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Archive for John Stancil

Is A Bitcoin Donation For Churches?

John Stancil, Tax Advisor, Florida

Bitcoin… Most likely you have heard of it. Maybe you have an idea about what it is. But what if a member of your church asks you, as Pastor or Treasurer, if they can contribute bitcoin to the church. How do you reply? Can it even be done? Most smaller churches are not set up to receive donations of stocks or other securities, much less something as new as bitcoin. Obviously, one does not want to turn away a legitimate contribution with no strings attached, but what is the process? To get the big question out of the way, yes, your church can accept bitcoin contributions, but it is not as simple as a member dropping a check in the offering plate or making an online contribution with a credit card.  The church must be prepared to receive such contributions.

But let’s take a step back and look at what bitcoin is. Bitcoin is the most well-known virtual currency now in existence. It is sometimes referred to as cryptocurrency. It not the province of any government, but is a virtual currency used in commerce. Since it is essentially a “private” currency the value of bitcoin changes much as the value of stocks or other securities change value. In fact, the IRS does not recognize bitcoin as cash for purposes of charitable contributions. Therefore, it must be treated as a noncash gift similar to the handling of contributions of other securities. Consequently, the church should not assign a value to the contribution but simply issue a letter acknowledging the contribution.

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Business Taxpayers – The Truth About Deducting Automobiles And Other Business Equipment

I received a mailing from an American automobile company regarding the Section 179 deduction. The letter expressed some urgency to purchase a vehicle before the end of the year to get a large Section 179 deduction. While this is true, the letter left me with the impression that I needed to take action before December 31, 2016, or the deduction would be lost. What they stated was true. However, it is what was left unstated that concerns me.

For the uninitiated, Section 179 allows a business taxpayer to expense in the current year costs of certain equipment purchased during the year rather than taking depreciation over the life of the asset. Currently businesses purchasing less than $2,000,000 in such assets may expense up to $500,000 of Section 179 deduction on their return. This amount was enacted in January 2016 and is permanent until Congress changes it. Thus, the deduction remains at $500,000 and is indexed for inflation for future years. The deduction must be taken in the year in which the asset is placed into service.

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How Organizations Are Classified As Partnerships (Part I)

An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits. However, a joint undertaking merely to share expenses is not a partnership. For example, co-ownership of property maintained and rented or leased is not a partnership unless the co-owners provide services to the tenants.

The rules you must use to determine whether an organization is classified as a partnership changed for organizations formed after 1996.

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Rental Property Sales – A Simplified Look At Rental Real Estate Taxes

When one has rental real estate, the sale of that property can have significant tax ramifications. Some of these are good, while others can create significant tax liabilities.

First, the good news. If there were losses that could not be deducted due to the passive activity rules, these losses may be deducted on Schedule E in the year of sale, assuming the property is sold in a taxable transaction.

Determining gain or loss on the sale can be a daunting task. Due to depreciation recapture, the gain and tax can be much larger than anticipated.

As far as the sale itself is concerned, first determine the adjusted basis. This starts with is the original cost plus any capital improvements. These are improvements to the house that were not expensed when incurred, but depreciated over time.

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Where’s My Refund? – IRS Changes

John Stancil, Tax Connections

So you get all your tax information together early and go to your preparer so you can file your tax return early and get the refund quickly. Not so fast. Certain refunds will be delayed and will not be released by the IRS until February 15. This is due to a provision in the PATH Act, enacted by Congress in 2015, prohibiting the IRS from releasing certain refunds prior to February 15. This provision takes effect this year. Note that the 15th is the release date, so it will take a few more days for you to receive the refund. Read more

Minister’s Housing Allowance Update

The minister’s housing allowance has been challenged in court. There have been several challenges in recent years, but last month, Judge Barbara Crabb once again ruled the housing allowance as unconstitutional, favoring a religious group. As of now, it is anticipated that the order will be stayed, meaning it will not be enforced, pending appeals. Once the appeals are exhausted, the order would take effect. Obviously, this would take at least a couple of years.  Read more

NFL Tax Breaks – And Tax Breaks Americans Dream About

John Stancil, Tax Advisor

Much has recently been said of the tax breaks received by the National Football League. While they do receive certain tax breaks, many of these breaks are also available to other businesses. Granted, they do tend to be on a larger scale.

There is however, one area in which sports franchises do get significant tax breaks. Below are three aspects to tax breaks received by the NFL and other professional sports:

  1. Tax-exempt status of the league office
  2. Amortization of the purchase price of the franchise
  3. State and local financing of sports stadiums.

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Minister’s Housing Allowance Loses a Court Battle

John Stancil Tax Advisor

In a 2013 count case in Wisconsin the Freedom From Religion Foundation (FFRF) challenged the Minister’s housing allowance, claiming it provided an unconstitutional subsidy of religion. They won that case, but it was overturned on appeal. The reason for overturning it was that the appeals court indicated that the FFRF did not have standing (or reason to sue) as they had not been damaged by the housing allowance law. The FFRF took it to heart and certain leaders in FFRF paid themselves a housing allowance and excluded it from tax on their individual 1040’s. The IRS disallowed some of them. This led to a new suit, heard by the same Wisconsin judge who made the 2013 ruling. Once again, she ruled the housing allowance unconstitutional.

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President Trump’s 2017 Disaster Tax Relief Bill

John Stancil, Tax Advisor

At long last, Congress and President Trump have given us a tax bill that provides some real relief for taxpayers impacted by this year’s hurricanes. The “Disaster Relief and Airport and Airport Extension Act of 2017” was signed by the President on September 29.

Although it deals with issues beyond hurricane relief, those issues are not the focus of this article and will not be discussed here. And there are some provisions relating to hurricane disaster losses that do not have widespread application and will not be discussed here.

There are four important segments to the hurricane relief granted by this act.

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Employers May Give Employees Tax-Free Disaster Relief

John Stancil

If they carefully follow the guidelines, employers may give cash payments to employees for disaster relief, tax-free. Under Sec. 139 of the Internal Revenue Code, qualified disaster relief payments to employees are tax free to the employee and deductible by the employer. This includes income as well as social security and Medicare taxes. Read more

Inflation-Adjusted Amounts for 2018 Taxes

Certain tax items are adjusted annually for inflation each year. The numbers that follow are not official releases by the IRS, but reflect the probable amounts that will be in effect for tax year 2018, based on the formulas used by the IRS.

The standard deduction for couples filing a joint return is anticipated to increase to $13,000, an increase of $300 from 2017. Single and married filing separately is half that amount. Head of Household will be $9,550, a $200 increase. Taxpayers 65 years or older or blind will get an additional $1,300 standard deduction, a $50 increase. Personal and dependency exemptions will be the same as for 2017, $1,050. These increases will result in an increase in the minimum income requiring taxpayers to file a return.

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Big-Game Hunter Becomes Hunted by IRS

Big-game hunting has fallen into disfavor in recent years, as wealthy hunters take expeditions to Africa and other far-away locations to hunt big game for sport. What we are referring to here is not hunting game for food, it is just for the “thrill of the kill.” I didn’t say “thrill of the chase,” as there is often no chase, as the game is rigged so that the animal is essentially trapped.

One such big game hunter is Paul Gardner. Gardner maintains a “trophy room” in his home, displaying many of his exploits. But after a while, Gardner began running out of space. Some of what he displayed was full body, but much of it was from the neck up, hung on walls. In these cases, there are a lot of “extra” parts that are not on display.

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