by NFS | Dec 19, 2012 | Archives
When business liquidation is the only course of action at an owner’s death,life insurance can provide the funds that make the difference between a planned liquidation and a financially-disastrous forced liquidation.
Consider the uses to which life insurance can be put in the planned liquidation of a business:
| Estate Settlement |
Life insurance proceeds can be used to pay estate taxes and other estate settlement costs, allowing the liquidation to proceed on an orderly basis. |
| Family Income |
Using life insurance proceeds to provide the surviving family with a continuing income can avoid a forced liquidation of business assets for this purpose. |
| Working Capital |
If the executor needs additional cash to temporarily operate the business, life insurance can serve as the source of that cash. |
| Offset Shrinkage |
Even a planned liquidation will usually result in some shrinkage in value, as compared to what the business was worth as a going concern. Life insurance can be used to replace the value lost in the liquidation. |
For “pennies on the dollar,” life insurance provides the cash needed to avoid a forced liquidation will be available exactly when needed — at the business owner’s death.
To view the full NFS December Business Briefs Newsletter, click
here
by NFS | Dec 17, 2012 | Archives
The IRS is reminding employers to act soon if they plan to claim a Work Opportunity Tax Credit (WOTC) for hiring certain military veterans. The expanded credit may provide thousands of dollars of benefit to qualified businesses, but only if they hire veterans before the end of 2012.
The WOTC rewards employers with a tax credit for hiring individuals from targeted groups. The Three Percent Withholding Repeal and Job Creation Act (2011 Heroes Act) expanded this tax incentive to encourage employers to hire military veterans by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit.
Employers that hire veterans who have been looking for employment for more than six months may be eligible for a Returning Heroes Tax Credit of up to $5,600 per employee; employers that hire veterans who have been looking for employment for less than six months may be eligible for a credit of up to $2,400 per employee.
Employers that hire veterans with service-connected disabilities who have been looking for employment for more than six months may be eligible for a Wounded Warriors Tax Credit of up to $9,600 per employee.
The amount of the credit depends on a number of factors. Such factors include the length of the veteran’s unemployment before being hired, the number of hours the veteran works and the amount of wages the veteran receives during the first year of employment.
The Returning Heroes Tax Credit and the Wounded Warriors Tax Credit apply to individuals who begin work after November 21, 2011, but these credits are scheduled to expire after December 31, 2012.
In order to qualify, employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. The form must be filed within 28 days after the qualified veteran starts work. Some states accept Form 8850 electronically.
Our office can help you get the most out of this tax benefit, but you have to act soon. Please call our office at your earliest convenience.
by NFS | Dec 12, 2012 | Archives
You may be interested in what the public probate records of the estates of businessmen, attorneys, entertainers, accountants and even a President have to show.
| Name |
Gross Estate |
Net Estate |
Percent Shrinkage |
| Franklin D. Roosevelt |
$1,940,999 |
$1,366,132 |
30% |
| Henry J. Kaiser, Sr. |
$5,597,772 |
$3,109,408 |
44% |
| Edwin C. Ernst, CPA |
$12,642,431 |
$5,518,319 |
56% |
| Robert S. Kerr (U.S. Senator) |
$20,800,000 |
$11,300,000 |
46% |
| A.H. Wiggin (Chairman, Chase Bank) |
$20,493,999 |
$5,646,666 |
72% |
| William E. Boeing |
$22,386,158 |
$11,796,410 |
47% |
| Rick Nelson |
$744,357 |
$506,636 |
32% |
| Elvis Presley |
$10,165,434 |
$2,790,799 |
73% |
| Rock Hudson |
$8,600,000 |
$3,926,288 |
54% |
| James S. Kemper (Insurance Executive) |
$10,948,356 |
$7,007,560 |
36% |
| Nelson A. Rockefeller |
$79,249,475 |
$56,727,628 |
28% |
| Conrad Hilton |
$199,070,700 |
$93,288,483 |
53% |
Source: Public Probate Records
If these people, who had access to the best advice money could buy, were not able to avoid the “unwanted heirs” (federal and state estate taxes and estate administrative costs), it will be difficult for the rest of us to avoid estate settlement costs.
Proper advance planning, however, can minimize the impact of estate settlement costs on the value of your estate.
To view the full NFS December Estate Ideas Newsletter, click
here
by NFS | Dec 10, 2012 | Archives
Q: Can an employer offer both a SIMPLE IRA plan and a SEP IRA to his/her employees?
A: An employer that has a SIMPLE IRA plan cannot maintain another qualified plan, such as a SEP IRA, in which any employees receive contributions. An employee, however, who works for two different employers in the same year could be covered by a SEP IRA from one employer and a SIMPLE IRA plan from the other employer.
by NFS | Dec 7, 2012 | Archives
December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year. Here are some “Season of Giving” tips from the IRS covering everything from charity donations to refund planning:
- Contribute to Qualified Charities. If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by Dec. 31. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Exempt Organizations Select Check tool to check if your favorite charity is a qualified charity. Donations charged to a credit card by Dec. 31 are deductible for 2012, even if you pay the bill in 2013. A gift by check also counts for 2012 as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible.
- What You Can Deduct. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified charity. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
- Keep Records of All Donations. You need to keep a record of any donations you deduct, regardless of the amount. You must have a written record of all cash contributions to claim a deduction. This may include a cancelled check, bank or credit card statement or payroll deduction record. You can also ask the charity for a written statement that shows the charity’s name, contribution date and amount.
- Gather Records in a Safe Place. As long as you’re gathering those records for your charitable contributions, it’s a good time to start rounding up documents you will need to file your tax return in 2013. This includes receipts, canceled checks and other documents that support income or deductions you will claim on your tax return. Be sure to store them in a safe place so you can easily access them later when you file your tax return.
- Plan Ahead for Major Purchases. If you are making major purchases during the holiday season, don’t base them solely on the expectation of receiving your tax refund before the bills arrive. Many factors can impact the timing of a tax refund. The IRS issues most refunds in less than 21 days after receiving a tax return. However, if your tax return requires additional review, it may take longer to receive your refund.
For more information about contributions, check out Publication 526, Charitable Contributions. The booklet is available on IRS.gov or order by mail at 800-TAX-FORM (800-829-3676).
-IRS Tax Tip 2012-15
