Michael Gray, CPA's Tax and Business Insight

May 8, 2013

© 2013 by Michael C. Gray

ISSN 1539-395X

A monthly report to help you prepare for your financial future, keep more of what you earn by minimizing your taxes, and build an extraordinary business!

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(If you find this information valuable, please pass it on to a friend!)

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Britany and Christopher Marisco
My grandniece Britany Marisco with her new husband, Christopher, at their wedding reception.

This Sunday is Mother’s Day.

Now is the time to honor and express appreciation to your mother and other mothers who have contributed to your life. Remember Mother’s Day this Sunday, May 12.

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Extension season is here.

If you would like us to prepare your extended 2012 income tax returns, please call Dawn Siemer Mondays, Wednesdays or Fridays from 9 a.m. to 5 p.m.

We can also prepare amended income tax returns to clean up tax returns that were previously filed.

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Attention tax professionals! Michael Gray live tax planning presentation.

Michael Gray will give a luncheon presentation to the Santa Cruz Discussion Group of the Silicon Valley, San Jose chapter of CalCPA. The title is “Income tax planning in a new tax environment.” It will take place from noon to 1:30 p.m. on Thursday, June 13 at Michael’s on Main in Soquel. The investment is $20 for CalCPA members and $25 for nonmembers. For details, see the CalCPA web site resources, www.calcpa.org, local chapters or call Stephanie Stewart at 408-983-1122.

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Tax reform “buzz” in Washington.

Mark Twain once said, “Nobody’s life, liberty or property is safe while Congress is in session.” Tax reform proposals are being “floated” from Congressional hearings. For example, it has been suggested the mortgage interest deduction should be further reduced. It has also been suggested that long-term capital gains and dividends should be taxed at the same rates as ordinary income.

The last time I remember long-term capital gains being taxed at ordinary income rates is when the Tax Reform Act of 1986 was passed under the Reagan Administration, almost 30 years ago. It didn’t last long after Ronald Reagan left office.

President Obama has also proposed the estate tax exemption should be reduced from $5 million to $3.5 million.

It is said Senator Baucus, chairman of the Senate Finance Committee, wants tax reform to be his legacy because he is planning to retire soon.

All of this talk makes it very hard to plan. We don’t know what our tax laws will be, even for the short term.

It appears to me that with a Democrat Senate and a Republican House of Representatives, it’s unlikely any significant reform can be enacted.

If you want to be defensive, continue aggressive gift planning and take your long-term capital gains now. (Watch the 3.8% tax on net investment income!) Now may be a good time to take gains by selling a business or real estate.

Be sure to consult with a tax advisor about the tax bill you are generating. With higher tax rates at different thresholds and the phaseout of itemized deductions, computing the tax can be confusing.

On the other hand, you probably will be OK ignoring all of the talk and assuming there won’t be a major tax change for the immediate future. (Don’t let the tax tail wag the dog.)

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Financial Insider Weekly broadcast schedule for May and June.

Financial Insider Weekly is broadcast in San Jose and Campbell on Fridays at 8:00 p.m., Pacific Time. You can watch it on Comcast channel 15 for San Jose and Campbell. The show is broadcast as streaming video at the same time at www.creatvsj.org.

Here are the scheduled interviews for April and May:

May 10, 2013, attorney James V. Quillinan of Hopkins & Carley, “Estate planning with portability of a deceased spouse’s federal estate and gift tax exemption amount”
May 17, 2013, attorney James V. Quillinan of Hopkins & Carley, “Tax planning for real estate change of ownership in California”
May 24, 2013, Don Pollard, CLU, ChFC of Advanced Professionals, “Health insurance for individuals”
May 31, 2013, Don Pollard, CLU, ChFC of Advanced Professionals, “Group health insurance plans for small businesses”
June 7, 2013, attorney David Howard of Hoge, Fenton, Jones & Appel, “Federal reporting requirements for foreign bank and brokerage accounts”
June 14, 2013, Dick Blakeley, The Blakeley Group, Inc., “Benefits of a virtual family office”
June 21, 2013, attorney Scott Haislet, “Passive real estate loss limitations and electing to be a real estate professional”
June 28, 2013, attorney Scott Haislet, “Tax considerations for selling a principal residence”

Financial Insider Weekly is also broadcast as follows:

Past episodes are available at https://www.youtube.com/user/financialinsiderweek.

Let me know any ideas that you have for topics or guests. Guests will usually have to be located in or near the Silicon Valley in California.

Hope you can watch or record the show. Please tell your friends about it!

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Michael Gray regrets he can no longer personally answer email questions. He will answer selected questions in this newsletter.

For your questions about dependent exemptions, see IRS Publication 501 at www.irs.gov.

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Visit our new article!

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Follow me on Social Media!

Want to see new episodes of Financial Insider Weekly as soon as they're posted on Youtube? Want to see Michael Gray's blog posts as soon as they're live? We post them (and more) on social media!

If you enjoy Twitter, please follow me at www.twitter.com/michaelgraycpa. I would especially appreciate retweets of our messages announcing episodes of Financial Insider Weekly.

I'm also on Facebook, LinkedIn, and Google+.

you can also follow me on other social media sites, Facebook, LinkedIn, and Google+.

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If you have employee stock options, have you subscribed to Michael Gray, CPA's Option Alert at no charge or obligation?

To learn more, visit stockoptionadvisors.com/subscribe.shtml

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Real estate investors, have you subscribed to Michael Gray, CPA’s Real Estate Tax Letter at no charge or obligation?

For details, visit www.realestatetaxletter.com

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Check out my blog.

I have also started a blog at michaelgraycpa.com. Check it out!

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P.S.

My daughter and her husband, Holly and Dan Baker, have a Southern French Restaurant at 23 Ross Common, Ross, California, about 15 minutes north of the Golden Gate Bridge. The name of the restaurant is Marché Aux Fleurs and their website address is marcheauxfleursrestaurant.com. For the best meal of your life, call 415-925-9200 for a reservation and give them a try! For directions, visit our website at www.taxtrimmers.com/directions.shtml.

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Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

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