failure continues, up to a maximum of 12 months.

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Foreign Financial Assets – Tax Return Reporting

Effective date tax years beginning after 3/18/10
Individuals who hold any interest in a specified foreign financial asset during the tax year must attach certain information to their income tax return if the total value of all specified foreign financial assets exceeds $50,000. Failure to do so results in a minimum $10,000 penalty. (IRC 6038D)

A specified foreign financial asset is (1) a financial account maintained by a foreign financial institution or (2) any of the following assets not held in an account maintained by a financial institution:
- Stock or securities issued by a person other than a U.S. person.
- Financial instruments or contract held for investment that have an issuer or counterparty other than a U.S. person.
- Interest in a foreign entity.
Note: This new reporting requirement is similar but not identical to the Form TD F 90-22.1 requirements, which are unaffected by the new requirement.

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Capital Gains Tax Rates

The tax rate on capital gains from the sale of assets held longer than one year remains at 0% for people in the 10 percent or 15 percent tax brackets. The 15 percent maximum tax rate on long-term capital gains for taxpayers in higher brackets also remains the same. Rates are scheduled to increase in 2011.

Dividend Tax Rates

Similarly, the special 5 percent maximum rate on dividends of taxpayers in the 10 percent and 15 percent tax brackets remains at zero percent through 2010. Rates are scheduled to increase in 2011.


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Inflation Adjustments

Corrosive Dry Wall Losses

You may deduct as casualty loss for amounts paid repair damage home or household appliances that result from corrosive dry wall

 Section 179 Increased Expensing Limits

Tax years beginning in 2010 & 2011, the section 179 deduction limit is increased to $500,000 and the qualifying property phase-out threshold to $2,000,000.

 Special Depreciation allowance extended

The special depreciation provisions are extended for one year for the property acquired and paced in service in 2010 (and 2011 for certain long production property)

Personal Exemptions
For 2010, each personal exemption taxpayer can claim is worth $3,650, the same as in 2009.

Increase in Standard Deductions
For 2010, the standard deduction for married taxpayers filing a joint return is $11,400, no change from 2009. Joint filers can also add in up to $1,000 of property taxes paid.
For single filers, the amount is $5,700 in 2009, no change from 2009. Singles can also deduct up to $500 of real estate tax payments.
Heads of household can claim $8,400 in 2010, a jump of $50 from 2009.
Non-itemizers who pay real estate taxes can claim even larger standard deductions. Non-itemizers can also add any casualty losses that occurred in presidentially-declared disaster areas.

Child Tax Credit

The $8,500 income threshold needed to qualify to claim the child tax credit if it exceeds your regular income tax bill decreases to $3,000 for 2010.

Refundable Child Tax Credit

FICA/SE Taxes    
Maximum earning Subject to tax 2010 2011
Social Security tax 106,800 106,800
Medicare tax No Limit No Limit
Maximum tax paid by:    
Employee - Social Security $6,622 $6,622
Self-employed - Social Security $13,243 $13,243
Employee or self employed -Medicare No Limit No Limit
Standard Mileage allowance:    
Business/Employee business expenses 50cents waiting
Charity work 14cents waiting
Medical/moving 24cents waiting
Health savings accounts (HSAs):    
Self-only coverage:    
Contribution limit under age 55 3,050  
Plan minimum Deductible 1,200  
Plan out-of-pocket limit 5,950  
Family Coverage:    
Contribution limit under age 55 $6,150  
Plan minimum deductible $2,400  
Plan out-of-pocket limit $11,900  
Additional contribution limit $1,000  

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Earned Income Tax Credit (EITC)

For families with three or more children, the maximum Earned Income Tax Credit for 2009 and 2010 rises by $628.50. And the phase-out of the credit for joint filers starts at higher income levels in 2009 and 2010, allowing more of them to claim the credit. This credit is offered by the federal government to working families and individuals. You may qualify for the earned income tax credit, or EITC, if you worked, but did not earn a lot of money. EITC is a refundable tax credit meaning you could qualify for a tax refund even if you did not have federal income tax withheld. If you qualify, the amount of your EITC will depend on whether you have children, the number of children you have, and the amount of your wages and income.

Every year, the earned income credit amounts and income limitations have been adjusted for inflation. The maximum earned income tax credit is $5,657 for taxpayers with three or more qualifying children, $5,028 for taxpayers with two or more qualifying children, $3,043 for those with one child and $457 for people with no children. Available to low and moderate income workers and working families, the EITC helps taxpayers whose incomes are below certain income thresholds, which in 2009, rise to $43,279 for those with three or more children, 40,295 with two or more children, $35,463 for people with one child and $13,440 for those with no children.

Earned Income Credit for 2009 (Please also see EIC table)

# of Qualifying Child  Earned Income/AGI less than Maximum EIC
0 $18,470 Single/HOH $457 up to $7,500
    MFJ $457 up to $12,450
1 $ 40,545 Single/HOH $3,043 up to $16,500
    MFJ $3,043 up to $ 21,500
2 $40,545 Single/HOH $5,028 up to $16,450
    MFJ $5,028 up to $ 21,450
3 or more $ 48,362 Single/HOH $5,657 up to $16,450
    MFJ $5,657 up to $ 21,450

The election to treat nontaxable combat pay as earned income for EIC purposes was made permanent.


Nontaxable Combat Pay Allowed for Earned Income Tax Credit (EITC)

The election to include nontaxable combat pay in the calculation of earned income for the Earned Income Tax Credit applies for 2009.



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Energy-Efficient Credit for Residential Property

There are many new and expanded tax benefits on money spent to reduce energy use or create new energy sources. For example, homeowners can get bigger tax credits for making energy efficiency improvements or installing alternative energy equipment.

The American Recovery and Reinvestment Act (ARRA) of 2010 provides a uniform credit of 30% of the costs of qualifying improvements up to $1,500. Examples include adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. It also raises the limit on the amount that can be claimed on improvements placed in service during 2009 and 2010 to $1,500.

The IRS provides a list of energy-related tax benefits in the ARRA in its Fact Sheet 2009-10. The credit for 30 percent of the cost of installing solar water heating equipment, solar electric equipment, geothermal heat pumps or small wind turbines in your primary residence or a second home is unlimited in 2010. But the credit for fuel cell property cannot exceed $500 per half-kilowatt capacity.


Credit for Energy-Saving Home Improvements

The tax credit for the cost of energy-saving home improvements is 30 percent for 2009 and 2010, up to a maximum of $1,500 in the two-year period. It applies to qualified skylights, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters and central air conditioners.

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Summary for Retirement Plans:
IRA Contribution limits:  
      Under age 50 $5,000
      Age 50 or older $6,000
Traditional IRA phase out begins AGI (active participants):  
      MFJ and QW (participating spouse) $89,000
      MFJ (non participating spouse) $166,000
      Single & HOH $55,000
      MFS None
Roth IRA phase out begins AGI of:  
      MFJ and QW $166,000
      Single & HOH $105,000
      MFS Not Allowed
Roth IRA conversion – AGI limit:  
      MFJ, Single & HOH $100,000
      MFS Not Allowed
Simple IRA plan elective deferral Limits:  
      Under age 50 $11,500
      Age 50 or older $14,000;
401(k), 403 (b), 457 & SAR SEPs elective deferral limits:
      Under age 50 $16,500
      Age 50 or older $22,000
      SEPs / Profit-sharing plan contributions limits $49,000
      Compensation limit for employer contributions to profit sharing plans $245,000
Retirement Saver’s credit phased-out when AGI exceeds:  
      MFJ $55,500
      HOH $41,625
      Single, MFS & QW $27,750
      “Key employee” compensation threshold $160,000
      “Highly Compensated” threshold $110,000
      HOH $41,625

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Capital Gains Tax Rates


The tax rate on capital gains from the sale of assets held longer than one year remains at 0% for people in the 10 percent or 15 percent tax brackets. The 15 percent maximum tax rate on long-term capital gains for taxpayers in higher brackets also remains the same. Rates are scheduled to increase in 2011.


Dividend Tax Rates


Similarly, the special 5 percent maximum rate on dividends of taxpayers in the 10 percent and 15 percent tax brackets remains at zero percent through 2010. Rates are scheduled to increase in 2011.

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Kiddie Tax

In 2009, a child's unearned income over $1,900, such as gains and dividends, is taxed at the parents' marginal rate until the year the child is age 19, or age 24 for full-time students whose earned income is less than half their support.

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Energy-Efficient Credit for Residential Property
There are many new and expanded tax benefits on money spent to reduce energy use or create new energy sources. For example, homeowners can get bigger tax credits for making energy efficiency improvements or installing alternative energy equipment.

The American Recovery and Reinvestment Act (ARRA) of 2009 provides a uniform credit of 30% of the costs of qualifying improvements up to $1,500. Examples include adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. It also raises the limit on the amount that can be claimed on improvements placed in service during 2009 and 2010 to $1,500.

The IRS provides a list of energy-related tax benefits in the ARRA in its Fact Sheet 2009-10. The credit for 30 percent of the cost of installing solar water heating equipment, solar electric equipment, geothermal heat pumps or small wind turbines in your primary residence or a second home is unlimited in 2009. But the credit for fuel cell property cannot exceed $500 per half-kilowatt capacity.

Credit for Energy-Saving Home Improvements
The tax credit for the cost of energy-saving home improvements is 30 percent for 2009 and 2010, up to a maximum of $1,500 in the two-year period. It applies to qualified skylights, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters and central air conditioners.

Making Work Pay Credit:
Once again, a special tax credit offers taxpayers an opportunity to lower their tax bill or increase their refunds on their 2010 federal tax returns. Available to both Form 1040 and Form 1040A filers, this credit is claimed on Schedule M, Making Work Pay Credit.
The Making Work Pay Credit helps millions of workers and self-employed individuals. Although income limits apply to this credit, it is refundable –– meaning that those eligible can get it even if they owe no tax.
Though all eligible taxpayers must file Schedule M to claim the Making Work Pay Credit, most workers got the benefit of this credit through larger paychecks, reflecting reduced federal income tax withholding during 2010.
Most eligible taxpayers qualify for the maximum Making Work Pay Credit of $800 for a married couple filing a joint return or $400 for other taxpayers. The credit equals 6.2 percent of earned income up to the maximum amount. Thus, any eligible couple filing a joint return whose earned income is $12,903 or more qualifies for the $800 maximum credit. This is true even if the income is earned entirely by one spouse. Other taxpayers qualify for the $400 maximum if their earned income is $6,451 or more.
For most workers, the credit is based on the taxable wages reported to them on Forms W-2. Self-employed individuals figure the credit using the net profit or loss they receive from a business or farm. Additional calculations are necessary for some taxpayers, including those who have net business losses, or foreign earned income. More information, including a worksheet, can be found in the instructions for Schedule M.
Some taxpayers are not eligible for the making work pay credit, including:
Joint filers whose modified adjusted gross income (MAGI) is $190,000 or more.

  • Other taxpayers whose MAGI is $95,000 or more.
  • Anyone who can be claimed as a dependent on someone else’s return.
  • A taxpayer who doesn’t have a valid social security number.
  • Joint filers, if neither spouse has a valid Social Security number.
  • Nonresident aliens.

Other taxpayers qualify for the credit but must reduce the amount of the credit they claim, including:

  • Joint filers whose MAGI is more than $150,000 but less than $190,000.
  • Other taxpayers whose MAGI is more than $75,000 but less than $95,000.
    See Schedule M and its instructions for details.

 
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Exemptions for the Alternative Minimum Tax (AMT)
For 2009, the exemption levels rise to $70,950 for married couples filing jointly, $46,700 for singles and heads of household, and $35,475 for married couples filing separately. Otherwise, about 28 million filers would have been added to the AMT rolls. Congress is likely to act again to prevent this from happening for the 2010 tax year. Also, interest on private-activity bonds issued in 2009 and 2010 is exempt from the Alternative Minimum Tax.
About AMT ---The AMT is a parallel income tax that was created in 1969 to ensure that the wealthiest taxpayers could not use exemptions, deductions, or credits to avoid tax liability.  Taxpayers must pay the higher of two taxes—either their regular tax or the AMT.  Regular income tax brackets are indexed for inflation but the AMT thresholds are not.  Over time, and with various legislation (the Economic Growth and Tax Relief Reconciliation Act of 2001, Jobs and Growth Tax Relief Reconciliation Act of 2003, and the Working Families Tax Relief Act of 2004) that has expanded and adjusted the income tax brackets, this has reduced the difference between regular income tax liabilities and AMT liabilities at lower income levels and more taxpayers have become subject to the AMT.

Under current tax law, the reduction in exemption amounts against the AMT as well as the loss of the ability to offset the AMT with nonrefundable credits will result in more than 23 million taxpayers (from 4 million) becoming subject to the AMT. Taxpayers who previously benefited from the tax law changes of 2001 and 2003 will now find that they no longer qualify for the benefits, most of which are in effect until 2010.


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General Tax Topics for 2009

Estate Tax Exemption
For 2009, the federal estate tax exemption is $3,500,000.


Higher Annual Gift Tax Exemption
For 2009, you can give up any individual up to $13,000 without owing any gift tax.


Income Earned Abroad
The maximum foreign earned income exclusion is increased to $91,400, up fom $87,600 in 2008.

Estimated Tax Relief for Owners of Small Businesses
If an individual’s Adjusted Gross Income for 2008 was less than $500,000 and more than half of the gross income was from a business with fewer than 500 workers, the estimated income taxes for 2009 estimated tax payments can be based on the lesser of 90 percent of tax liability for 2008 or 2009. The usual estimated tax benchmarks of 100 percent or 110 percent of tax liability do not apply.

Direct Donations of IRAs to Charity

Unless Congress acts to extend it, 2009 is the last year that IRA owners age 70 ½ and older can donate up to $100,000 of their IRAs to charity without having to report the withdrawal as income and deduct the donation as a charitable contribution. Deductions will not be limited by the Adjusted Gross Income cap on charitable contributions or the itemized deduction phase-out. Keeping IRA distributions out of adjustable gross income in the first place can also have other benefits. Amounts donated in this way count as all or part the IRA owner’s required minimum distribution.

Tax Credit Phase-out Begins for Ford Hybrids

The Alternative Motor Vehicle Credit for new hybrid automobiles manufactured by Ford Motor Company will be reduced in stages. A phase-out of the full tax credit begins after a manufacturer sells 60,000 hybrid automobiles.

For Ford vehicles purchased for use or lease from April 1, 2009, through Sept. 30, 2009, the credit is 50% of the full amount. On Oct. 1, 2009, the credit drops to 25%. No credits will be given for hybrid automobiles made by Ford beginning on April 1, 2010.

Record Keeping Requirements

It is important to keep accurate mileage records for claiming a mileage deduction. The records to keep are:
• Total miles for the year
• Mileage for each business use
• Times and dates
• Place/address
• Business purposes
• Charitable purposes
• Educational purposes
• Medical purposes

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2009 Federal Tax Rate Schedules Single


If taxable income is over—

but not over—

the tax is:

$0

$8,350

10% of the amount over $0

$8,350

$33,950

$835 plus 15% of the amount over $8,350

$33,950

$82,250

$4,675 plus 25% of the amount over $33,950

$82,250

$171,550

$16,750 plus 28% of the amount over $82,250

$171,550

$372,950

$41,754 plus 33% of the amount over $171,550

$372,950

no limit

$108,216 plus 35% of the amount over $372,950

2009 Federal Tax Rate Schedules Single

If taxable income is over—

but not over—

the tax is:

$0

$16,700

10% of the amount over $0

$16,700

$67,900

$1,670 plus 15% of the amount over $16,700

$67,900

$137,050

$9,350 plus 25% of the amount over $67,900

$137,050

$208,850

$26,637.50 plus 28% of the amount over $137,050

$208,850

$372,950

$46,741.50 plus 33% of the amount over $208,850

$372,950

no limit

$100,894.50 plus 35% of the amount over $372,950

Married Filing Separately

If taxable income is over—

but not over—

the tax is:

$0

$8,350

10% of the amount over $0

$8,350

$33,950

$835 plus 15% of the amount over $8,350

$33,950

$68,525

$4,675 plus 25% of the amount over $33,950

$68,525

$104,425

$13,318.75 plus 28% of the amount over $68,525

$104,425

$186,475

$23,370.75 plus 33% of the amount over $104,425

$186,475

no limit

$50,447.25 plus 35% of the amount over $186,475

Head of Household

If taxable income is over—

but not over—

the tax is:

$0

$11,950

10% of the amount over $0

$11,950

$45,500

$1,195 plus 15% of the amount over $11,950

$45,500

$117,450

$6,227.50 plus 25% of the amount over $45,500

$117,450

$190,200

$24,215 plus 28% of the amount over $117,450

$190,200

$372,950

$44,585 plus 33% of the amount over $190,200

$372,950

no limit

$104,892.50 plus 35% of the amount over $357,700

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Starting in 2010

Estate Tax Repealed

The federal estate tax will be eliminated for estates of individuals who die in 2010 unless Congrress acts by December 31, 2009 to retain it.

Roth IRA Conversions

Starting in 2010, individuals with any amount of modified Adjusted Gross Income are free to switch a traditional IRA to a Roth IRA. Conversions are fully taxable at your regular tax rate. For conversions in 2010, taxpayers can spread the tax due over two years. Half the tax will be due in 2011, and the remaining half will be payable in 2012. Removing the limit on conversions effectively eliminates the income limit on contributions to Roth IRAs. A taxpayer with income too high to use a Roth will be able to contribute to a traditional IRA (which does not have income limits for contributions) and immediately convert to a Roth.

Domestic Production Activities Deduction

In 2010, this deduction increases to nine percent of qualifying business net income. This deduction applies to businesses engaged in construction, engineering or architectural services, film production, or the lease, rental or sale of equipment you manufactured. However, the rate remains 6 percent for oil and gas companies.

State and Local Sales Tax Deduction

The opportunity for itemizers to choose to deduct their state sales tax payments instead of deducting their state and local income taxes ends after 2009, unless Congress extends it.

Educators' Deduction

This deduction for classroom supplies purchased by educators lapses after 2009, unless Congress extends it.

Nontaxable Combat Pay Allowed for Earned Income Tax Credit (EITC)

The election to include nontaxable combat pay in the calculation of earned income for the Earned Income Tax Credit is not available after 2009, unless Congress extends it.

Tuition and Fees Deduction

The deduction for up to $4,000 of college tuition and fees expires after 2009, unless Congress extends it.

Direct Donations of IRAs to Charity

Beginning in 2010, the opportunity for IRA owners age 70½ to directly donate part of their IRA balance to charity will disappear, unless Congress extends it.

Income Earned Abroad

The maximum foreign earned income exclusion is increased to $91,500. This is a $100 increase from 2009.

Additional Standard Deduction for Property Taxes

Starting in 2010, non-itemizers will no longer be allowed to increase their standard deduction by up to $1,000 of property taxes paid, unless Congress extends this break.

Section 179 Expense Deduction

The maximum amount of equipment placed in service that businesses can expense drops by nearly 50%, to $135,000 from $250,000 previously.

Limits on Deducting Farm Losses

Beginning in 2010, the amount of farm losses you can enter to offset nonfarm income is capped at the greater of $300,000 or your net farm income over the past five years. But this limit will apply only if you get federal farm payments or Commodity Credit Corporation (CCC) loans. You can take suspended losses in later years. The caps will also apply to partners and S corporation owners.

Capital Gains Tax Rates

The tax rate on capital gains from the sale of assets held longer than one year remains at 0% for people in the 10 percent or 15 percent tax brackets. The 15 percent maximum tax rate on long-term capital gains for taxpayers in higher brackets also remains the same. However, these rates are scheduled to increase in 2011.

Dividend Tax Rates

Similarly, the special 5 percent maximum rate on dividends of taxpayers in the 10 percent and 15 percent tax brackets remains at zero percent through 2010.

Exemptions for the Alternative Minimum Tax

For 2010, the exemption levels drop to $45,000 for married filing jointly, $33,750 for singles and heads of household, and $22,500 for married couples filing separately. Congress, can, however, act in 2010 to extend the relief that was available in 2009.

Partial Exclusion for Unemployment Benefits

For 2010, the first $2,400 of unemployment benefits you receive is no longer tax-free.

Sales Tax Deduction for New Vehicles

Beginning in 2010, buyers of new vehicles no longer get a tax benefit for sales tax paid on new vehicles, unless they itemize and elect to deduct sales taxes instead of state income taxes.

Credit for Energy-Saving Home Improvements

The 30 percent tax credit of the cost of energy-saving home improvements reverts to 10 percent after 2010, and is capped at $500.

Starting in 2011

Higher Tax Rates
Beginning in 2011, tax rates that were in effect prior to 2001 return. The top income tax rate goes back to 39.6 percent, and the special low 10 percent bracket is eliminated. Whether this will actually happen will be at the heart of a spirited battle in Congress during 2010.
Estate Tax Revived
For individuals dying after 2010, the federal estate tax returns with a $1,000,000 exemption and a 50 percent maximum rate. Congress is likely to take some action on these rules during 2010.
Increase in Capital Gains and Dividend Tax Rates
The tax rate reductions for long-term capital gains and dividends is scheduled to expire this year.

  • In 2011, the maximum long-term capital gains tax rate goes back up to 20 percent from 15 percent. A lower 10 percent tax rate is used by individuals who are in the 15 percent tax bracket. Their long-term capital gains had been tax-free since 2008.
  • In 2011, dividend income (other than capital gain distributions from mutual funds) is taxed as ordinary income at your highest marginal tax rate.

Child Tax Credit
The credit of $1,000 per eligible child reverts to $500 after 2010. After 2010, none of the child tax credit will be refundable to taxpayers unless their earned income is more than $12,550. This is one of the many Bush tax cuts currently scheduled to expire after 2010.
Payroll Tax Credit
Starting in 2011, the partial credit for payroll taxes paid is no longer available.
Section 179 Expense Deduction
The maximum amount of equipment placed in service that businesses can expense drops to $25,000, down from $135,000 in 2010.
College Savings Plans
Beginning in 2011, 529 Plans can no longer be tapped tax-free to pay for a computer or Internet access.
Tax Credit for College Tuition
The Hope credit is again limited to the first two years of college and is capped at $1,800. None of the credit is refundable if it is more than your regular income tax liability.
Earned Income Tax Credit (EITC)
Temporary increases in the Earned Income Tax Credit for filers with three or more children and the higher income levels for the phaseout of the credit are repealed.
Mortgage Insurance Premiums
The special itemized deduction for mortgage insurance premiums paid on mortgages taken out after 2006 expires on Dec. 31, 2010.

Starting in 2013

Tax Relief for Taxpayers Who Lose Their Homes Due to Foreclosure Expires
Beginning in 2013, debt forgiven in connection with the foreclosure of a principal residence will once again be considered taxable income (unless you are in bankruptcy or insolvent).

Starting in 2017

Credit for Residential Energy-Efficient Property
The credit for 30 percent of the cost of installing solar water heating equipment, photovoltaic or fuel cell equipment, geothermal heat pumps or wind turbines in your primary residence or a second home does not apply after 2016.

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GENERAL TAX TOPICS:

APPLYING FOR ITIN – FORM W7 PROCEDURE
If you or your spouse or dependent are on non immigrant dependent visa or some how not eligible to get social security number, may qualify for ITIN number. To apply for ITIN number for your spouse or dependent you must have to fill out W7, attach a notarized copy of their passport & visa (usually first, last and visa page), notary should be done from the U.S. notary public or if you are in the foreign country then must be from any of the local U.S. consulate office in your country.
You can apply the ITIN only at time of filling your tax return. You can not file form W7 alone without filling the tax return.

Foreign Earned Income Exclusion:
If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $87,600 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts.

You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. Refer to Exclusion of Meals and Lodging in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 15-B, Employer's Tax Guide to Fringe Benefits for more information.

References/Related Topics

 

Requirement:

To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:

  • A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year
  • A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
  • A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months

For tax year 2008 the maximum amount of the Foreign Earned Income Exclusion under section 911 of the Internal Revenue Code has been increased to $87,600. (Refer to Revenue Procedure 2007-66.) In addition, Section 515 of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) amends the computation of the Maximum Housing Amount Exclusion under Section 911 of the Code. (Refer to Notice 2006-87 and Notice 2007-25.)

Limits

For each tax year, you cannot exclude more than the smaller of:

  1.      $87,600 (or other amount determined under Section 911 of the Internal Revenue Code), or
  2.      Your foreign earned income for the tax year minus your foreign housing exclusion.

If both you and your spouse work abroad and you and your spouse meet either the bona fide residence test or the physical presence test, you can each choose the foreign earned income exclusion. You do not both need to meet the same test. Together, you and your spouse can exclude as much as $175,200 for the tax year.

 

Part Year Exclusion

Part-year exclusion. If you qualify under either the bona fide residence test or the physical presence test for only part of the year, you must adjust the maximum limit based on the number of qualifying days in the year. The number of qualifying days is the number of days in the year within the period on which you both:

  1.        Have your tax home in a foreign country, and
  2.        Meet either the bona fide residence test or the physical presence test.

For this purpose, you can count as qualifying days all days within a period of 12 consecutive months once you are physically present and have your tax home in a foreign country for 330 full days. To figure your maximum exclusion, multiply the maximum excludable amount for the year by the number of your qualifying days in the year, and then divide the result by the number of days in the year.

Physical presence test

Under the physical presence test, a 12-month period can be any period of 12 consecutive months that includes 330 full days. If you qualify under the physical presence test for part of a year, it is important to carefully choose the 12-month period that will allow the maximum exclusion for that year.

For sales after 2007, the maximum exclusion on the sale of a main home by an unmarried surviving spouse is $500,000 if the sale occurs no later than 2 years after the date of the other spouse's death. However, this rule applies only if the requirements for joint filers relating to ownership and use were met immediately before the date of such death, and during the 2-year period ending on the date of such death, there was no sale or exchange of a main home by either spouse which qualified for the exclusion.

Like-Kind Exchanges Under IRC Code Section 1031

 Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

The exchange can include like-kind property exclusively or it can include like-kind property along with cash, liabilities and property that are not like-kind. If you receive cash, relief from debt, or property that is not like-kind, however, you may trigger some taxable gain in the year of the exchange. There can be both deferred and recognized gain in the same transaction when a taxpayer exchanges for like-kind property of lesser value.

This fact sheet, the 21st in the Tax Gap series, provides additional guidance to taxpayers regarding the rules and regulations governing deferred like-kind exchanges.

Who qualifies for the Section 1031 exchange?

Owners of investment and business property may qualify for a Section 1031 deferral. Individuals, C corporations, S corporations, partnerships (general or limited), limited liability companies, trusts and any other taxpaying entity may set up an exchange of business or investment properties for business or investment properties under Section 1031.

What are the different structures of a Section 1031 Exchange?

To accomplish a Section 1031 exchange, there must be an exchange of properties.  The simplest type of Section 1031 exchange is a simultaneous swap of one property for another. 

Deferred exchanges are more complex but allow flexibility.  They allow you to dispose of property and subsequently acquire one or more other like-kind replacement properties. 

To qualify as a Section 1031 exchange, a deferred exchange must be distinguished from the case of a taxpayer simply selling one property and using the proceeds to purchase another property (which is a taxable transaction).  Rather, in a deferred exchange, the disposition of the relinquished property and acquisition of the replacement property must be mutually dependent parts of an integrated transaction constituting an exchange of property.  Taxpayers engaging in deferred exchanges generally use exchange facilitators under exchange agreements pursuant to rules provided in the Income Tax Regulations. .

A reverse exchange is somewhat more complex than a deferred exchange.  It involves the acquisition of replacement property through an exchange accommodation titleholder, with whom it is parked for no more than 180 days.  During this parking period the taxpayer disposes of its relinquished property to close the exchange.

What property qualifies for a Like-Kind Exchange?

Both the relinquished property you sell and the replacement property you buy must meet certain requirements. 

Both properties must be held for use in a trade or business or for investment.   Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.

Both properties must be similar enough to qualify as "like-kind."  Like-kind property is property of the same nature, character or class.  Quality or grade does not matter. Most real estate will be like-kind to other real estate.  For example, real property that is improved with a residential rental house is like-kind to vacant land.  One exception for real estate is that property within the United States is not like-kind to property outside of the United States.  Also, improvements that are conveyed without land are not of like kind to land.

Real property and personal property can both qualify as exchange properties under Section 1031; but real property can never be like-kind to personal property. In personal property exchanges, the rules pertaining to what qualifies as like-kind are more restrictive than the rules pertaining to real property.  As an example,  cars are not like-kind to trucks. 

Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of:

  • Inventory or stock in trade
  • Stocks, bonds, or notes
  • Other securities or debt
  • Partnership interests
  • Certificates of trust

What are the time limits to complete a Section 1031 Deferred Like-Kind Exchange?

While a like-kind exchange does not have to be a simultaneous swap of properties, you must meet two time limits or the entire gain will be taxable.  These limits cannot be extended for any circumstance or hardship except in the case of presidentially  declared disasters. 

The first limit is that you have 45 days from the date you sell the relinquished property to identify potential replacement properties.  The identification must be in writing, signed by you and delivered to a person involved in the exchange like the seller of the replacement property or the qualified intermediary.  However, notice to your attorney, real estate agent, accountant or similar persons acting as your agent is not sufficient. 

Replacement properties must be clearly described in the written identification.  In the case of real estate, this means a legal description, street address or distinguishable name. Follow the IRS guidelines for the maximum number and value of properties that can be identified. 

The second limit is that the replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. The replacement property received must be substantially the same as property identified within the 45-day limit described above.

Are there restrictions for deferred and reverse exchanges?

It is important to know that taking control of cash or other proceeds before the exchange is complete may disqualify the entire transaction from like-kind exchange treatment and make ALL gain immediately taxable.

If cash or other proceeds that are not like-kind property are received at the conclusion of the exchange, the transaction will still qualify as a like-kind exchange.  Gain may be taxable, but only to the extent of the proceeds that are not like-kind property.

One way to avoid premature receipt of cash or other proceeds is to use a qualified intermediary or other exchange facilitator to hold those proceeds until the exchange is complete.

You can not act as your own facilitator. In addition, your agent (including your real estate agent or broker, investment banker or broker, accountant, attorney, employee or anyone who has worked for you in those capacities within the previous two years) can not act as your facilitator.

Be careful in your selection of a qualified intermediary as there have been recent incidents of intermediaries declaring bankruptcy or otherwise being unable to meet their contractual obligations to the taxpayer.  These situations have resulted in taxpayers not meeting the strict timelines set for a deferred or reverse exchange, thereby disqualifying the transaction from Section 1031 deferral of gain.  The gain may be taxable in the current year while any losses the taxpayer suffered would be considered under separate code sections.

How do you compute the basis in the new property?

It is critical that you and your tax representative adjust and track basis correctly to comply with Section 1031 regulations.

Gain is deferred, but not forgiven, in a like-kind exchange. You must calculate and keep track of your basis in the new property you acquired in the exchange. 

The basis of property acquired in a Section 1031 exchange is the basis of the property given up with some adjustments.  This transfer of basis from the relinquished to the replacement property preserves the deferred gain for later recognition.  A collateral affect is that the resulting depreciable basis is generally lower than what would otherwise be available if the replacement property were acquired in a taxable transaction. 

When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

 

How do you report Section 1031 Like-Kind Exchanges to the IRS?

You must report an exchange to the IRS on  Form 8824, Like-Kind Exchanges and  file it with your tax return for the year in which the exchange occurred. 

Form 8824 asks for:

  • Descriptions of the properties exchanged
  • Dates that properties were identified and transferred
  • Any relationship between the parties to the exchange
  • Value of the like-kind and other property received
  • Gain or loss on sale of other (non-like-kind) property given up
  • Cash received or paid; liabilities relieved or assumed
  • Adjusted basis of like-kind property given up; realized gain

If you do not specifically follow the rules for like-kind exchanges, you may be held liable for taxes, penalties, and interest on your transactions. 

Beware of schemes

Taxpayers should be wary of individuals promoting improper use of like-kind exchanges.  Typically they are not tax professionals.   Sales pitches may encourage taxpayers to exchange non-qualifying vacation or second homes.  Many promoters of like-kind exchanges refer to them as “tax-free” exchanges not “tax-deferred” exchanges. Taxpayers may also be advised to claim an exchange despite the fact that they have taken possession of cash proceeds from the sale. 

Consult a tax professional or refer to IRS publications listed below for additional assistance with IRC Section 1031 Like-Kind Exchanges. 

References/Related Topics

Form 4797, Sales of Business Property

 

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