What is a PLR?

A PLR is a Private Letter Ruling from the IRS. What does that mean exactly? A PLR is a written request a taxpayer submits to obtain some sort of exception to a tax rule. The IRS interprets and applies tax laws to the taxpayer’s specific set of facts. The IRS then makes a statement about the taxpayer’s transaction and this statement is binding upon the IRS as long as the taxpayer accurately described the submitted facts and specifically carries out the transaction as stated.

It is important to note that although a PLR may give some insight as to how the IRS may respond to a specific situation, the IRS’ analysis and decision only applies to the taxpayer who submitted the request. A PLR is not law and it may not be relied upon as a source of authority or legal precedent by anyone else.

Who Pays the Gift Tax?

If you give a non-spouse a gift valued in excess of the annual exclusion amount, you could be subject to a gift tax. For 2016, the annual federal gift tax exclusion amount for gifts to a non-spouse remains at $14,000 per person. If you are married, you and your spouse may give up to $28,000, per person, per year, free from federal gift tax.

Although there are no immediate tax concerns for the recipient of a gift because federal gift tax is imposed upon the donor, the recipient could be liable for capital gains tax in the future. Highly appreciated gifts such as real estate or stocks will render the recipient liable for capital gains tax when he or she decides to sell the gift at a later date.

The general rule is that the recipient’s basis in the gifted property is the same as the basis of the donor. For example, if you were given stock that the donor had purchased for $10 per share (which was also his/her basis) and you later sold it for $100 per share, you would pay tax on a gain of $90 per share.

Don’t Forget to Contribute to Your IRA

If you planned to make a contribution to your IRA in 2015 but didn’t have time, weren’t sure if you wanted to or just simply forgot about it, you still have some time. You have until your tax filing deadline to do it, so most taxpayers have until April 18, 2016 to make an IRA contribution for 2015.

Contributions can be made to your traditional IRA for a year at any time during that year or by the due date for filing your return for that year, not including extensions. The limit is $5,500 (or $6,500 if you are age 50 or older).

Be aware of the 70½ rule though… traditional IRA contributions cannot be made for the year in which you reach age 70½ or for any later year. Contributions can only be made to your traditional IRA for each year that you receive compensation and have not reached age 70½.

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Most Americans face the real possibility of out-living their money. Even dutiful savers cannot presume that their nest egg will support their lifestyle throughout a long and active retirement. Are you one of those Americans? Unless you have a comprehensive distribution plan in place, you probably are!

Tax season is near and many people don’t realize that they must take steps to “disinherit” Uncle Sam. What’s the point of working your whole life, reaping high rates of return (hopefully) and accumulating a sizeable balance if you’re just going to hand it over to the IRS?

How did we get into this mess? When you think about it, it’s very easy to out-live your money by something as simple as spending too freely, especially early in retirement. Excessive withdrawals tend to happen partly due to the fact that we didn’t expect to live as long as we do!

Finally, a great danger to a retirement plan is the unforeseen, economic and political elements that can sabotage even the best-laid plans. The unforeseen can also include what are termed Black Swan event trends that are impossible to predict yet have profound and lasting effects on world economies.

The statistics can be grim but if you are reading this, the good news is there is still time to preserve, protect and defend yourself against market downfalls and other negative elements. Your retirement distribution specialist at America’s Tax Solutions™ can help you protect your nest egg and discuss strategies that can help you create a stream of income that you cannot outlive.

Retirement Plans for All?

The White House recently released a Fact Sheet about proposals that will be included in the 2017 budget. One of those has to do with employers offering their employees retirement plans. According to this release, less than 10% of American workers contribute to some sort of retirement plan on their own if their employer does not sponsor one.

One of the President’s proposals would require employers with more than ten employees to automatically enroll each employee in an IRA if that employer does not offer its employees a retirement plan. A tax credit of up to $3,000 would be offered to employers with less than one hundred employees for this “auto-IRA” requirement.

What a Will, Will and Will Not Do

Sound confusing? Many Americans are confused when it comes to understanding what can and what cannot pass by their will and they assume that a will takes care of everything.

There are several situations in which a will does not control the transfer of an asset. Disposition of a decedent’s property is determined by the form of ownership of a particular asset or by a beneficiary designation form, which overrides the provisions of a will. For example, regardless of how perfect and well drafted a last will and testament may be, its terms cannot and do not override the terms of an IRA or 401(k) custodial agreement, a private and binding contract.

Here are just a few common assets that do not pass through a will: IRA, 401(k), Pension Plan, Annuity, Life Insurance Policy, Joint Tenancy Property, Community Property with Right of Survivorship, POD Accounts and Totten Trusts.

Special Announcement

Denise Garrison Named Director of CPA Relations for America’s Tax Solutions

America’s Tax Solutions™ announced that Denise Garrison has rejoined the firm as Director of CPA Relations and will head the company’s relationships with its accounting partners across the country.

Ms. Garrison previously served as Special Assistant to the President of Table Bay Financial, America’s Tax Solutions parent company. In that role she worked extensively with the ATS System and accountants and Wealth preservation Specialist around the country. Her institutional knowledge of the entire enterprise and all of the various support systems will be invaluable to the accounting firms in the program.

Prior to joining Table Bay in 2015 Denise was with Edward Jones for six years. She will have responsibility for all aspects of the America’s Tax Solutions Program™ including Relationship Management, Firm Induction, Member Support Services, Training, and Education.

Denise will be in touch with all member firms in the coming days to introduce herself and asses how we can best help and support you during tax season.

She can be reached at: 1-866-225-1786 Ext. 307 or Email: Dgarrison@tablebayfinancial.com.