Monthly Archives: January 2014

Applicable Federal Rates for February 2014

The Internal Revenue Code prescribes minimum imputed interest rates and time-value-of–money factors applicable to certain loan transactions and estate planning techniques. These rates are tied formulaically to market interest rates. The Internal Revenue Service updates these rates monthly.

These are commonly applicable rates in effect for February 2014:

Short Term AFR
(Loans with Terms <= 3 Years) 0.30%

Mid Term AFR
(Loans with Terms > 3 Years and <= 9 Years) 1.97%

Long Term AFR
(Loans with Terms >9 Years) 3.56%

7520 Rate
(Used in many estate planning vehicles) 2.4%

Here is a link to the complete list of rates:

E. John Wagner, II

IRS Extends Deadline for Some Surviving Spouses to “Inherit” Deceased Spouse’s Estate Tax Exemption

The Federal Estate Tax Law sometimes allows a surviving spouse to “inherit” a deceased spouse’s unused estate tax exemption. This reduces the estate tax to the family when the surviving spouse dies, under current law saving the family as much as 40 cents of estate tax for every dollar of “inherited” exemption. This is only possible, however, only if an estate tax return claiming the transferred exemption is timely filed for the deceased spouse’s estate.

The IRS has announced that a surviving spouse of a person who died before January 1, 2014, will be granted an limited extension to file such a return. For some, this creates a second opportunity to revisit taking advantage of this tax benefit.

Here is a link to the IRS ruling.

E. John Wagner, II

Self-Rental Income Exempted From The New Medicare Tax

The IRS has backtracked on its guidance from 2012, by exempting certain self-rental income from the new 3.8% Medicare surtax. The new guidance applies common sense by aligning the tax treatment of self-rental arrangements with the passive loss rules under Section 469. Taxpayers should be able to avoid the surtax with a little pre-planning.
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Tax Court Sets Boundaries for Predevelopment Capital Gains for Real Estate Developers

A recent Tax Court case, Pool v. Commissioner, is the first court opinion in many years describing the limits of a popular capital gain tax planning technique used by real estate investors and developers.
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FICPA Gulf Coast Chapter

These materials were presented to the FICPA’s Gulf Coast chapter on January 7, 2014:

DOMA and Estate Planning: A Florida Perspective
Presented by Douglas J. Elmore – Williams Parker

Trusts in an Era of Portability: The Not-so-Simple Analysis
Presented by Jeffrey T. Troiano – Williams Parker

Medicare Surtax Planning For Real Estate Investors and Developers
Presented by E. John Wagner, II – Williams Parker

Current Developments on Retirement and Welfare Plans Including Controlled Groups and DOMA
Presented by Carol L. Myers and Edward K. Kim – Williams Parker
2013 New Rules for Mid-Year Changes to 401(k) Safe Harbor Plans
The Sun Capital Case How Does it Impact Your Employee Benefit Plans
2013 Relaxation of Flex Plan Use it or Lose it Rule
IRS Notice 2014-1 Guidance on Same-Sex Marriage Issues for Cafeteria Plans Flexible Spending Arrangements and Health Savings Accounts
Fiduciary Responsibility Beware of Indemnification Agreements
Post-DOMA Developments and Potential Changes to Your Benefit Plans
2013 A Year of Significant Benefit Changes