NEWSLETTERS

Newsletter
February 10, 2005

There are three separate "death" taxes that may potentially apply to your estate:

1. The federal estate tax:
   The federal estate tax is based on the size of your estate. All assets, including life insurance, retirement plans, your home, jewelry, collectibles, et cetera, count. There is an unlimited marital deduction so there will be no federal estate tax on your death if you leave everything to a surviving spouse (domestic partners are not considered spouses under federal law). Assets passing to charity are also exempt from the federal estate tax. There is also a $1,500,000 exemption for property passing other than to a surviving spouse or charity. That exemption increases in several steps through 2009. There is no federal estate tax in 2010. The estate tax exemption in 2011 and beyond is $1,000,000.]

   Read more: The Three 'Death' Taxes

Newsletter
January 6, 2005

This newsletter is a very broad overview of The American Jobs Creation Act of 2004 most of which took effect January 1, 2005. Although mainly directed toward large businesses and more full of special interest provisions than any tax legislation I have seen in 20 years (grinding coffee qualifies for tax breaks as manufacturing for Starbucks, a special provision for a tax break on importing ceiling fans for Home Depot, et cetera) there are several provisions affecting individuals and small or closely-held businesses. The new law:

Read more: The American Jobs Creation Act of 2004

Newsletter
January 13, 2005

This newsletter continues very broad overview of The American Jobs Creation Act of 2004. This Newsletter focuses on those provisions that primarily affect businesses. The next Newsletter will focus on those provisions that primarily affect individuals.

1. The small business expensing allowance allows businesses to deduct certain asset purchases in the year of purchase rather than taking a depreciation deduction over a period of years. This deduction was previously increased from $25,000 to $100,000 for 2003 through 2005. The Act extends the $100,000 deduction limit through 2007 (so that the maximum deduction was actually $102,000 in 2004), and added off-the-shelf software as eligible property. For taxable years beginning after 2007, the dollar amount of the deduction will again be limited to $25,000. It also increased the level at which the deduction is "phased out" for investments in business property to $400,000 (from $200,000), with annual inflation adjustments (so that the phase out started at $410,000 in 2004). If more than $410,000 was invested in business property in 2004, the $100,000 deduction is reduced by the amount invested over the $410,000 limit.

   Read more: The American Jobs Creation Act of 2004 - Businesses

Newsletter
January 20, 2005

This newsletter continues a very broad overview of The American Jobs Creation Act of 2004. This Newsletter focuses on those provisions that primarily affect individuals.

1. Itemized Deduction for State and Local Sales Taxes. Individuals who itemize their deductions can now elect to deduct state and local sales taxes instead of state and local income taxes. Although the principal beneficiaries are residents of states that do not have an income tax, the new deduction provides an alternative for taxpayers living in states that impose both income and sales taxes. The amount of the deduction can be based on actual taxes paid or by using IRS-prepared tables. The record keeping required to prove the sales taxes actual paid during the year is prohibitive (total the sales tax from every sales receipt you have saved) but mat be worthwhile if you have made major purchases during the year on which sales taxes were paid. There are some open issues here such as whether the New Jersey mansion tax (imposed on buyers of a home where the purchase price exceeds $1,000,000) is a state sales tax.
   This provision is retroactive to JANUARY 1, 2004. Therefore, the deduction will be available on your income tax return due this April.

   Read more: The American Jobs Creation Act of 2004 - Individuals