kitces.com | Nerd's Eye View - Taxes

Using average cost accounting for Exchange-Traded Funds?

nospam@example.com (Michael Kitces) — Fri, 05 Sep 2008 16:33:01 -0400

The average cost accounting method was first created to allow a taxpayer to simply report the gain on partial sales based on the average cost of all shares purchased (instead of the default FIFO treatment, or by using specific share identification), but was reserved exclusively for mutual funds and not for individual equity securities. However, it appears now that the rules may be a little broader than anyone realized - because technically, an exchange-traded fund (ETF) may also be eligible, notwithstanding the fact that it trades more like a stock than a mutual fund.

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Single-State Municipal Bond Funds Dodge a Bullet! But What About 529 Plans?

nospam@example.com (Michael Kitces) — Mon, 19 May 2008 18:25:47 -0400

Earlier today the Supreme Court issued its ruling in the case of Department of Revenue of Kentucky v. Davis, stating that Kentucky's tax rules which exempt the interest earned on Kentucky muncipal bonds while taxing the interest of other state's bonds is not a violation of the so-called dormant commerce clause of the Constitution. The ruling spared what may have been a tumultuous disruption to the municipal bond market, but the Supreme Court's decision still leaves the door open for several issues...

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Should you be doing 2008 tax planning for your rebate check?

nospam@example.com (Michael Kitces) — Thu, 03 Apr 2008 12:10:03 -0400

With the Economic Stimulus Act rebate checks set to start mailing out to taxpayers next month, based on their 2007 tax filings, many believe that no tax planning remains for the rebate checks. However, for the many individuals who will receive less than the full maximum of the rebate check (or possibly as little as nothing), tax planning opportunities do remain!
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New guidance on fixing a botched IRA stretch after it's "too late"

nospam@example.com (Michael Kitces) — Tue, 25 Mar 2008 10:28:21 -0400

To preserve the ability to stretch IRA distributions for a beneficiary, that individual must start taking withdrawals based on his/her life expectancy in the year after death. If those required withdrawals don't start on time, can you still rectify the situation to preserve the tax deferral? A recent private letter ruling indicates the answer is "yes."

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IRS delays for AMT patch may not be as bad as first feared!

nospam@example.com (Michael Kitces) — Mon, 07 Jan 2008 09:07:55 -0500

Taxpayers awaiting a refund may be delayed in their ability to file early and receive that refund, due to Congress' late passage of an AMT patch - but apparently, the delay won't impact as many taxpayers as first feared.

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IRS steps back on non-spouse beneficiary concession!

nospam@example.com (Michael Kitces) — Fri, 04 Jan 2008 17:23:52 -0500

In its list of required plan amendments for 2008, the IRS has failed to include any mandatory requirement that plans provide for non-spouse beneficiary rollovers to IRAs. This implies a change in position from their Interim and Discretionary Amendments release issued in the fall of 2007, which suggested that the IRS intended to acquiesce in advance of a Congressional Technical Corrections bill that non-spouse beneficiary rollovers from employer retirement plans to inherited IRAs would be mandatory, as covered earlier in this blog.

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IRS shuts down wash sale evasion technique!

nospam@example.com (Michael Kitces) — Fri, 21 Dec 2007 12:41:58 -0500

The IRS has just released Revenue Ruling 2008-5, cracking down on a perceived loophole in the so-called "wash sale" rules where an individual sells a security at a loss and purchases a substantially similar security in his/her IRA.
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IRS capitulates on non-spouse beneficiary rollover rules!

nospam@example.com (Michael Kitces) — Tue, 06 Nov 2007 17:32:17 -0500

Last year's passage of the Pension Protection Act (PPA) allowed, under Section 829, for non-spouse beneficiaries to complete rollovers of inherited employer retirement plans into inherited IRAs to maximize tax deferral. Unfortunately, though, the IRS' interpretation of the newly created IRC Section 402(c)(11) early this year in IRS Notice 2007-7, declared that such rollovers would only be optional, at the discretion of the employer to allow them or not. Fortunately, though, in the face of a pending Technical Corrections bill in Congress to reverse this undesirable interpretation, the IRS has acquiesced to simply making the treatment mandatory for all employers.
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