Under the existing rules for 529 plans, account owners can only make investment selection adjustments once per year (or when there is a change in beneficiaries). Under the new relief just released from the IRS for 2009, 529 plan account owners will now be eligible to make changes... twice.Read More...
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.
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...
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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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?
The good news is that recent private letter ruling 200811028 (and more recently, IRS Information Letter 2016-0071) indicates the answer is "yes."
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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.
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.
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. And unlike a typical wash sale where the rules simply temporarily disallow the loss, in the case of a wash sale with an IRA the loss will be permanently forfeited under the new rules!Read More...
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.Read More...
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