Monthly Archives: December 2014

$14,000 Gift Checks Deposited After December 31 Will Give You a Holiday Hangover; Charitable Gifts, Not So Much

To conclude the Williams Parker Business & Tax Blog’s inaugural year, a few year-end tax tips:

If you receive a holiday gift check intended to qualify for the donor’s 2014 Federal Gift Tax annual exclusion of up to $14,000 per year, per recipient, improve your chances of repeat future gifts by depositing the check on or before December 31, 2014.  If you deposit the check during 2015, the check will not qualify for the donor’s 2014 annual exclusion.  That will make your generous donor unhappy because only annual exclusion gifts are “free” for transfer tax purposes.  If the gift does not qualify for the annual exclusion, the donor may owe gift tax or have to reduce his or her lifetime exemption, increasing Federal Gift Tax or Federal Estate Tax in the future.  More likely, the donor will give you less next year so your total gifts in 2015 fit within the donor’s 2015 annual exclusion.

Charitable gifts are more flexible.  Recipient charitable organizations are not required to deposit donation checks on or before December 31, 2014, to qualify for a 2014 income tax deduction.  The donor only has to document that the check was mailed or otherwise sent outside the donor’s control on or before December 31, 2014.

We hope you enjoy the holidays and have a happy new year.

E. John Wagner, II

With Only Two Weeks Left for Taxpayers to Act, 2014 Tax Extenders Bill Finally To Become Law: Should You Celebrate, Yawn, or Yell?

On Tuesday, December 16 the Senate passed the “The Tax Increase Prevention Act of 2014,” popularly known as the 2014 Tax Extenders Bill. President Obama is expected to sign the bill into law. Unfortunately, even in its passage, the new law exemplifies political dysfunction and gridlock.

The bill temporarily extends popular personal and business tax breaks through 2014, but not beyond. Extended provisions include bonus depreciation, a shortening of the period corporate-level tax applies to S corporations that used to be C corporations, and a $100,000 Individual Retirement Account qualified charitable donation exemption from the normally applicable income tax deduction limitations. Past legislation has repeatedly temporarily extended these provisions, but only through 2013, necessitating a further extension through this bill.

Passage of the bill is more a cause for relief than celebration. Some might just yawn. Others will yell.  While some of its tax breaks are supposed to spur investment and business acquisition activity, passing the law with two weeks remaining in 2014 gives most businesses little time to buy equipment or close transactions. It also leaves a small window for Individual Retirement Account charitable donations. The law seems unlikely to significantly benefit the economy by influencing behavior before its tax benefits expire.

The law will not spur meaningful long-term planning or activity, because no one knows with certainty whether a similar bill will become law to further extend the favorable tax provisions into 2015 or beyond. Congress willfully failed to act on this bill through almost all of 2014.  It is not clear the political impetus exists for an earlier extension action–or better yet permanent adoption of the law allowing even longer-term planning—in 2015.

Here is a link to a more detailed summary and text of the bill:

Here are links to our prior posts concerning the 2014 Extenders Bill and similar bills:

E. John Wagner, II

Williams Parker settles $3 Million Tax Court Litigation on Behalf of Client

Williams Parker acted as tax counsel for a client in connection with a $3 million income tax dispute with the Internal Revenue Service. The dispute involved the proper allocation of income among entities in a multi-entity corporate structure where some of the entities were C corporations and others were pass-through entities. Williams Parker partner Mike Wilson handled the Tax Court litigation on behalf of the client, and was able to settle the dispute with the IRS Chief Counsel’s office for $0.00 – a complete victory for the client.

Michael J. Wilson