Tax Guru – Ker$tetter Letter

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Archive for April 8th, 2013

Posted by taxguru on April 8, 2013

From Argus Hamilton:

The White House announced that the president will return five percent of his salary to the U.S. government to share the sacrifice in the sequester budget cuts. He’s paying seventeen hundred a month back to the Treasury. At this rate he’ll reimburse us for what he spent on family vacations but only if he’s president for another twenty-three years.

 

John Kerry declared he will donate five percent of his salary to charity as a sacrifice for the sequester budget cuts. He’s worth two hundred million dollars. For five percent of his Secretary of State’s salary to hurt him he would have had to marry Dionne Warwick.


 

The White House on Monday proclaimed April to be Personal Finance Responsibility Month. The Obama administration put together a website intended to teach children how to manage budgets responsibly. It looks like another case of those who cannot do, teach.


 

The White House backed banks who give home loans to people with bad credit. They threatened banks who refuse. The American Dream is now a thirty-year mortgage and a two-month payment plan, backed by the full faith and paratroopers of the U.S. government.


 

Senator Jay Rockefeller asked Carnival Cruise to reimburse the U.S. Treasury the four million dollars it cost the U.S. government for the Coast Guard to tow last month’s sewage-fouled liner back safely to port. The cruise company is complaining, but they won’t get anywhere. Even the Auto Club only tows you so many times before they start charging you.

 

From Jay Leno:

Good news: our buddy Wesley Snipes — remember he went to prison in 2010 for tax evasion — he got released earlier this week. The bad news: He’s only got 10 days to file his taxes.

 

From Dave Letterman:

The White House has now put together a website for kids. It’s a website to teach kids how to manage a budget responsibly. The website is called “Irony.gov.”

 

 

From Jimmy Fallon:

A new report found that, despite the slowing economy, going to college is still paying off. Unfortunately, still paying off is what you’ll be doing with your college loans for the rest of your life.

 

 

 

 

 

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Gift Tax Rules

Posted by taxguru on April 8, 2013

Bob Jennings recently posted this short summary of the rules for when people need to file Gift Tax returns. 

 

He did leave out a few key facts that I think people should know.

The only potential tax obligation for gifts is on the Giver (aka Donee).  This usually surprises most people who are so accustomed to paying taxes on money they received.  The recipient has no tax obligation on the receipt of the gift. 

The annual exclusion (currently $14,000 per Donor per Donee) is adjusted upwards every few years in $1,000 increments based on inflation.  It was $13,000 per year from 2009 through 2012 and just increased for 2013.

Gift Splitting between spouses allows large gifts to be considered as made half by each spouse.  That effectively increases the annual excludable gifts to $28,000 per donee (recipient).

The trickiest issue, and the one that requires the most studied consideration, has to do with the basis of transferred assets.  For non-cash assets that have increased in value, the current fair market value is used to determine the size of the gift; but the cost basis of the gift for the recipient remains the same as it was for the giver.  This effectively transfers the capital gain obligation from  the donor to the donee.  Sometimes this may be a wise move, but often it may have been better for the donor to sell the asset and just give the money.  This is a time when the advice of an experienced tax professional is critical. 

  Of course, if he had included all of these additional points, it would no longer be a short summary.

 

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