The government tax revenue authorities demand a piece of your income; and they expect their tax cut when you realize a profit. This cut is known as a Capital Gains tax on your investments.
For tax purposes, you must understand the difference between an unrealized gain and a realized gain. A realized gain becomes realized when you sell the asset or investment at a profit. For example, you realize a gain on the sale of a home if you purchase it for $1M and sell it for $1.5M and your gain is $500,000. The tax on the capital gains only happens when the asset or investment is sold or realized.
For tax purposes, an unrealized gain is a potential profit that exists on paper only. An unrealized gain is a potential profit that exists on paper – an increase in the value of asset or investment you own but have not sold or realized a profit yet. For example, you purchase bitcoin and a year later the bitcoin is worth 20% more than you paid for it. Although your investment has increased in value by 20%, your gain is unrealized since you still own it.
Gift taxes were created to prevent wealthy taxpayers from transferring their estates to their beneficiaries via gifts and thus avoid estate taxes when they pass away. But that does not mean only wealthy taxpayers need to be concerned with the gift tax provisions as, under many circumstances, even lower-income taxpayers may find they are liable for filing a gift tax return.
The government uses the gift tax return to keep a perpetual record of a taxpayer’s gifts during their lifetime, and gifts exceeding the amount that is annually exempt from the gift tax reduce the taxpayer’s lifetime estate tax exclusion, which is currently $11.18 million (nearly a two-fold increase from the 2017 exclusion as a result of the Tax Cuts and Jobs Act of 2017).
So what does this have to do with me you ask, since your estate is significantly less than $11.18 million? Well, your estate may be less than $11.18 million now, but what will it be when you pass away? You never know. Another concern is that the IRS requires individuals to file gift tax returns if their gifts while living exceed the annual exemption amount.
Do Not Include Social Security Numbers Or Personal Data
WASHINGTON — The Internal Revenue Service reminded certain tax-exempt organizations that the Tuesday, May 15 filing deadline for Form 990-series information returns is fast approaching.
Form 990-series information returns and notices are normally due on the 15th day of the fifth month after an organization’s tax-year ends. Many organizations use the calendar year as their tax year, making May 15, 2018 the deadline to file for 2017.
No Social Security Numbers On Forms 990 Read More
Most articles about the passage of the Tax Cuts and Jobs Act in December buzz about the resulting income tax consequences for individuals and businesses.
But what about the intersection of the TCJA and estate planning?
In a report by Stefi Gascon Hafen, published by AccountingToday, she comes to some interesting conclusions about the TCJA’s significant impact on estate planning. Read More
One Louisiana sales tax exemption for medical purchases made by hospitals and health care facilities provides an opportunity for both Louisiana sales and use tax savings at the state tax rate of 5%. This Louisiana sales tax exemption applies to medical devices that are required to be issued under a physician’s prescription and are used personally and exclusively by a single patient.
Beginning July 1, 2014 manufacturers in California are eligible for a partial exemption from state sales and use tax. This California sales tax exemption for manufacturing and research and development machinery and equipment reduces the state sales tax by 4.1875% from July 1, 2014 through December 31, 2016. From January 1, 2017 through June 30, 2022 the state sales tax rate is reduced by 3.9375%. In order to qualify for this exemption the “qualified tangible personal property” must be purchased or leased by a “qualified person” and used in one of four ways:
South Carolina sales tax law provides an exemption for drugs dispensed to Medicare Part A patients residing in nursing homes. Facilities that were clearly organized exclusively as “nursing homes” have long claimed this exemption, however, the South Carolina Department of Revenue had failed to grant or extend this exemption to those facilities with more complex operations. In reality, many facilities have different segments or divisions that interact with patients in varied ways, including providing skilled nursing services. Many facilities organized in this manner have a portion of their total bed count dedicated to providing these skilled nursing services. As a result of arguments presented by Agile Consulting Group in mid-2017, facilities organized in this multifaceted manner are now able to reap the benefit provided under this South Carolina sales tax exemption. Read More
When an organization wishes to become a tax-exempt organization eligible to accept tax deductible contributions from donors it is not sufficient that it be a non-profit organization. That, however, is the first step. Before the organization can be recognized by the IRS as a tax-exempt organization, it must file organization papers with the state as a non-profit corporation.
The United States Supreme Court has heard arguments in the Obergefell v. Hodges case which basically seeks to legalize same-sex marriage in the United States. While the court has not yet announced its verdict, there is concern that, if it is legalized, the action could threaten the tax-exempt status of churches and other religious organizations. Albert Mohler, President of Southern Baptist Theological Seminary has stated that this issue “may well be the greatest threat to religious liberty of our lifetime.
During discussions before the Court, three religious liberty issues were raised. First, Justice Scalia asked counsel arguing for same-sex marriage if clergy would be required to perform same-sex marriages. The response was that a constitutional right for such unions would not require clergy of any faith to perform these ceremonies. Read More
Martin Luther King Jr said, “Life’s most persistent and urgent question is, what are you doing for others?” Daily routine is an all-consuming machine, we do forget to ask ourselves this question.
Speaking of doing something for others, brings to mind Charitable Organizations. May 15th is creeping up on us real fast. And for those of us who have non-profit organizations as clients, we know that it is the deadline to file Form 990. This form is due on the 15th day of the fifth month after an organization’s tax year ends. Since most use the calender year, the deadline for them is May 15th.
A non-profit or a tax-exempt organization is one which seeks exemption from federal income Read More