A common strategy for minimizing gift taxes on estates that are larger then the Federal Gift Tax Exclusion (Currently two million dollars) is for the person with the estate to gift some of the estate to their heirs before the person(s) dies.

This year you (And your spouse if your are married) can gift up to $12,000 to a person without incurring Federal Gift taxes.

So lets say you own an estate that is worth 3 million dollars.  This estate could include real estate, a business, cash or cash equivalents, farm land, stocks, bonds, mutual funds, etc.  Lets say you are married and have two children who are not married.  You and your spouse could decide to give each of your children $12,000 without incurring and Federal Gift Taxes.

Real Estate prices and stock prices are currently extremely low.  Gifts are valued on the date of transfer.  So you may want to consider gifting property that is depressed in value.

Mike Sylvester 

Tomorrow is October 15th, 2008.

The tax returns of individual taxpayers who “extended” their tax returns are due tomorrow.  They must be postdated as of October 15th!

Mike Sylvester, CPA/ABV “accredited in business valuation”

I have had a couple of clients call me and ask about the tax treatment of losses from the sale of stocks and mutual funds this week and so I decided to put up a brief post on the topic.

In simple terms here is how stock losses from the sale of stocks and/or mutual funds are handled on your individual tax return:

First of all gains and losses from the actual sale of stocks and/or mutual funds are considered capital gains or capital losses. 

For each transaction, you have to calculate the gain or loss for that specific transaction.  These individual gains or losses are combined and result in a total net gain or net loss. 

If the loss is a net loss then you can deduct a maximum of $3000 from your taxable income on your individual tax return each year.  If your loss is greater then $3000 then this loss is carried forward to your next tax year.

The rules governing gains and losses are complicated and this post just discusses the topic in general terms!

Mike Sylvester, CPA/ABV “accredited in business valuation”   

If your income fluctuates by large amounts from year to year your chances of being audited by the Internal Revenue Service increase. 

When the Internal Revenue Service sees these fluctuations (Or more likely when their software notices and flags these income fluctuations) they often suspect that something is wrong.

Once again if your income is fluctuating it is not a big deal; just make sure that you file your tax return correctly and that you keep the required documentation in case of an IRS audit.

Mike Sylvester, CPA/ABV 

This is the second post discussing situations that increase your chances of incurring an audit from the Internal Revenue Service.

Certain expenses listed on your tax return are more likely to draw the attention of the Internal Revenue Service. 

Meals and entertainment expenses are often scrutinized by the IRS since they are commonly abused by certain taxpayers. 

Automobile and travel expenses also increase the chances that you will be audited by the Internal Revenue Service.

I strongly feel that you should deduct the above expenses; however, you need to ensure that the expenses are valid deductions and you need to keep the required documentation.

Internal Revenue Publication 463 is a good source of information regarding these expenses and can be retrieved at:

http://www.irs.gov/pub/irs-pdf/p463.pdf

Mike Sylvester, CPA/ABV

There are many red flags that increase the odds of your tax return being audited by the Internal Revenue Service.  I will be discussing several of the more common “red flags” in a series of posts over the next couple of weeks.

One of the most common “red flags” is a tax return that has an unusually large amount of itemized deductions in relation to the amount of income listed on the return.  The Internal Revenue Service has grouped tax payers into several different income groups and has determined a range of “reasonable” amounts of itemized deductions for each income group.

If you report a higher amount of itemized deductions than the IRS considers “normal” for your income then your chances of IRS audit increase.

This does not mean you should not claim these large deductions; it just means that you need to document these deductions and realize that by claiming these large deduction the odds of an audit increase.  This means you need to keep good records for all of the items listed on your tax return not just the “itemized deductions!”

Mike Sylvester, CPA/ABV

Another tax season has ended.  We are extremely proud of the fact the we filed tax returns for our clients and only extended those people who have yet to provide us with their tax data.  We even managed to file tax returns for people who got us their information on the 13th and 14th of April this year!

Individual tax extensions filed today will give taxpayers another six months in which to gather their tax data and submit returns; however, this extension does not extend the amount of time you have to pay the your taxes if you owe Uncle Sam taxes!

If you need help with your taxes please give Mike Sylvester a phone call at 260-338-0833!

Mike Sylvester, CPA 

Our firm has had another great tax season!  We grew our tax planning and preparation business by 38% this year and we had two great interns from IPFW intern with us this tax season.

We once again are proud to announce that we are only extending those people who did not manage to get their tax information to us by April 15th!

I will be posting to this blog much more frequently now that tax season is almost over!

Mike Sylvester, CPA 

It has been an extremely busy tax season so far!  We have managed to turn around most of our tax returns in less then a week and I expect that will continue through the end of tax season.

My partner and I have been busy; however, we are still accepting new clients and would be happy to help you with your 2007 taxes!

We hired two interns from Indiana Purdue University Fort Wayne this year and they have really worked out well.  Chris and Sandra are both doing a great job and have been great additions to our staff.

Remember that the corporate tax deadline is March 15th so please ensure that you get your corporate information to us as soon as possible!

Mike Sylvester

As of January 1st, 2007 Indiana residents have been eligible for a non-refundable tax credit if they contribute to an Indiana 529 plan.  Taxpayers receive a state tax credit equal to 20% of their contribution to an Indiana 529 plan up to a maximum tax credit of $1000.

This is a great opportunity to save on your Indiana taxes and is something many Indiana residents should strongly consider. 

Mike Sylvester, CPA