ROTH IRA Conversions Using Planning – By John R. Bullis

Kim Pilant John's Articles

You can convert your regular IRA to a ROTH IRA. The value converted is taxable income.  If the value goes down after conversion, you can change your mind and cancel the conversion if you do it by Oct. 15th of the year following the conversion. It is called Cherry Picking that gives you the ability to convert to several ROTH …

What if My Stock Investment is Worthless – By John R. Bullis

Kim Pilant Uncategorized

Once in a while a stock or bond you bought has big problems and becomes worthless. A security (stock or bond) that becomes worthless during the year is treated (and reported on your tax return) as if it were sold on the last day of the year. The definition of worthless means the stock or bond has no value or …

Selling a Stock to Reduce Your Income Tax By John R. Bullis

Nancy Bullis John's Articles

No one I know makes 100 decisions and finds all 100 were right or good decisions.  We all make mistakes. If you purchased a stock say for $10,000 and the value has gone down to $6,000, maybe you should consider selling it to recognize a capital loss. Capital losses are deductible first against any capital gains (both short term and …

Death Tax Planning – By Kelly J. BullisMost folks think what I’m about to talk about is also known as Estate Planning. Far from it! On a regular basis, we see carryover items on a decedent’s tax return that are lost at their death. With a little planning, these can be taken advantage of and save some significant taxes. I think the number one item is Capital Loss Carryovers. Usually an elderly person may have accumulated a lot of losses and they still have a substantial stock portfolio. The Heirs get a step up in basis at death and the final decedent’s individual income tax return reports the LOST Capital Loss Carryover. (It flies away, never to be seen again.) A better way would be for somebody in their last few years of life to sell those highly appreciated assets, recognize the gain, offset by the Capital Loss, paying ZERO tax!!! Converting these holdings to cash locks in the highly appreciated value and the inheritance for the beneficiaries is locked in and protected from any future market drops. On the other hand, property subject to depreciation recapture (at ordinary tax rates) should probably not be sold to offset Capital Loss Carryovers. Why? Because the depreciation recapture is taxed at ordinary tax rates and not offset by any Capital Loss Carryover. A better strategy for those kinds of assets is to hold the property until death, the heirs inherit it at its current Fair Market Value and the recapture of depreciation goes away. But wait! There’s another “on the other hand.” If you have substantial Passive Activity Loss Carryovers on that depreciable property, selling it before death would allow you to take those accumulated Passive Activity Losses. If they are greater than the depreciation recapture amount, then, it may be a better idea to sell the depreciable property to offset it’s gain against Capital Loss Carryovers. I haven’t even talked about Net Operating Loss Carryovers, Charitable Contribution Carryovers, Savings Bond Interest, Business Credit Carryovers, Alternative Minimum Tax Credits, etc. All of which have their own complex set of circumstances that can put the average brain into orbit because it’s spinning so hard. Confused yet? Even I get mixed up occasionally. Ok! My wife says it’s not “occasionally.” But if this can send my poor little head spinning sometimes, it usually does it to just about everybody else. That’s why it is important to sit down with your CPA when you feel you are within a couple of years or less of your “final chapter.” (Maybe you have a deadly illness or health issue, etc.) In a rational, unrushed manner, you and your CPA can work through all the complex issues and come up with a plan that you can follow while taking all the money you can out of the hands of Uncle Sam. Now wouldn’t that help you “rest in peace” knowing Uncle Sam got less? Have you heard? Proverbs 15:22 says “Without counsel, plans go awry, but in the multitude of counselors they are established.” Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com Also on Facebook.

Kim Pilant Uncategorized

Most folks think what I’m to talk about is also known as Estate Planning. Far from it! On a regular basis, we see carryover items on a decedent’s tax return that are lost at their death. With a little planning, these can be taken advantage of and save some significant taxes. I think the number one item is Capital Loss …

Your Surprise IRA Beneficiary – By John R. Bullis

Kim Pilant Uncategorized

Saving for your retirement and possible bequest to family and friends is good to do! Many folks have an Individual Retirement Account (IRA) that is a major part of their retirement savings. Your IRA has designated beneficiaries.  Usually you during your lifetime, you will take the distributions from the IRA.  If you are age 70 ½, you must take a …

Gift Tax Rules – By John R. Bullis

Kim Pilant Uncategorized

IRS form 709, U.S. Gift Tax Return, is used to report major gifts done in the year.  The return is due the following April 15th but if an Extension of Time is filed, the due date might be the following October 15th.  Usually the Gift Tax Return does not require a tax payment since each person has an exemption of …

New Death Tax “Portability” Rules – By John R. Bullis

Kim Pilant Uncategorized

Every person has a death tax allowance or exemption of $5,490,000 this year.  If you die with total assets (net of any debts or liabilities) of less than $5,490,000, there is no death tax to pay. If the husband dies first and his total assets (net of debts) are only $1,490,000, his unused exemption is $4,000,000 and it can be …

Let’s Think About Funerals – By John R. Bullis

Nancy Bullis Uncategorized

First a little background.  One of my grandfathers started a mortuary in Hardin, Montana just over a hundred years ago.  It is still run by family, currently one of my cousins.  My father had many occupations, including being a mortician.   When we begin planning for a funeral, one of the first decisions is a choice of wanting burial or …

Refinancing A Home Mortgage – By John R. Bullis

Kim Pilant John's Articles

Many folks believe home mortgage interest rates will increase in the near future. If you have an adjustable-rate mortgage or a high fixed rate mortgage you got some years ago, maybe you should look into refinancing now. The tax rules on deducting interest on your new home mortgage loan can be a little complicated. The interest on the new loan …

What is the 3.8% Medicare Surtax? – By John R. Bullis

Kim Pilant Uncategorized

IRS Code Section 1411 charges 3.8% additional Medicare tax on unearned income of high earning taxpayers.  That surtax is called earned income Medicare contribution tax or the Net Investment Income Tax.  It is in addition to the regular income tax.   The tax applies, in certain situations, on investment income such as interest, dividends, annuities, royalties and rents-unless it is …