The IRS has issued proposed new regulations designed to expand the making of electronic tax deposits. The regs would eliminate the use of paper-based federal tax deposit (FTD) coupons after 2010. The existing rules for making electronic deposits would otherwise generally remain unchanged.
Current rules. Taxpayers whose aggregate annual deposits of certain taxes exceed $200,000 are generally required to use electronic funds transfer (EFT) to make FTDs. Taxes taken into account in determining whether the $200,000 threshold has been met include withheld income and FICA taxes, corporate income and estimated taxes, certain taxes imposed on tax-exempt organizations, taxes withheld on nonresident aliens and foreign corporations, estimated taxes of certain trusts, FUTA taxes, and excise taxes, as well as others. Once taxpayers exceed the $200,000 threshold, they have a one-year grace period before being required to use EFT, and then they are required to use EFT in all later years even if their deposits fall below the threshold. The Electronic Federal Tax Payment System (EFTPS) is the EFT system currently used by IRS to collect FTDs.
Depositors not currently required to use EFTPS for deposits may instead use the paper-based FTD coupon system to make a deposit by presenting a check and an FTD coupon to a bank teller at one of the financial institutions authorized to be a government depository or financial agent.
Proposed regs knock out use of paper coupons. The proposed regs would eliminate the rules for making federal tax deposits by paper coupon after 2010 because the paper coupon system will no longer be maintained by the Treasury Department after Dec. 31, 2010.
The proposed regs would require all of the following to be deposited via EFT:
• Corporate income and corporate estimated taxes;
• Unrelated business income taxes of tax-exempt organizations;
• Private foundation excise taxes;
• Taxes withheld on nonresident aliens and foreign corporations;
• Estimated taxes on certain trusts;
• FICA taxes and withheld income taxes;
• Railroad retirement taxes;
• Nonpayroll taxes, including backup withholding;
• Federal Unemployment Tax Act (FUTA) taxes; and
• Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return.
Some businesses paying a minimal amount of tax could, however, continue to make their payments with the related tax return, instead of using EFTPS.
Other deposit rules would generally remain unchanged. The proposed regs would, however, remove references to "banking" days and provide that, if the day an FTD would otherwise be due is a Saturday, Sunday, or legal holiday under Code Sec. 7503, the taxes will be treated as timely deposited if deposited on the next succeeding day which is not a Saturday, Sunday, or legal holiday.IRS says that using EFTPS to make federal tax deposits provides substantial benefits to taxpayers. EFTPS users can make tax payments 24 hours a day, seven days a week from home or office. Deposits can be made on-line with a computer or by telephone. EFTPS also significantly reduces payment-related errors that could result in a penalty.
Effective date. The rules in the proposed regs would be effective for remittances made after the date that final regs are published, but in no case earlier than Jan. 1, 2011. The proposed regs are expected to be finalized by the end of this year.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
This service is being provided exclusively to YWM clients and firm friends. This alert is one of a series that are distributed to both individuals and businesses.
Thursday, November 18, 2010
Monday, November 15, 2010
e-YWM ALERT #5- IRA-to-Roth IRA Conversion Rules
This year is the first in which taxpayers may convert funds in regular IRAs (as well as qualified plan funds) to Roth IRAs regardless of their income level. What's more, taxpayers have the choice of paying the tax on the conversion when they file their 2010 returns, or deferring the tax hit on the conversion to the 2011 and 2012 tax years. As this article explains, these rules favor taxpayers who want to convert to a Roth IRA before year-end but are hesitant to do so because of the current uncertainty over post-2010 tax rates. They can convert before year-end and wait until Apr. 18, 2011, the due date of their 2010 return, to see how the conversion should be handled for best tax results.
Conversions to Roth IRAs. This year, for the first time ever, all taxpayers, regardless of their modified adjusted gross income (AGI), may convert amounts in a traditional IRA to amounts in a Roth IRA. Marrieds filing separately also are eligible. Before 2010, only taxpayers with modified AGI of $100,000 or less could make such conversion, and marrieds filing separately were not eligible regardless of modified AGI. (Code Sec. 408A(c)(3))
Amounts from a SEP-IRA or a SIMPLE IRA also may be converted to a Roth IRA, but a conversion from a SIMPLE IRA may be made only after the 2-year period beginning on the date on which the taxpayer first participated in any SIMPLE IRA maintained by the taxpayer's employer. (Reg. § 1.408A-4) Distributions from a Code Sec. 401(a) qualified plan also may be rolled over to a Roth IRA. (Code Sec. 408A(d)(3))
A conversion from a regular IRA to a Roth IRA generally is subject to tax as if it were distributed from the traditional IRA and not recontributed to another IRA (Code Sec. 408A(d)(3)(A)(i)), but isn't subject to the 10% premature distribution tax. (Code Sec. 408A(d)(3)(A)(ii); Reg. § 1.408A-4, Q&A 7)
Why make a IRA-to-Roth IRA conversion? Roth IRAs have two major advantages over regular IRAs:
(1) Distributions from regular IRAs are taxed as ordinary income (except to the extent they represent nondeductible contributions). By contrast, Roth IRA distributions are tax-free if they are "qualified distributions," that is, if they are made (1) after the 5-tax-year period that begins with the first tax year for which the taxpayer made a contribution to a Roth IRA, and (2) when the account owner is 59 1/2 years of age or older, or on account of death, disability, or the purchase of a home by a qualified first-time homebuyer (limited to $10,000). (Code Sec. 408A(d)(2))
(2) Regular IRAs are subject to the lifetime required minimum distribution (RMD) rules that generally require minimum annual distributions to be made commencing in the year following the year in which the IRA owner attains age 70 1/2. By contrast, Roth IRAs aren't subject to the lifetime RMD rules that apply to regular IRAs (as well as individual account qualified plans). (Code Sec. 408A(c)(5))
A similar comparison could be made between distributions from qualified retirement plans and Roth IRAs.
There are other tax advantages: Because distributions from Roth IRAs are tax-free (if they are qualified distributions), they (a) may keep a taxpayer from being taxed in a higher tax bracket that would otherwise apply if he were withdrawing taxable distributions, (b) don't enter into the calculation of tax owed on Social Security payments, and (c) have no effect on AGI-based deductions. What is more, the benefits flow through to beneficiaries of Roth IRA accounts, who also can make tax-free withdrawals from such accounts (they are, however, subject to the same annual post-death minimum distribution rules that apply to beneficiaries of regular IRAs).
Who should make IRA-to-Roth IRA conversions? The consensus view is that the conversion route should be considered by taxpayers who:
• have a number of years to go before retirement (and are therefore able to recoup the dollars that are lost to taxes on account of the conversion);
• anticipate being taxed in a higher bracket in the future than they are now; and
• can pay the tax on the conversion from non-retirement-account assets (otherwise, there will be a smaller buildup of tax-free earnings in the depleted retirement account).
Unique choice for 2010 conversions. A unique income inclusion rule applies for IRA-to-Roth-IRA conversions occurring in 2010. Unless a taxpayer elects otherwise, none of the gross income from the conversion is included in income in 2010; half of the income resulting from the conversion will be includible in gross income in 2011 and the other half in 2012. Taxpayers who elect to include all of the 2010 rollover income on their 2010 return cannot change the election after the due date of that return. (Code Sec. 408A(d)(3)(A))
A major wild card in making this choice is the tax-rate picture after 2010. In the "worst-case scenario"-Congress doesn't act and the EGTRRA sunset rule is allowed to go into effect-after 2010 the tax brackets above the 15% bracket will revert to their pre-2001 levels. That means the top four brackets will be 39.6%, 36%, 31%, and 28%, instead of the current top four brackets of 35%, 33%, 28%, and 25%. Other possible scenarios include Congress's allowing the current tax rate structure to stay in effect for everyone, possibly for a year or two, or increasing taxes rates for high income individuals only. One way or the other, the tax rate picture for at least 2011 and hopefully 2012, ought to be clear by the time tax return seasons rolls around next spring.
Observation:Much of year-end tax planning this year is a chancy proposition because of the currently uncertainty over tax rates. Not so with a conversion to Roth IRA. IRS FAQs ("Employee Plans News-October 8, 2010-2010 Rollovers and Conversions to a Roth IRA") confirm that taxpayers can elect to not have the two-year spread apply by simply including in gross income on their 2010 tax return the entire amount of the taxable income from a 2010 distribution rolled over to a Roth IRA. Thus, taxpayers who believe converting to a Roth IRA is a good long-term move will have the luxury of doing so before year-end and then waiting until Apr. 18, 2011, the due date of their 2010 return, to see how they should handle the conversion (i.e., to elect or not elect out of deferral).
•Those taxpayers who find that their rates won't go up in the near future can defer the tax hit on their 2010 conversion to Roth IRA, and pay the bill ratably when they file their 2011 return in 2012, and when they file their 2012 return in 2013.
• High income taxpayers who find that their tax rates will go up after this year can elect out of the deferral option and pay the tax on their Roth IRA conversion when they file their 2010 returns. Of course before doing so, such taxpayers will need to consider the overall impact of the election-out on their tax bills, and the time value of money.
Caution:Under Code Sec. 408A(d)(3)(E)(i)(I), an individual who rolls over a 2010 eligible retirement plan distribution to a Roth IRA cannot retain the benefit of the two-year spread for inclusion of the income from the distribution to the extent that he receives distributions from the Roth IRA in 2010 or 2011. Where the 2010 distribution income is being included in gross income over two years: the income inclusion from the 2010 distribution is accelerated, and the 10% early withdrawal tax under Code Sec. 72(t) applies to the distributed amounts.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
This service is being provided exclusively to YWM clients and firm friends. This alert is one of a series that are distributed to both individuals and businesses.
Conversions to Roth IRAs. This year, for the first time ever, all taxpayers, regardless of their modified adjusted gross income (AGI), may convert amounts in a traditional IRA to amounts in a Roth IRA. Marrieds filing separately also are eligible. Before 2010, only taxpayers with modified AGI of $100,000 or less could make such conversion, and marrieds filing separately were not eligible regardless of modified AGI. (Code Sec. 408A(c)(3))
Amounts from a SEP-IRA or a SIMPLE IRA also may be converted to a Roth IRA, but a conversion from a SIMPLE IRA may be made only after the 2-year period beginning on the date on which the taxpayer first participated in any SIMPLE IRA maintained by the taxpayer's employer. (Reg. § 1.408A-4) Distributions from a Code Sec. 401(a) qualified plan also may be rolled over to a Roth IRA. (Code Sec. 408A(d)(3))
A conversion from a regular IRA to a Roth IRA generally is subject to tax as if it were distributed from the traditional IRA and not recontributed to another IRA (Code Sec. 408A(d)(3)(A)(i)), but isn't subject to the 10% premature distribution tax. (Code Sec. 408A(d)(3)(A)(ii); Reg. § 1.408A-4, Q&A 7)
Why make a IRA-to-Roth IRA conversion? Roth IRAs have two major advantages over regular IRAs:
(1) Distributions from regular IRAs are taxed as ordinary income (except to the extent they represent nondeductible contributions). By contrast, Roth IRA distributions are tax-free if they are "qualified distributions," that is, if they are made (1) after the 5-tax-year period that begins with the first tax year for which the taxpayer made a contribution to a Roth IRA, and (2) when the account owner is 59 1/2 years of age or older, or on account of death, disability, or the purchase of a home by a qualified first-time homebuyer (limited to $10,000). (Code Sec. 408A(d)(2))
(2) Regular IRAs are subject to the lifetime required minimum distribution (RMD) rules that generally require minimum annual distributions to be made commencing in the year following the year in which the IRA owner attains age 70 1/2. By contrast, Roth IRAs aren't subject to the lifetime RMD rules that apply to regular IRAs (as well as individual account qualified plans). (Code Sec. 408A(c)(5))
A similar comparison could be made between distributions from qualified retirement plans and Roth IRAs.
There are other tax advantages: Because distributions from Roth IRAs are tax-free (if they are qualified distributions), they (a) may keep a taxpayer from being taxed in a higher tax bracket that would otherwise apply if he were withdrawing taxable distributions, (b) don't enter into the calculation of tax owed on Social Security payments, and (c) have no effect on AGI-based deductions. What is more, the benefits flow through to beneficiaries of Roth IRA accounts, who also can make tax-free withdrawals from such accounts (they are, however, subject to the same annual post-death minimum distribution rules that apply to beneficiaries of regular IRAs).
Who should make IRA-to-Roth IRA conversions? The consensus view is that the conversion route should be considered by taxpayers who:
• have a number of years to go before retirement (and are therefore able to recoup the dollars that are lost to taxes on account of the conversion);
• anticipate being taxed in a higher bracket in the future than they are now; and
• can pay the tax on the conversion from non-retirement-account assets (otherwise, there will be a smaller buildup of tax-free earnings in the depleted retirement account).
Unique choice for 2010 conversions. A unique income inclusion rule applies for IRA-to-Roth-IRA conversions occurring in 2010. Unless a taxpayer elects otherwise, none of the gross income from the conversion is included in income in 2010; half of the income resulting from the conversion will be includible in gross income in 2011 and the other half in 2012. Taxpayers who elect to include all of the 2010 rollover income on their 2010 return cannot change the election after the due date of that return. (Code Sec. 408A(d)(3)(A))
A major wild card in making this choice is the tax-rate picture after 2010. In the "worst-case scenario"-Congress doesn't act and the EGTRRA sunset rule is allowed to go into effect-after 2010 the tax brackets above the 15% bracket will revert to their pre-2001 levels. That means the top four brackets will be 39.6%, 36%, 31%, and 28%, instead of the current top four brackets of 35%, 33%, 28%, and 25%. Other possible scenarios include Congress's allowing the current tax rate structure to stay in effect for everyone, possibly for a year or two, or increasing taxes rates for high income individuals only. One way or the other, the tax rate picture for at least 2011 and hopefully 2012, ought to be clear by the time tax return seasons rolls around next spring.
Observation:Much of year-end tax planning this year is a chancy proposition because of the currently uncertainty over tax rates. Not so with a conversion to Roth IRA. IRS FAQs ("Employee Plans News-October 8, 2010-2010 Rollovers and Conversions to a Roth IRA") confirm that taxpayers can elect to not have the two-year spread apply by simply including in gross income on their 2010 tax return the entire amount of the taxable income from a 2010 distribution rolled over to a Roth IRA. Thus, taxpayers who believe converting to a Roth IRA is a good long-term move will have the luxury of doing so before year-end and then waiting until Apr. 18, 2011, the due date of their 2010 return, to see how they should handle the conversion (i.e., to elect or not elect out of deferral).
•Those taxpayers who find that their rates won't go up in the near future can defer the tax hit on their 2010 conversion to Roth IRA, and pay the bill ratably when they file their 2011 return in 2012, and when they file their 2012 return in 2013.
• High income taxpayers who find that their tax rates will go up after this year can elect out of the deferral option and pay the tax on their Roth IRA conversion when they file their 2010 returns. Of course before doing so, such taxpayers will need to consider the overall impact of the election-out on their tax bills, and the time value of money.
Caution:Under Code Sec. 408A(d)(3)(E)(i)(I), an individual who rolls over a 2010 eligible retirement plan distribution to a Roth IRA cannot retain the benefit of the two-year spread for inclusion of the income from the distribution to the extent that he receives distributions from the Roth IRA in 2010 or 2011. Where the 2010 distribution income is being included in gross income over two years: the income inclusion from the 2010 distribution is accelerated, and the 10% early withdrawal tax under Code Sec. 72(t) applies to the distributed amounts.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
This service is being provided exclusively to YWM clients and firm friends. This alert is one of a series that are distributed to both individuals and businesses.
Tuesday, November 2, 2010
e-YWMnews-November 2010 WEBSITE UPDATE
e-YWMnews-November 2010 WEBSITE UPDATE
Newsletter Updates- The following articles can be found at our website at http://www.ywmcpa.com/newsletter . This month our articles include:
1. 2010 year-end tax planning for individuals presents unique challenges
2. How do I? Compute bonus depreciation.
3. 2010 year-end tax planning for businesses
4. Third quarter federal tax developments
5. FAQ: What should I do with my 401(k) when changing jobs?
6. November 2010 tax compliance calendar.
If any of these articles are of interest to you be sure to visit our site during the month of November as these articles change monthly.
YWM Office News- In an effort to keep you abreast of the many events and opportunities we are made aware of through our clients and firm friends we will be providing brief updates on items we believe may be of interest to you.
We currently have two beautiful mountain-view offices available in a suite-share arrangement within our office. Conference room, network, tax software, fax, scanner, copier, free parking, receptionist phone answering. Secretarial services available. Contact Becki or Carol at 303-792-3020 for additional information.
We would also like to formally thank all of you who donated and participated in our 2010 Relay For Life event benefiting the American Cancer Society. As a team we raised over $3,100 for the event. We had nearly 20 people attend the event as a part of our team, with 3 members making it over night walking over 10 miles each. We truly appreciate the support.
Relay for Life Team 2010
As always, if you have any questions or comments to make our site even better, please don't hesitate to contact us at. All information on our website is generic, to determine how this affects your specific situation please give us a call at 303-792-3020.
Yanari Watson McGaughey P.C.
Newsletter Updates- The following articles can be found at our website at http://www.ywmcpa.com/newsletter . This month our articles include:
1. 2010 year-end tax planning for individuals presents unique challenges
2. How do I? Compute bonus depreciation.
3. 2010 year-end tax planning for businesses
4. Third quarter federal tax developments
5. FAQ: What should I do with my 401(k) when changing jobs?
6. November 2010 tax compliance calendar.
If any of these articles are of interest to you be sure to visit our site during the month of November as these articles change monthly.
YWM Office News- In an effort to keep you abreast of the many events and opportunities we are made aware of through our clients and firm friends we will be providing brief updates on items we believe may be of interest to you.
We currently have two beautiful mountain-view offices available in a suite-share arrangement within our office. Conference room, network, tax software, fax, scanner, copier, free parking, receptionist phone answering. Secretarial services available. Contact Becki or Carol at 303-792-3020 for additional information.
We would also like to formally thank all of you who donated and participated in our 2010 Relay For Life event benefiting the American Cancer Society. As a team we raised over $3,100 for the event. We had nearly 20 people attend the event as a part of our team, with 3 members making it over night walking over 10 miles each. We truly appreciate the support.
Relay for Life Team 2010
As always, if you have any questions or comments to make our site even better, please don't hesitate to contact us at. All information on our website is generic, to determine how this affects your specific situation please give us a call at 303-792-3020.
Yanari Watson McGaughey P.C.
Thursday, October 28, 2010
e-YWM ALERT #4-How to Reduce your 2010 or 2011 Income
Numerous tax breaks (tax credits, deductions, and other tax benefits) are reduced or eliminated if a taxpayer's adjusted gross income (AGI), or modified AGI (MAGI), exceeds specified thresholds. As year-end nears, taxpayers whodo not anticipate being subject to higher rates next year should consider reducing their 2010 AGI by deferring taxable income into 2011, or by accelerating deductions, if doing so will keep their income level for the current tax year below the relevant phase-out thresholds (or will mitigate the effect of the phaseouts).
Not all steps listed below will be available or desirable for every individual, but many whose income without any planning would be in the range of a threshold may be able to use one or more of the following strategies to keep AGI below the applicable level:
• Convert taxable interest to tax-exempt interest.This will be especially practical where an individual will recognize little or no gain on the disposition of a taxable investment, such as when shifting funds in a taxable money market account to a tax-exempt fund. The tax-exempt interest will not be included in AGI (except in determining the taxability of Social Security benefits), and for some individuals, the after-tax amount received from tax-exempt interest will be at least as much as the after-tax amount received from taxable interest. That's especially true if the tax-exempt interest is exempt from state or local income taxes as well as from Federal income tax.
Caution:Taxpayers who might be subject to the alternative minimum tax should usually avoid investing in tax exempt private activity bonds since the interest on those is included in determining alternative minimum taxable income even though it's not included in AGI.
• Convert taxable interest to tax-deferred interest or income.Instead of leaving funds in a savings or money market account generating taxable interest, some individuals may want to shift some funds to U.S. Series EE bonds or inflation-indexed U.S. Series I savings bonds. Unless the individual elects otherwise, "interest" on Series EE or I bonds isn't taxed until the bonds mature or are redeemed. Another possibility would be to buy Treasury Bills with a term of one-year or less that mature in 2011 so that the income from the Bills won't be included in gross income until that year. Alternatively, individuals may shift funds from investments that produce currently taxable income to beaten-down growth stocks, which pay little or no dividends and give the individual the ability to control when any gain on the stocks will eventually be realized by timing their sale to suit his tax goals.
• Pay off debts.If an individual has both income-generating investments and debts on which he is paying interest, he should consider selling part of his investments and using the proceeds to pay off debt. In addition to reducing AGI, this may increase the individual's net income because the reduction in interest payments often is greater than the reduction in the income received on the investment.
Recommendation:If an individual in this situation is reluctant to repay current debt for fear that he may need the capital in the near future, then, if eligible, he should consider taking out a home equity credit line to draw on in case of need instead of keeping both income earning investments and debt.
•Increase contributions to retirement plans.Some individuals may be able to reduce AGI by increasing contributions to retirement plans such as 401(k) plans, SIMPLE pension plans, and Keogh plans.
Illustration : Sharon has compensation income above $100,000 and usually makes elective deferrals of $5,000 a year to the 401(k) plan maintained by her employer. For 2010, Sharon doubles her elective deferral amount to $10,000, effectively making her 2010 and 2011 contributions in 2010. This will reduce her 2010 AGI by $5,000 more than her normal 401(k) contribution would.
Caution:Assume an employer makes matching contributions to a 401(k) plan at one rate for elective deferrals up to a certain percentage of compensation and at a lower rate for elective deferrals of greater percentages of compensation (as frequently is the case to induce non-highly compensated employees to participate). The strategy described above will cause the employee to lose some employer matching contributions, unless the employee also makes his usual contribution for 2011 in addition to doubling up for 2010.
• Increase contributions to Health savings account (HSA).Individuals who are covered by a qualifying high deductible health plan (and are generally not covered by any other health plan that is not a qualifying high deductible health plan) may make deductible contributions to an HSA, subject to certain limits. For calendar year 2010, assuming a full year of coverage, the maximum contribution for self-only coverage is $3,050, and for family coverage it's $6,150. In addition, an individual who has reached age 55 before the close of 2010, can make a catch-up contribution of $1,000. Distributions from an HSA to pay qualified medical expenses are not taxable. Distributions used for nonmedical purposes are taxable, and if made before age 65, are subject to a 10% penalty tax. An individual's HSA contribution level may be based on expected out-of-pocket medical expenses, but there is nothing to prevent an individual from making deductible contributions up to the maximum allowable amount, regardless of expected expenses. These contributions in excess of medical needs can be withdrawn from the HSA and used for any purpose without penalty (but subject to tax) once the individual reaches age 65.
• Defer receipt of year-end bonuses.An employee who believes a bonus may be coming his way may request that his or her employer delay payment of any bonus until early in the following year. For example, if a bonus would normally be paid on Dec. 15, 2010, an employee may ask the employer before Dec. 15 to defer any bonus coming his way until January 2, 2011. By deferring the bonus, the employee will avoid having it included in 2010 income.
Caution:If an employee waits until a bonus is due and payable to request a deferral, the doctrine of constructive receipt will be triggered and the inclusion of the bonus in AGI will not be deferred. Also, if the deferral extends beyond two-and-one-half months after the close of the tax year, the bonus will be treated as nonqualified deferred compensation. Bonuses treated as deferred compensation are currently includible in income to the extent not subject to a "substantial risk of forfeiture" if the arrangement fails to meet certain distribution, acceleration of benefit, and election requirements. The impact of the 6.2% Social Security portion of the FICA tax may also affect the timing of a bonus. For example, if an employee is retiring in 2011, the employee's salary alone may exceed the Social Security wage base in 2010 ($106,800) but not in 2011. As a result, postponing a bonus payment from 2010 to 2011 could convert a bonus exempt from the 6.2% Social Security tax into a bonus subject to that tax.
• Pay up to $2,500 of student loan interest.Up to $2,500 of student loan interest paid during a tax year is deductible in computing AGI. A taxpayer should consider deducting up to this amount in a tax year even if less than that amount is required to be paid in that tax year.
Observation:The deduction for payments of interest on a student loan applies to voluntary interest payments such as payments made on a qualified student loan during a period when interest payments aren't required, because, for example, the loan hasn't yet entered repayment status or is in a period of deferment or forbearance. Thus, such voluntary payments will reduce AGI to the extent the total amount paid in any tax year does not exceed $2,500.
Observation:Under EGTRRA sunset rules, after 2010 (unless Congress acts) the above-the-line student loan interest deduction under Code Sec. 221 (1) phases out over lower modified AGI ranges and (2) applies only to interest paid during the first 60 months in which interest payments are required. The possibility of more stringent rules next year makes accelerating student loan interest deductions into this year more worthwhile.
• Pay back alimony in 2010.An individual required to pay alimony to a former spouse is entitled to deduct that alimony in the year paid. Accordingly, to the extent possible, such an individual should consider deducting any alimony owed for prior years in 2010, since the full amount paid in 2010 will be a deduction from AGI.
• Pay moving expenses in 2010 even if move isn't made until 2011.Residential moving expenses are deductible (including from AGI) by the taxpayer in the year paid or incurred. Thus, where a taxpayer paid professional movers in December of 2010 1, but the actual move wasn't made until January of 2011, the taxpayer is entitled to the deduction on his 2010 return.
Illustration: In 2010, taxpayer changed job locations, causing her to incur deductible moving expenses. Among these were the expenses of moving furniture, which she paid in 2010, and expenses of travel to the new job location, which she paid in Year 2011. Taxpayer may deduct the furniture-moving expenses in 2010, and the travel expenses in 2011.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
Not all steps listed below will be available or desirable for every individual, but many whose income without any planning would be in the range of a threshold may be able to use one or more of the following strategies to keep AGI below the applicable level:
• Convert taxable interest to tax-exempt interest.This will be especially practical where an individual will recognize little or no gain on the disposition of a taxable investment, such as when shifting funds in a taxable money market account to a tax-exempt fund. The tax-exempt interest will not be included in AGI (except in determining the taxability of Social Security benefits), and for some individuals, the after-tax amount received from tax-exempt interest will be at least as much as the after-tax amount received from taxable interest. That's especially true if the tax-exempt interest is exempt from state or local income taxes as well as from Federal income tax.
Caution:Taxpayers who might be subject to the alternative minimum tax should usually avoid investing in tax exempt private activity bonds since the interest on those is included in determining alternative minimum taxable income even though it's not included in AGI.
• Convert taxable interest to tax-deferred interest or income.Instead of leaving funds in a savings or money market account generating taxable interest, some individuals may want to shift some funds to U.S. Series EE bonds or inflation-indexed U.S. Series I savings bonds. Unless the individual elects otherwise, "interest" on Series EE or I bonds isn't taxed until the bonds mature or are redeemed. Another possibility would be to buy Treasury Bills with a term of one-year or less that mature in 2011 so that the income from the Bills won't be included in gross income until that year. Alternatively, individuals may shift funds from investments that produce currently taxable income to beaten-down growth stocks, which pay little or no dividends and give the individual the ability to control when any gain on the stocks will eventually be realized by timing their sale to suit his tax goals.
• Pay off debts.If an individual has both income-generating investments and debts on which he is paying interest, he should consider selling part of his investments and using the proceeds to pay off debt. In addition to reducing AGI, this may increase the individual's net income because the reduction in interest payments often is greater than the reduction in the income received on the investment.
Recommendation:If an individual in this situation is reluctant to repay current debt for fear that he may need the capital in the near future, then, if eligible, he should consider taking out a home equity credit line to draw on in case of need instead of keeping both income earning investments and debt.
•Increase contributions to retirement plans.Some individuals may be able to reduce AGI by increasing contributions to retirement plans such as 401(k) plans, SIMPLE pension plans, and Keogh plans.
Illustration : Sharon has compensation income above $100,000 and usually makes elective deferrals of $5,000 a year to the 401(k) plan maintained by her employer. For 2010, Sharon doubles her elective deferral amount to $10,000, effectively making her 2010 and 2011 contributions in 2010. This will reduce her 2010 AGI by $5,000 more than her normal 401(k) contribution would.
Caution:Assume an employer makes matching contributions to a 401(k) plan at one rate for elective deferrals up to a certain percentage of compensation and at a lower rate for elective deferrals of greater percentages of compensation (as frequently is the case to induce non-highly compensated employees to participate). The strategy described above will cause the employee to lose some employer matching contributions, unless the employee also makes his usual contribution for 2011 in addition to doubling up for 2010.
• Increase contributions to Health savings account (HSA).Individuals who are covered by a qualifying high deductible health plan (and are generally not covered by any other health plan that is not a qualifying high deductible health plan) may make deductible contributions to an HSA, subject to certain limits. For calendar year 2010, assuming a full year of coverage, the maximum contribution for self-only coverage is $3,050, and for family coverage it's $6,150. In addition, an individual who has reached age 55 before the close of 2010, can make a catch-up contribution of $1,000. Distributions from an HSA to pay qualified medical expenses are not taxable. Distributions used for nonmedical purposes are taxable, and if made before age 65, are subject to a 10% penalty tax. An individual's HSA contribution level may be based on expected out-of-pocket medical expenses, but there is nothing to prevent an individual from making deductible contributions up to the maximum allowable amount, regardless of expected expenses. These contributions in excess of medical needs can be withdrawn from the HSA and used for any purpose without penalty (but subject to tax) once the individual reaches age 65.
• Defer receipt of year-end bonuses.An employee who believes a bonus may be coming his way may request that his or her employer delay payment of any bonus until early in the following year. For example, if a bonus would normally be paid on Dec. 15, 2010, an employee may ask the employer before Dec. 15 to defer any bonus coming his way until January 2, 2011. By deferring the bonus, the employee will avoid having it included in 2010 income.
Caution:If an employee waits until a bonus is due and payable to request a deferral, the doctrine of constructive receipt will be triggered and the inclusion of the bonus in AGI will not be deferred. Also, if the deferral extends beyond two-and-one-half months after the close of the tax year, the bonus will be treated as nonqualified deferred compensation. Bonuses treated as deferred compensation are currently includible in income to the extent not subject to a "substantial risk of forfeiture" if the arrangement fails to meet certain distribution, acceleration of benefit, and election requirements. The impact of the 6.2% Social Security portion of the FICA tax may also affect the timing of a bonus. For example, if an employee is retiring in 2011, the employee's salary alone may exceed the Social Security wage base in 2010 ($106,800) but not in 2011. As a result, postponing a bonus payment from 2010 to 2011 could convert a bonus exempt from the 6.2% Social Security tax into a bonus subject to that tax.
• Pay up to $2,500 of student loan interest.Up to $2,500 of student loan interest paid during a tax year is deductible in computing AGI. A taxpayer should consider deducting up to this amount in a tax year even if less than that amount is required to be paid in that tax year.
Observation:The deduction for payments of interest on a student loan applies to voluntary interest payments such as payments made on a qualified student loan during a period when interest payments aren't required, because, for example, the loan hasn't yet entered repayment status or is in a period of deferment or forbearance. Thus, such voluntary payments will reduce AGI to the extent the total amount paid in any tax year does not exceed $2,500.
Observation:Under EGTRRA sunset rules, after 2010 (unless Congress acts) the above-the-line student loan interest deduction under Code Sec. 221 (1) phases out over lower modified AGI ranges and (2) applies only to interest paid during the first 60 months in which interest payments are required. The possibility of more stringent rules next year makes accelerating student loan interest deductions into this year more worthwhile.
• Pay back alimony in 2010.An individual required to pay alimony to a former spouse is entitled to deduct that alimony in the year paid. Accordingly, to the extent possible, such an individual should consider deducting any alimony owed for prior years in 2010, since the full amount paid in 2010 will be a deduction from AGI.
• Pay moving expenses in 2010 even if move isn't made until 2011.Residential moving expenses are deductible (including from AGI) by the taxpayer in the year paid or incurred. Thus, where a taxpayer paid professional movers in December of 2010 1, but the actual move wasn't made until January of 2011, the taxpayer is entitled to the deduction on his 2010 return.
Illustration: In 2010, taxpayer changed job locations, causing her to incur deductible moving expenses. Among these were the expenses of moving furniture, which she paid in 2010, and expenses of travel to the new job location, which she paid in Year 2011. Taxpayer may deduct the furniture-moving expenses in 2010, and the travel expenses in 2011.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
e-YWM ALERT #3-Small Business Act-Depreciation Provisions
The recently enacted Small Business Jobs Act of 2010 includes a wide-ranging assortment of tax changes generally affecting business. Two of the most significant changes allow for faster cost recovery of business property. Here are the details.
Enhanced small business expensing (Section 179 expensing). In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers can elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. Under pre-2010 Small Business Act law, taxpayers could expense up to $250,000 for qualifying property-generally, machinery, equipment and certain software-placed in service in tax years beginning in 2010. This annual expensing limit was reduced (but not below zero) by the amount by which the cost of qualifying property placed in service in tax years beginning in 2010 exceeded $800,000 (the investment ceiling). Under the new law, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment ceiling to $2,000,000.
The new law also makes certain real property eligible for expensing. For property placed in service in any tax year beginning in 2010 or 2011, the up-to-$500,000 of property that can be expensed can include up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property).
Extension of 50% bonus first-year depreciation. Businesses are allowed to deduct the cost of capital expenditures over time according to depreciation schedules. In previous legislation, Congress allowed businesses to more rapidly deduct capital expenditures of most new tangible personal property, and certain other new property, placed in service in 2008 or 2009 (2010 for certain property), by permitting the first-year write-off of 50% of the cost. The new law extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (2011 for certain property).
All information presented above is generic, if you would like to know how this affects your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
This service is being provided exclusively to YWM clients and firm friends.
Enhanced small business expensing (Section 179 expensing). In order to help small businesses quickly recover the cost of certain capital expenses, small business taxpayers can elect to write off the cost of these expenses in the year of acquisition in lieu of recovering these costs over time through depreciation. Under pre-2010 Small Business Act law, taxpayers could expense up to $250,000 for qualifying property-generally, machinery, equipment and certain software-placed in service in tax years beginning in 2010. This annual expensing limit was reduced (but not below zero) by the amount by which the cost of qualifying property placed in service in tax years beginning in 2010 exceeded $800,000 (the investment ceiling). Under the new law, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment ceiling to $2,000,000.
The new law also makes certain real property eligible for expensing. For property placed in service in any tax year beginning in 2010 or 2011, the up-to-$500,000 of property that can be expensed can include up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property).
Extension of 50% bonus first-year depreciation. Businesses are allowed to deduct the cost of capital expenditures over time according to depreciation schedules. In previous legislation, Congress allowed businesses to more rapidly deduct capital expenditures of most new tangible personal property, and certain other new property, placed in service in 2008 or 2009 (2010 for certain property), by permitting the first-year write-off of 50% of the cost. The new law extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (2011 for certain property).
All information presented above is generic, if you would like to know how this affects your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
This service is being provided exclusively to YWM clients and firm friends.
Thursday, October 21, 2010
e-YWM ALERT #2-2012 Form 1099 Reporting Requirement
e-YWM ALERT #2-2012 Form 1099 Reporting Requirement
What the new 1099 reporting requirement will mean for businesses
Businesses of all sizes are preparing for a possible avalanche of information reporting after 2011. To help pay for health care reform, lawmakers tacked on expanded information reporting to the Patient Protection and Affordable Care Act (PPACA). The health care reform law generally requires all businesses, charities and state and local governments to file an information return for all payments aggregating $600 or more in a calendar year to a single provider of goods or services. The PPACA also repeals the longstanding reporting exception for payments to a corporation. The magnitude of the reporting requirement has opponents working feverishly to persuade Congress to either repeal it or scale it back.
Pre-PPACA law
Pre-PPACA law generally requires businesses to file an information return with the IRS reporting payments to non-corporate service providers that exceed $600 in a given year. Payments to providers of goods are excluded from reporting. Payments to a corporation for goods or services are excluded from reporting with some limited exceptions.
See change ahead
Effective for purchases made after December 31, 2011 the PPACA requires all businesses purchasing $600 or more in goods or services from another entity (including corporations but not tax-exempt corporations), to provide the vendor and the IRS with an information return. Presumably, Form 1099-MISC will be used for purposes of the new reporting rule, or the IRS will develop a new form. We will keep you posted on developments.
Example. In February 2012, your business buys computers, printers, and fax machines from an office supply company, doing business as a corporation, for $4,000. Your business also spends $1,000 at a local caterer, doing business as a partnership, for office breakfasts and lunches throughout the year. Additionally, the company spends $600 for business travel on Amtrak. Your business must provide each of these vendors with a Form 1099 for 2012, as well as the IRS.
Day-to-day transactions
Here are some more examples of purchases after 2011 that appear to fall under the PPACA's reporting requirements:
-- You make small, incremental purchases from the same vendor; for example, your business purchases more than $600 of office supplies, such as staples, toner, pens, paper, and calendars from the same vendor.
-- You pay more than $600 throughout the year in mail and shipping costs to the same vendor; however each individual charge costs no more than $10 or $12.
-- You purchase floral arrangements for the office throughout the year, although each purchase may be no more than $40 to $70, your cumulative purchases are more than $600;
-- You purchase an $800 computer for your new employee;
-- You hold a summer picnic for your employees and purchase more than $600 in food from a local grocery store;
-- Every Friday you buy breakfast pastries from the local bakery for your employees, and even though each purchase is no more than $40, you spend more than $600 in the year.
Backup withholding
The PPACA requires sellers to provide, and purchasers to collect, Taxpayer Identification Numbers (TINs). If a seller fails to furnish a correct TIN, you must impose backup withholding at the rate of 28 percent of the purchase price.
Moreover, if your business fails to issue an accurately completed Form 1099 to a vendor, the IRS can assess a penalty.
Preparing now
There are some proactive steps your business can take now to prepare for the new reporting requirement and its heavy administrative and paperwork burden. The way you collect and manage vendor information will be more important than ever. Basic information you will need to track includes every vendor's name and TIN, the amounts spent at each vendor and the total annual amount spent at each vendor. You should also begin requesting that each of your vendors, particularly your regular vendors, complete IRS Form W-9 for your records. Form W-9 will provide you with the vendor's legal name, address, and TIN.
Pending legislation
Opponents of the expanded information requirement are hoping that Congress will repeal it before 2012. Outright repeal is a long-shot. As written now, the PPACA reporting requirement is estimated to raise $17 billion over 10 years. Congress will need to find another source of revenue if it repeals the reporting requirement. More likely, Congress will modify the requirement.
Senate Democrats have introduced legislation to raise the reporting threshold from $600 to $5,000 and exclude some routine payments, such as office supplies, from reporting. All purchases made with a credit card would also be exempt from the reporting requirement. Additionally, small businesses employing not more than 25 employees would be completely exempt from the reporting requirement.
Congress may scale back the PPACA's reporting requirements in the autumn of 2010. Our office will keep you posted on developments.
All information presented above is generic, if you would like to know how this affects your specific situation please give us a call. Additional resources are always available at our website, www.ywmcpa.com.
What the new 1099 reporting requirement will mean for businesses
Businesses of all sizes are preparing for a possible avalanche of information reporting after 2011. To help pay for health care reform, lawmakers tacked on expanded information reporting to the Patient Protection and Affordable Care Act (PPACA). The health care reform law generally requires all businesses, charities and state and local governments to file an information return for all payments aggregating $600 or more in a calendar year to a single provider of goods or services. The PPACA also repeals the longstanding reporting exception for payments to a corporation. The magnitude of the reporting requirement has opponents working feverishly to persuade Congress to either repeal it or scale it back.
Pre-PPACA law
Pre-PPACA law generally requires businesses to file an information return with the IRS reporting payments to non-corporate service providers that exceed $600 in a given year. Payments to providers of goods are excluded from reporting. Payments to a corporation for goods or services are excluded from reporting with some limited exceptions.
See change ahead
Effective for purchases made after December 31, 2011 the PPACA requires all businesses purchasing $600 or more in goods or services from another entity (including corporations but not tax-exempt corporations), to provide the vendor and the IRS with an information return. Presumably, Form 1099-MISC will be used for purposes of the new reporting rule, or the IRS will develop a new form. We will keep you posted on developments.
Example. In February 2012, your business buys computers, printers, and fax machines from an office supply company, doing business as a corporation, for $4,000. Your business also spends $1,000 at a local caterer, doing business as a partnership, for office breakfasts and lunches throughout the year. Additionally, the company spends $600 for business travel on Amtrak. Your business must provide each of these vendors with a Form 1099 for 2012, as well as the IRS.
Day-to-day transactions
Here are some more examples of purchases after 2011 that appear to fall under the PPACA's reporting requirements:
-- You make small, incremental purchases from the same vendor; for example, your business purchases more than $600 of office supplies, such as staples, toner, pens, paper, and calendars from the same vendor.
-- You pay more than $600 throughout the year in mail and shipping costs to the same vendor; however each individual charge costs no more than $10 or $12.
-- You purchase floral arrangements for the office throughout the year, although each purchase may be no more than $40 to $70, your cumulative purchases are more than $600;
-- You purchase an $800 computer for your new employee;
-- You hold a summer picnic for your employees and purchase more than $600 in food from a local grocery store;
-- Every Friday you buy breakfast pastries from the local bakery for your employees, and even though each purchase is no more than $40, you spend more than $600 in the year.
Backup withholding
The PPACA requires sellers to provide, and purchasers to collect, Taxpayer Identification Numbers (TINs). If a seller fails to furnish a correct TIN, you must impose backup withholding at the rate of 28 percent of the purchase price.
Moreover, if your business fails to issue an accurately completed Form 1099 to a vendor, the IRS can assess a penalty.
Preparing now
There are some proactive steps your business can take now to prepare for the new reporting requirement and its heavy administrative and paperwork burden. The way you collect and manage vendor information will be more important than ever. Basic information you will need to track includes every vendor's name and TIN, the amounts spent at each vendor and the total annual amount spent at each vendor. You should also begin requesting that each of your vendors, particularly your regular vendors, complete IRS Form W-9 for your records. Form W-9 will provide you with the vendor's legal name, address, and TIN.
Pending legislation
Opponents of the expanded information requirement are hoping that Congress will repeal it before 2012. Outright repeal is a long-shot. As written now, the PPACA reporting requirement is estimated to raise $17 billion over 10 years. Congress will need to find another source of revenue if it repeals the reporting requirement. More likely, Congress will modify the requirement.
Senate Democrats have introduced legislation to raise the reporting threshold from $600 to $5,000 and exclude some routine payments, such as office supplies, from reporting. All purchases made with a credit card would also be exempt from the reporting requirement. Additionally, small businesses employing not more than 25 employees would be completely exempt from the reporting requirement.
Congress may scale back the PPACA's reporting requirements in the autumn of 2010. Our office will keep you posted on developments.
All information presented above is generic, if you would like to know how this affects your specific situation please give us a call. Additional resources are always available at our website, www.ywmcpa.com.
Tuesday, October 5, 2010
e-YWMnews-OCTOBER 2010 WEBSITE UPDATE
We would like to welcome you to the Yanari Watson McGaughey P.C. e-YWMnews and e-YWMalert mailing lists, the newest additions in our ongoing effort to provide you the highest quality professional service and guidance. These mailing lists will operate as follows:
• e-YWMnews-This email will be sent at least monthly to alert you to the new
articles available at our website.
• e-YWMalert-We will be sending this email to keep you abreast of cutting edge
tax news and legislation as it unfolds.
To ensure you receive these important announcements please add us as an approved sender.
This month we'd like to make sure you are aware of the many resources we have available on our website, www.ywmcpa.com, which is designed to provide helpful resources to aid you in making smart financial decisions throughout the year and to keep you abreast of important tax changes. We will notify you at least monthly when new tax and financial articles are posted to our site. Additionally, on an as needed basis we will be providing you with information on new tax legislation that may affect you and your business.
The website is comprised of multiple sections each created in an effort to provide you with relevant tools and resources to assist you in many types of financial decisions:
• Newsletter section-This is updated on a monthly basis with links to relevant
tax headlines. This month our articles include:
1. 2010 Health Care Reform Act
2. The Small Business Jobs Act of 2010
3. 2010 year-end tax planning
4. FAQ on what the income tax rate will be in 2011
5. How to use the new Roth rollover opportunity within a 401k plan
6. October 2010 tax compliance calendar
• Financial Tools section- In this section we have a number of interactive
financial calculators to assist you in making a wide variety of financial
decisions. For example there are calculators available to help you make
personal budget decision, evaluate whether refinancing makes sense in your
individual situation, to assess the best method of financing and paying for a
new car, and to determine the best retirement plan for you. This is just a
small sample of the many calculators available.
• Links-We have gathered many links to external financial Websites that may be of
interest to you. Here we have links to several financial, governmental, tax and
news websites that we hope you will find useful. Additionally we have a link to
the "Gross Prophet", YWM's blog, which will contain an archive of all e-YWMnews
and e-YWMalerts for future reference.
As always, if you have any questions or comments to make our site even better, please don't hesitate to contact us. All information on our website is generic, to determine how this affects your specific situation please give us a call.
Yanari Watson McGaughey P.C.
• e-YWMnews-This email will be sent at least monthly to alert you to the new
articles available at our website.
• e-YWMalert-We will be sending this email to keep you abreast of cutting edge
tax news and legislation as it unfolds.
To ensure you receive these important announcements please add us as an approved sender.
This month we'd like to make sure you are aware of the many resources we have available on our website, www.ywmcpa.com, which is designed to provide helpful resources to aid you in making smart financial decisions throughout the year and to keep you abreast of important tax changes. We will notify you at least monthly when new tax and financial articles are posted to our site. Additionally, on an as needed basis we will be providing you with information on new tax legislation that may affect you and your business.
The website is comprised of multiple sections each created in an effort to provide you with relevant tools and resources to assist you in many types of financial decisions:
• Newsletter section-This is updated on a monthly basis with links to relevant
tax headlines. This month our articles include:
1. 2010 Health Care Reform Act
2. The Small Business Jobs Act of 2010
3. 2010 year-end tax planning
4. FAQ on what the income tax rate will be in 2011
5. How to use the new Roth rollover opportunity within a 401k plan
6. October 2010 tax compliance calendar
• Financial Tools section- In this section we have a number of interactive
financial calculators to assist you in making a wide variety of financial
decisions. For example there are calculators available to help you make
personal budget decision, evaluate whether refinancing makes sense in your
individual situation, to assess the best method of financing and paying for a
new car, and to determine the best retirement plan for you. This is just a
small sample of the many calculators available.
• Links-We have gathered many links to external financial Websites that may be of
interest to you. Here we have links to several financial, governmental, tax and
news websites that we hope you will find useful. Additionally we have a link to
the "Gross Prophet", YWM's blog, which will contain an archive of all e-YWMnews
and e-YWMalerts for future reference.
As always, if you have any questions or comments to make our site even better, please don't hesitate to contact us. All information on our website is generic, to determine how this affects your specific situation please give us a call.
Yanari Watson McGaughey P.C.
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The information contained in this website is for general information purposes only. The information is provided by Yanari Watson McGaughey P.C. and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
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UNLESS EXPRESSLY STATED OTHERWISE, IN WRITING, THIS CORRESPONDENCE, INCLUDING ANY ATTACHMENTS HERETO, IS NOT INTENDED TO OR WRITTEN TO BE USED AND CANNOT BE USED BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING PENALTIES ASSERTED BY THE INTERNAL REVENUE SERVICE OR SANCTIONS PROPOSED BY THE DIRECTOR OF THE OFFICE OF PROFESSIONAL RESPONSIBILITY UNDER THE UNITED STATES TAX LAWS (THE FOREGOING STATEMENT IS MADE IN ACCORDANCE WITH CIRCULAR 230, 31 C.F.R. PART 10).
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