The IRS Audit Blog

Posts Tagged ‘IRS Rules’

401k Loans Can Put Your Future at Risk

RISMEDIA, December 9, 2010—(MCT)—The days of using your house as a piggy bank are over, and it’s harder to get a consumer loan these days. So where are Americans turning to finance college, buy cars and get credit card companies…

401k Rollover Advice Avoiding The 20% IRS Penalty by Bill Losey, CFP.mp4

Question: Whil im waiting on my 501 (c)(3) application from the IRS for my non profit…?

Does anyone know if it is legal to solicit donations for my non profit organization while I am waiting for my application to be approved by the IRS? Since the bank will not allow me to set up the account as non profit before they have an IRS letter, the donation account will not be listed as non profit…. will donations that people make be tax deductible for them if they make the donation before I have received IRS approval or is it best to hold off until I have a definite ruling. Its a non profit for deployed soldiers and my husband is currently overseas, so I am anxious to hurry up and get started helping our troops and hate this waiting game.

Answer: Do you have an attorney that’s been helping you with this? If not try to contact one, preferably a tax attorney that may be better versed in this type of thing. You can always try to contact the American Bar Association for a referral that might be able or willing to help out at a reduced rate. I tried to do a little research on this and could not get anything definitive. I would think that your tax exempt status would have to approved before you can do this. Your application could be denied for some reason such as lack of information and may seem as though you are trying to defraud people if you take donations without it. That could do more harm than good because you could risk being shut down for good. I have a brother in the military and know how hard it is for him to leave his family, and I would hate to see you jeopardize the good that you could possibly do for these soldiers. I know the red tape stuff is frustrating. I work for a 501(c) non-profit agency myself, and I get so tired of the government’s demands for stupid stuff that limits our ability to help those that really need it. I hope the approval comes through soon for you and good luck with this.

Avoiding an early SEP IRA withdrawal penalty

You could have avoided paying income taxes if you’d restructured your retirement plan to allow for a loan.

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Question: If I exceed the gift tax exclusion one year do I have to file form 709 in subsequent years?

My wife and I are considering purchasing a prepaid college plan (which I understand is considered a 529) for one our our children which costs ~$32,000. I understand that the gift tax exclusion for a married couple is $26k and thus we would have to file IRS gift tax form 709 – and I understand that we can elect the five year rule to divide that “gift” over 5 years. What is not clear to me is whether I would be required to file form 709 in the following years to “prove” that we don’t exceed that 5 year limit – or even have to file every year beyond that time frame to “prove” that we don’t exceed the lifetime estate tax exclusion. Is the form 709 ONLY filed in the one year that the limit is exceeded even if smaller amount “gifts” (contributions to a standard 529) continue for many years?

Answer: If you do not make taxable gifts in the future, you do not have to do the 709 for the next 4 years.

If you, by yourself, give $32,000 to one child, it’s $19,000 to much. You’d could either use up $19K or divide by 5. $32,000 / 5 = $6400 and you are back under the $13K limit. You could give the same child up to $6600 a year for the next 4 years and not trigger the tax or filing requirement.

If you with your wife give $32,000 to one child, it’s $6000 to much. You could each use up of $3000 of the unified credit *or* elect the 5 years, reducing the gift to $3200 for each of you. Then each of you could give (separately) up to $9800 a year without going over.

2010 Market Facts

The holiday season is always a busy time of year, so you’re probably pretty busy. But it is important to take some time now to evaluate year-end financial moves that may be beneficial in preparing for your financial future.

Latest Internal Revenue Service (IRS) Update: Changes for Gifts and Donations to Museums

Question: How can I put intellectual property I create; a copyright, patent, etc. into my self-directed IRA or 401K?

I have learned that some creative investors are buying Domain Names (URLs) with 401K accounts. This method of turning a bright idea into retirement funds fascinates me-and I wonder if anyone knows the mechanics for doing the same thing with intellectual property like a copyright? Buying an existing copyrighted material with retirement account funds seems straightforward-but what about for a idea you conceive yourself? Does anyone know of a blog, forum or IRS ruling on this?

Answer: I don’t know that you can but I would suggest asking a professional IRA source that could give you the most accurate response, as well as give you some suggestions.

http://www.irafinancialservices.com/

Avoiding “Prohibited Transactions” In Your IRA

Between the time you contribute to and distribute from your IRA , you will be working to ensure that your assets provide the best possible return. However, there are some limitations on what you can do. When investing your IRA assets or implementing certain transactions, you must exercise caution.

Self Directed IRA Tips With Give the IRS the Slip

Car Flips on Its Top Along Interstate 64 Near Oakwood Exit

The westbound lanes of Interstate 64 in Charleston have re-opened after a car accident near the Oakwood exit entrance ramp.

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