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Urbach & Avraham, CPAs, is proud to offer an executor checklist to help alleviate the nightmare of financial affairs of a deceased relative. This comprehensive list, which is regularly updated to reflect the latest changes in estate tax regulation, will help you:
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Two recent verdicts involving unreported foreign asset reporting highlight the same moral: do the right thing (or go to jail).
In one case, Michael Canale, a physician, pleaded guilty in New York federal court last December to willful failure to notify the IRS about Swiss bank accounts that in 2010 held nearly $1.5 million. While acknowledging that Canale “made a serious mistake,” attorney Robert Fink wrote that his client inherited the account from his father, who gave orders to keep it a secret. The defense lawyer characterized Canale as “a genuine American hero, who served his country selflessly as a combat military doctor”. The Manhattan U.S. Attorney’s office argued, however, that he evaded at least $216,000 in federal taxes on income form the Swiss accounts and “he could have, at any time, ceased his criminal conduct by disclosing the account or even simply closing the account.” Canale was sentenced to six months in federal prison, fined $100,000, ordered to pay more than $216,000 in restitution and perform 400 hours of community service. [Read more…] about Reporting Foreign Assets: It Pays to do the Right Thing
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On January 15, 2013, the NJ Division of Taxation issued a technical bulletin on the taxability of purchases made by lawyers and law firms. Lawyers who practice in New Jersey are not liable for collecting sales tax on charges for professional services performed by their practice. They are, however, required to pay sales or use tax on all purchases of taxable tangible property, specified digital products, and certain services used by their firm, unless otherwise exempted by law. Purchases subject to sales and use tax that are common to law firms include: [Read more…] about NJ Issues Technical Bulletin on Sales and Use Tax for Attorneys
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In an interesting 2012 Tax Court case, Bronstein vs. Commissioner, the strict interpretation of the Section 163 limitation on the mortgage interest deduction for married taxpayers filing separately was brought into question. Faina Bronstein and her husband purchased a $1.3 million home in 2007, taking out a $1 million mortgage. The home was their primary residence. The Bronsteins chose the option of “married filing separate” that year, and Faina deducted all of the mortgage interest paid (which amounted to $50,000). The IRS, using a plain interpretation of the statute, disallowed half of Faina’s deduction. Section 163, the statute governing the $1,000,000 limitation provides that: [Read more…] about Limit on Mortgage Interest Deduction for Married Filing Separate
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Are you a U.S. citizen living overseas with a foreign bank account? If your accounts hold more than $10,000 in the aggregate anytime during the year, you are required to file an FBAR (Report of Foreign Bank Accounts) by June 30th of the following year. It doesn’t matter whether foreign accounts generate income or not; just owning them, or having signature authority, requires you to file. Failure to file can result in severe civil penalties and potential prosecution followed by a term in federal prison. [Read more…] about Opportunity for Noncompliant U.S. Citizens Overseas to Avoid Penalties
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Overlooking a minute detail in the Property Settlement Agreement (PSA) is by no means as minor as it may seem. It often results in much grief, wasted time, and squandered money – for both litigants, as well as taxpayers funding the judicial system. In Dawn Zera v. Kevin Krushinski, an incomplete PSA resulted in just that.
Dawn and Kevin were divorced in Jan. 2006. The judgment of divorce (JOD) failed to designate who could claim the children as dependents on his or her tax return. While the JOD ended the marriage, an ensuing nightmare was just beginning. More than six long, costly years of litigation later, on May 22, 2012, the NJ Supreme Court ruled that the parents alternate odd and even years.
The Moral: Divorcing spouses must scrutinize the PSA, making sure the lawyers covered everything. It is wise to have a tax accountant review the PSA for all tax issues. The investment of time and effort may spare you loads of grief.