B.A. Harris Blog

Documentation for Charitable Contributions

Yesterday I asked my daughter to name three things she learned during the day. She began with a statement about what makes plants appear green (from biology class) and followed that with some obscure fact from math class. It was her third statement, however, that caught my interest: “Always get the receipt!” As it turns out, she had fueled her car after school using her debit card and she forgot to request the gas receipt to print out.


New Cost Basis Reporting for Sales of Securities Set to Begin

Effective for tax year 2011, Form 1099-B issued by stock brokers is required to report the cost basis of certain securities sold during the year. Under the old rules Form 1099-B reported the gross sale proceeds for securities sold during the year. Beginning with the 2011 year Form 1099-B will also report the cost basis of securities sold during 2011 BUT only for stock purchased in 2011 and later. This means your 2011 Form 1099-B will report gross proceeds from securities sold during the year and will report cost basis for those that were purchased during 2011 and will not report cost basis for those purchased in prior years.


End of Year Tax Legislation

You may recall the uncertainty in late 2009 surrounding the estate tax rules and their repeal as provided for by the Economic Growth and Tax Relief Reconciliation Act of 2001, for estates of decedents dying after December 31, 2009. I don’t think many of us thought Congress would actually allow the estate tax to be repealed. It did. Congressional deadlock prevented any resolution to the repeal until late 2010 resulting in a new estate tax exemption amount of $5,000,000.


State of Idaho Department of Labor Corporate Officer Exemption from Unemployment Tax

Recently the Department of Labor changed the rules which required corporations to pay state unemployment tax (SUT) on corporate officer wages. Under the new rules the corporation can make an election to exempt officer wages from SUT. With the increases in unemployment tax over the last few years this change in law could result in a more significant savings. Please be aware that if you take advantage of the new exemption for corporate officer wages you will not be able to collect unemployment benefits.


Recharacterization of 2010 Roth IRA Conversions

With the recent volatility in the stock market we wanted to alert our clients who converted IRA’s to Roth IRA’s in 2010 to a potential planning issue that may warrant some attention in the next 60 days. The law allows a taxpayer to reverse, or cancel a 2010 Roth conversion by filing an amended tax return prior to October 17, 2011. Depending on what has happened to your investments since converting to a Roth IRA and also depending on your particular circumstances and outlook on the future tax and investment picture, it could benefit you to reverse your Roth conversion and transfer the funds back to a traditional IRA.


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