At Wheeler & Associates, we want to keep you informed of the constantly changing income tax laws and accounting developments affecting you and your business. The following articles and information are from our quarterly tax newsletter. If you would like to be added to our complimentary newsletter mailing list, please click here   

Quarterly Client Newsletter

July, August, September 2013

  • New IRS Rules May Offer Tax Breaks for Property Owners
  • The Gift Tax Still Matters
  • Investing on Margin Increases Risk and Potential Rewards
  • Business Owners May Defer Tax on an Employee Stock Ownership Plan Sale
  • Keep Track of Noncash Contributions

  • October, November, December 2013
  • Planning for "Permanent" Tax Laws
  • Year-End Tax Planning for Investors
  • Year-End Tax Planning for Retirement
  • Year-End Estate Tax Planning
  • Year-End Tax Planning for Donations
  • Year-End Tax Planning for Business Owners

  • Gifting of Stock – Year-end tax planning tip

    Consider donating stock in-kind to your favorite charity and receive a tax deduction equal to the selling price of the stock on the date of the gift. This method of charitable giving allows you to avoid the capital gains tax on the appreciation of the stock, while allowing you a charitable deduction equal to your original cost plus appreciation through the date of your gift. However, if the stock you intend to donate would report a tax loss at the time of your intended gift, you should sell the stock to report the tax loss on your income tax return and donate the sale proceeds to receive your charitable deduction as an itemized deduction on your income tax return.

    Special Tax-Fee Charitable Distributions for Certain IRA Owners

    This provision, currently scheduled to expire at the end of 2013, offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. An IRA owner, age 70-1/2 or over, can directly transfer tax-free up to $100,000 per year to an eligible charity. This option can be used for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible.

    To qualify, the funds must be transferred directly by the IRA trustee to the eligible charity. Distributed amounts may be excluded from the IRA owner’s income – resulting in lower taxable income for the IRA owner. However, if the IRA owner excludes the distribution from income, no deduction, such as a charitable contribution deduction on Schedule A, may be taken for the distributed amount.

    Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

    Amounts transferred to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats amounts distributed to charities as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions.

    Harvesting of capital losses to offset capital gains

    A popular tax planning strategy intended to reduce current year realized capital gains (and related capital gains income tax) involves a year-end review of unrealized capital loss positions in your investment portfolio. By disposing of targeted investments that will report a loss upon their disposition, the accumulated realized capital gains can be reduced or even eliminated.

    If you are reluctant to dispose of an investment in an unrealized loss position because you believe it will have a financial recovery, you may buy back the investment after 30 days in order to avoid the “wash-sale” rules that otherwise prevent the deduction of the loss if the buy-back occurs within 30 days before or after you acquire a substantially identical investment.


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