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De Minimis Fringe Benefit Exclusion – Paul Gaulkin CPA

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De minimis fringe benefits occur when the value of the property or service provided to an employee is so minimal that the accounting to record it would be unreasonable. Examples of de minimis fridge benefits include: 1. Having a secretary type a personal letter for an employee 2. Occasional personal use of the company copy machine 3. Occasional parties or picnics for employees 4. Traditional holiday gifts that have a small fair market value 5. Tickets given out for entertainment … Read more

Annuity Income Exclusion Guidelines – Paul Gaulkin CPA

money that is locked with chain

An annuity is nothing more than a contract that pays a fixed income at set intervals for a specified period of time. The amount of income generally depends upon the premium paid, the life expectancy of the annuitant, and the number of years payments are to be received. When income is received as an annuity under an annuity, endowment, or life insurance contract, the amount received generally consists of two separate parts: 1. A nontaxable return on the investment made … Read more

Charitable Donations Value Guide – Paul Gaulkin CPA

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When making charitable donations, it is important to understand the rules the IRS will use to value the donation. If a charitable contribution is made in property, the amount of the contribution is normally the fair market value of the property at the time of the contribution. The fair market value is generally regarded as the price at which the property would exchange between a willing buyer and a willing seller, with both having reasonable knowledge of the relevant facts. … Read more

United States Tax Court Basics – Paul Gaulkin CPA

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A taxpayer may petition the Tax Court for redetermination of their deficiency within 90 days of the mailing of a notice of deficiency according to Code Section 6213(a). If the 90 day deficiency notice was used by the Appeals Office, it is possible to arrange for pretrial settlement with the Regional Counsel of the IRS. This can be accomplished even after the case has been docketed in the Tax Court. Small Tax Cases Taxpayers filing a petition with the Tax … Read more

Deducting Student Loan Interest Code Section 221 – Paul Gaulkin CPA

paper saying student loans in red

Interest payments made on student loans are deductible for adjusted gross income or “above the line”. This means that a taxpayer can deduct the interest whether or not he or she has chosen to itemize deductions for the tax year. For 2012, eligible taxpayers may deduct up to $2,500 of interest expense on a qualified education loan under Code Section 221. Deduction Phase Out The deduction begins to phase out for single taxpayer with adjusted gross income between $60,000 and … Read more

Restricted Stock Plan Rules & Guidance – Paul Gaulkin CPA

wall with ticker for stocks

Stock or other property that is transferred to a taxpayer by an employer as compensation for services rendered and that same stock is subject to certain restrictions that affect its value, the stock is considered restricted and is governed by the rules contained in Code Section 83. As a general rule, the value of any property transferred in connection with services provided by the taxpayer is taxable as compensation, whether the property is goods, common stock, a partnership interest, or … Read more

Deduction for Losses Code Section 165 – Paul Gaulkin CPA

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Code Section 165 basically establishes the general outline that governs the deductibility of losses. This statute permits a deduction for the following categories of losses as long as they the taxpayer is no reimbursed through insurance or otherwise: 1. Losses incurred in a trade or business (deductible without limitation) 2. Losses incurred in transactions entered into for profit, though not connected with a trade or business (deductible as capital losses); and 3. Losses of property not connected with a trade … Read more

Medical Insurance Premium Deduction – Paul Gaulkin CPA

Doctor's Office Team

A medical expense deduction is allowed for premiums paid for medical care insurance, subject to a 7.5 percent limitation. If amounts are payable under an insurance contract for services that are not related to medical care, no amount paid for the insurance is deductible unless the medical care charges are stated separately in the contract or furnished in a separate statement. Amount of Deduction Long term health care insurance premiums are deductible, for 2012, the maximum deduction for prepaid long … Read more

Classifying Domestic Production Gross Receipts – Paul Gaulkin CPA

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Domestic production gross receipts are defined under Code Section 199(c)(4) to include gross receipts from the following sources: 1. Any sale, exchange or other disposition, or any lease, rental or license, of qualifying production property that was manufactured, produced, grown or extracted by the company in whole or in significant capacity within the United States. Usually qualifying production property includes tangible personal property, computer software, and sound recordings. 2. Any sale, exchange or disposition, or any lease, rental or license, … Read more

Amount Realized for Gain or Loss Determination – Paul Gaulkin CPA

person holding for sale sign

The amount realized from the sale or disposition of property is the sum of any money received plus the fair market value of other property received in the transaction. This does not include any amount received from the purchaser as reimbursement for real property taxes which are treated as imposed on the purchaser. However, it does include amounts representing real property taxes which are treated as imposed on the seller, if they are paid by the purchaser. The amount realized … Read more