Monthly Archives: May 2014

Applicable Federal Rates for June 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 June 2014:

Short Term AFR (Loans with Terms <= 3 Years)                                          0.32%

Mid Term AFR (Loans with Terms > 3 Years and <= 9 Years)                      1.89%

Long Term AFR (Loans with Terms >9 Years)                                              3.10%

7520 Rate (Used in many estate planning vehicles)                                     2.2%

Here is a link to the complete list of rates:

E. John Wagner, II

Three Florida Sales Tax Holidays in 2014

Governor Rick Scott recently signed legislation providing for three separate sales tax holidays in 2014 for purchases of hurricane supplies, school supplies, and energy efficient appliances. The sales tax holiday for hurricane supplies runs from May 31 through June 8, 2014, and covers (a) portable self-powered light sources selling for $20 or less; (b) portable self-powered radios (including two-way radios and weather band radios) selling for $50 or less; (c) tarpaulin or other flexible waterproof sheeting selling for $50 or less; (d) self-contained first-aid kits selling for $30 or less; (e) ground anchor systems or tie-down kits selling for $50 or less; (f) fuel tanks selling for $25 or less; (g) packages of AA-cell, C-cell, D-cell, 6-volt, or 9-volt batteries selling for $30 or less; (h) nonelectric food storage coolers selling for $30 or less; (i) a portable generators selling for $750 or less; and (j) reusable ice selling for $10 or less.

The school supply sales tax holiday runs from August 1 through August 3, 2014, and covers (a) clothing, footwear, wallets, and bags (including backpacks and handbags) selling for $100 or less; (b) school supplies selling for $15 or less per item; and (c) the first $750 of the sales price for personal computers and related accessories (including tablets and laptops, but not cell phones) purchased for home or personal use.

The sales tax holiday for energy efficient appliances and products runs from September 19 through September 21, 2014, and applies to the first $1,500 of the sales price of a new Energy Star or WaterSense product. However, the exemption only applies to one purchase of each specified type of Energy Start or WaterSense product with a sales price of $500 or more. Eligible Energy Start products are air conditioners, air purifiers, ceiling fans, clothes washers and dryers, dehumidifiers, dishwashers, freezers, refrigerators, water heaters, swimming pool pumps, and specified light bulbs. Eligible WaterSense products are bathroom sink faucets, faucet accessories, high-efficiency toilets and urinals, showerheads, and weather or sensor-based irrigation controllers.

A link to the legislation is here

If you have questions regarding sales tax matters, please contact:

Michael J. Wilson

Protect Capital Gains for Real Estate Investors Before Development

In January we noted a new Tax Court case, Pool v. Commissioner, addressing the boundaries of a structuring technique real estate investors use to protect the lower-federal-income-tax-rate-long-term-capital-gain treatment of real estate gains, before property is converted to an active development purpose that creates higher-tax-rate income. Tax Court Sets Boundaries For Predevelopment Capital Gains For Real Estate Developers

Here is a link to materials from the American Bar Association Tax Section meeting in Washington this month, discussing the case in more detail: Pool v Commr ABA SEB Committee Presentation (May 10 2014)

The following provides a broader overview of the structuring technique: Check the Box Bramblett – ABA Tax SEB Committee Presentation

E. John Wagner, II