On December 20, 2019, the President signed into law the Secure Act. This article will focus on the key provisions of the new Act. The new Act changes the beginning age for taking required minimum distributions to age 72. The new law applies to account owners who turn 70½ after the year 2019. The new Act also repeals the prohibition on contributions to a traditional IRA by an individual who has attained the age of 70½. Owners of traditional IRA’s can now make contributions past the age of 70½. The new Act also allows taxpayers to withdraw up to $5,000
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On November 8, 2019, the Iowa Supreme Court issued an opinion in the Matter of the Application of Coe College for Interpretation of Purported Gift Restriction. The case involves a gift of seven paintings of Grant Wood in 1976 by the Eppley foundation to Coe College in Cedar Rapids. The gift letter stated that the paintings would be given to the college “and that this would be their permanent home, hanging on the walls of Stewart Memorial Library”. The college treated the paintings on its books as an unrestricted gift that could be sold or otherwise alienated. In 2016 an
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Qualified charitable distributions are a valuable tool in reducing taxes. The deadline for the 2019 year is December 31, 2019. Qualified charitable distributions are valuable if a person is taking required minimum distributions and also making charitable gifts. Under the new tax act, most taxpayers are no longer able to itemize deductions, which includes charitable contributions, on the federal return due to the increase in the standard deduction. As such, many taxpayers are no longer able to deduct their charitable contributions on their federal income tax returns. A qualified charitable distribution allows an individual who is over the age of
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The Federal Path Act includes provisions to allow a taxpayer who is age 70½ or older to make tax-free distributions from their IRA’s to qualified charities. The Path Act allows an individual who is over the age of 70½ to make a direct distribution from their IRA account to a charity. The benefit of doing such is that the amount transferred to the charity will be counted as part of the taxpayer’s qualified minimum distribution and it will also not be included in the taxpayer’s gross income for Federal and State income taxes. In order to qualify as a qualified
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Last month the IRS issued the final regulations regarding Section 199A. The IRS also issued IRS Notice 2019-07 which set forth a safe harbor under which a rental real estate enterprise would be treated as a trade or business under Section 199A. The purpose of the Notice is to give taxpayers guidelines as to the application of the 199A deduction for rental real estate properties. To qualify for the safe harbor requirements, the taxpayer must meet the following requirements: Keep separate books and records setting out the income and expenses for the rental real estate enterprise; For tax years beginning
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The Tax Cuts and Jobs Act has added a number of complex issues to the tax preparation for businesses. Taxpayers who previously prepared their own tax returns with Schedule C’s or Schedule F’s will face many complex issues under the new tax act. One issue is the new 20 percent pass–through deduction for non-C corporation businesses. The Act also has significant changes regarding depreciation and the deduction of expenses. Another item that adds complexity to tax preparation for 2018 is that the State of Iowa has not adopted the changes in federal tax law for the year 2018. I highly
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This brief article will deal with the changes to the Estate, Gift and Generation Skipping Tax under the new tax law. The Act doubles the basic exclusion amount for estates of individuals who die during the 2018 through 2025 tax years and for gifts made during those same tax years. The basic exclusion amount for each person increases from 5.6 million per person in 2017 to 11.2 million per person in 2018. The amount of the exclusion will be indexed for inflation starting in tax year 2019. The Act does not repeal the estate, gift or generation skipping tax for
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The Iowa Department of Revenue has had a long standing position that it will not accept Family Settlement Agreements to change the calculation of Iowa Inheritance Tax. The Department has always relied on the original Will or Trust to calculate the amount of inheritance tax owed to the State of Iowa. A recent Iowa Court of Appeals decision has changed the long standing policy regarding Family Settlement Agreements. Family Settlement Agreements arise in estates or trusts where the beneficiaries of the Estate or Trust agree to enter into an agreement to change how the assets of the Estate or Trust
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The question was asked of a forester, “what is the best time to plant a tree?” The answer was 40 years ago. The second best time to plant a tree is today. So what is my point? Now that Iowa tax season is behind us, it is appropriate to take time and reflect on how we could have made the process of gathering income tax information less stressful. Gathering information on the income-side is relatively easy. That information is sent to you by a payer of interest or dividends, a K-1 from a partnership or Sub-S Corporation or some other
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