IRS has announced the 2020 cost-of-living adjustments (COLAs) with respect to retirement plan limits. Many limits, which are adjusted by reference to Code Sec. 415(d), are changed for 2020 since the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, others remain unchanged. [IRS Notice 2019-59]
The following plan limits are increased effective January 1, 2020:
Elective deferrals. The Code Sec. 402(g)(1) limit on the exclusion for elective deferrals described in Code Sec. 402(g)(3) increases from $19,000 to $19,500 for 2020. This limitation affects elective deferrals to Code Sec. 401(k) plans, Code Sec. 403(b) plans, and the Federal Government's Thrift Savings Plan.
Defined benefit plans
Generally, a surviving spouse may make a tax-free spousal rollover from a deceased spouse’s IRA only if the survivor is designated as the IRA’s beneficiary. However, in a private letter ruling (PLR), IRS said this general rule didn’t apply – and a tax-free spousal rollover was OK – where the decedent failed to designate an IRS beneficiary, died without a will, and the surviving spouse was the administrator and sole heir to the decedent’s estate.
Background on surviving spouse’s IRA choices. A surviving spouse designated as the beneficiary of an IRA need not leave the IRA in the decedent’s name. The surviving spouse can either:
1. Roll over the decedent’s IRA into an IRA in the spouse’s n
In a private letter ruling, the Internal Revenue Service has concluded that a limited liability company (LLC)’s “S” corporation election was inadvertently terminated after its members adopted an amendment to the distribution provisions in the LLC’s operating agreement. [PLR 201930023 / issued July 26, 2019]
Internal Revenue Code (“Code”) section 1361 defines a small business corporation (“S” corporation) as an eligible domestic corporation, which does not have:
A corporation is treated as havin
The Michigan Department of Treasury updated its guidance on the sales and use tax bad debt deduction for periods after September 30, 2009. The revised release (Revenue Administrative Bulletin 2019-3) incorporates the Michigan Supreme Court’s 2018 decision in Ally Financial Inc. et. al. v. Department of Treasury.
In Ally Financial, the Court cla
2018 was a year of sweeping change. The enactment of the federal Tax Cuts & Jobs Act will dramatically affect many taxpayers, but time remains now to execute new strategies that will benefit you this tax year and in the future.
We examine a few actions you can still implement before the New Year to take advantage of the tax laws.
Many taxpayers feel that a Roth IRA offers several benefits over a traditional IRA. If you’re one of those people, and you meet the eligibility requirements, consider converting beaten-down stocks or mutual funds in a traditional IRA i
Noncorporate taxpayers take note. For tax years 2018 through 2025, the IRS allows you to claim an income tax deduction for “qualified business income” (QBI) from a partnership, S corporation, or sole proprietorship – as long as you meet certain requirements.
Sec. 199A of the Internal Revenue Code allows noncorporate taxpayers to deduct 20 percent of their QBI from the above pass-through entities, along with 20 percent of the
On August 1, 2018, the Michigan Department of Treasury issued a Revenue Administrative Bulletin describing the criteria for imposing sales and use tax on out-of-state and remote sellers. In light of the U.S. Supreme Court’s June 2018 ruling in South Dakota v. Wayfair, Michigan’s reach is now stronger than ever.
Under the Commerce Clause of the
Internal Revenue Service regulations provide that a taxpayer must capitalize an amount paid to facilitate an acquisition of a trade or business, which includes the process of investigating or otherwise pursuing the transaction. Other portions of the expense are currently deductible as ordinary and necessary business expenses. But what about an investment banker’s fee that is contingent upon the successful closing of the transaction?
According to the specific IRS provision, such a contingency fee is considered “an amount paid to facilitate the transaction except to the extent the taxp
For snowbirds who choose to head to warmer climes after enduring years of Michigan winters or for other Michigan business owners of companies that operate within the state but who reside in another state or country, the fact that you live elsewhere doesn’t protect you from the reach of Michigan taxes. How and where your business generates its income are critical considerations.
Michigan has enacted specific statutes that address the tax treatment of individuals who are equity holders of Michigan businesses or businesses that provide services in Michigan, but who live elsewhere other than Michigan.
According to the
According to a recent and closely-watched decision from the North Carolina Supreme Court, it is unconstitutional for the state to tax a trust whose only connection to North Carolina was the residence of the beneficiary.
At issue in Kaestner 1992 Family Trust vs. North Carolina Department of Revenue was a trust that was created in New York and governed by New York law. At the time the trust was created, none of the beneficiaries resided in North Carolina, but later, Kimberly Rice Kaestner, a daughter of the settlor and a primary beneficiary of the trust, became a North Carolina resident.
The trust documents, financial books and recor
The tax reforms pushed by the Trump Administration and enacted by Congress in 2017 impacted several deductions that U.S. taxpayers have routinely claimed on their returns each year. Despite confusion regarding the scope of the Tax Cuts & Jobs Act (TCJA), the IRS has confirmed that mortgage and home equity loan interest is still deductible – with some changes.
A “qualified residence” is your main home, the place you live most of the time. It can be a house, condo, or cooperative apartment – as well as a house trailer, mobile home, or houseboat – as long as the home has toilet, cooking, and sleeping facilities.
A second home (no mo
It’s a fact of life in everyday business that companies take on debt to finance their operations and growth, and bonds are one type of debt instrument corporations use. Market influences and other forces can impact bond interest rates, but when a change in the federal corporate tax rate automatically changes a bond’s interest rate, is that a taxable event?
This precise question recently arose with a client when the 2017 Tax Cuts & Jobs Act (TCJA) lowered the corporate tax rate.
Some bonds and other debt instruments are structured so that their interest rates can be adjusted when the federal corporate tax rate changes. In some instances, the rate goes up or down automaticall