How should you appeal an IRS tax audit?

posted by Michael Gray, CPA @ 6:54 AM
April 13, 2016

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, April 15, is with William T. Mitchell, CPA. Our interview subject is “Appealing your tax audit.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

How should you handle an IRS audit?

posted by Michael Gray, CPA @ 8:06 AM
March 30, 2016

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell the next two Fridays, April 1 and 8, is with William T. Mitchell, CPA. Our interview subject is “I’m being audited by the IRS! Now what?” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What are current developments for individual medical insurance?

posted by Michael Gray, CPA @ 9:16 AM
December 23, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, December 25, is with Don Pollard, Clu, ChFC of Advanced Professionals. Our interview subject is “Medical insurance for individuals update.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What are the income tax rules for selling a principal residence?

posted by Michael Gray, CPA @ 9:46 AM
December 16, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, December 18, is with attorney and CPA G. Scott Haislet. Our interview subject is “Sale of a principal residence.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

How do you qualify to be a “real estate professional”?

posted by Michael Gray, CPA @ 10:04 AM
December 3, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, December 4, is with attorney and CPA G. Scott Haislet. Our interview subject is “Real estate professionals and passive activity losses.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

How does ownership title affect your taxes?

posted by Michael Gray, CPA @ 8:48 AM
October 7, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Friday, October 9, is with attorney William D. Mahan, of counsel to Gates, Eisenhart, Dawson. Our interview subject is “Tax and financial considerations of title.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

Section 83(b) election simplified

posted by Michael Gray, CPA @ 9:27 AM
July 21, 2015

The IRS has issued proposed regulations that can be relied upon by taxpayers to eliminate the requirement that a copy of a Section 83(b) election must be attached to a taxpayer’s income tax return in order for it to be effective, applying for transfers on or after January 1, 2015. The IRS eliminated the requirement because tax return preparation software doesn’t consistently allow taxpayers to submit the election with electronically filed income tax returns.

The general rule when unvested property is received as compensation for services is taxable income is measured at the time the property becomes vested.

For example, XYZ Co. grants a nonqualified stock option to Jane Employee. Jane is granted the right to exercise the option before it is vested. (Vesting means Jane has all rights to the stock, including the right to sell it.) Jane exercises the option on June 1, 20X1 and the stock isn’t vested on that date.. The fair market value on that date is $1 per share, and the option price is also $1 per share. No income is taxable for 20X1. The stock vests on June 1, 20X2, when the fair market value is $11 per share. Jane has taxable wages income for 20X2 of $10 per share. The holding period for the stock starts on the vesting date.

Jane could have avoided having the increase in value after exercise taxed as wages by making a Section 83(b) election. When you make a Section 83(b) election, you are electing to disregard restrictions such as vesting at the date the property is received, which is the date of exercise for a nonqualified stock option. The election must be made within 30 days after the property is received, and it is irrevocable without the consent of the IRS once it is made. If Jane made a Section 83(b) election in the above example, there would be no taxable income when the option was exercised in 20X1 because the fair market value was the same as the option price. Any future appreciation for the stock would be taxed as a capital gain. The holding period for the stock would start on the date of exercise.

In the past, there were three requirements to make a valid election. (1) A written election must be filed at the IRS service center where tax returns are filed for the taxpayer within 30 days after the date the property is transferred; (2) a copy of the election must be given to the employer or entity for which services are performed; and (3) a copy of the election must be attached to the taxpayer’s income tax return for the year of the election.

Under the new proposed regulations, the last requirement has been eliminated.

What should you do if you’re audited by the IRS?

posted by Michael Gray, CPA @ 8:48 AM
May 6, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell Friday, May 18 and repeated next Friday, May 15, is with William J. Mitchell, CPA. Our interview subject is “I’m being audited by the IRS! What should I do?” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What federal income tax developments should same sex couples know?

posted by Michael Gray, CPA @ 8:05 AM
April 29, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell Friday, May 1, is with Professor Patricia Cain of Santa Clara University School of Law. Our interview subject is “Tax developments for same sex couples.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

How does the federal net investment income tax work?

posted by Michael Gray, CPA @ 7:52 AM
October 2, 2014

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell this Friday, October 3, is with attorney G. Scott Haislet. Our interview subject is “The net investment income tax and real estate professionals.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.