The New Year is upon us again, and this time it’s an election year, one full of excitement, anticipation, and a modest economic growth of 2.7 percent. Interest rates are low, and hopefully will remain as such well into the next presidency of our nation. One only has to drive around the beach cities to see all the new construction and remodeling going on, it seems that everyone wants to live here. Hopefully all this robust real estate commerce doesn’t lead to another “Big Short” , which was an excellent film.
As far as new tax law provisions, Congress enacted PATH, Protecting Americans from Tax Hikes Act on December 18th (who comes up with these names?). No new tax rates or tax laws were created , but expiring provisions were made permanent. Child tax credit, American Opportunity credit, Earned Income credit, above-the-line teacher’s deduction, tax-free transfer from IRA to charity, 100% exclusion on small business stock sales are some of them. We can explore the deductions that benefit you personally at your individual tax appointment.
On a humorous side in the gift tax area … Payments a woman got for agreeing to be faithful to her boyfriend are taxable. After dating for about a year, a couple pledged their fidelity to each other in writing. The agreement required him to pay her $400,000. Later, he accused her of cheating. They broke up, and he sued her. He also filed a 1099-MISC, reporting the payment. A state court found that she defrauded him and required her to repay the $400,000. Still the Tax Court says she owes tax on the amount (Blagaich, TC Memo. 2016-2). Wow!
In closing, I would like to thank you once again for your continued use of my and my team’s tax and accounting services. We really appreciate you!
Monique Wright, CPA
Beach Cities Tax & Books