Expect to be Paying School Costs in the Future? Consider an ESA

In This Issue

Got ISOs?...You Need to Understand Their Tax Treatment.

Keep Up With Your Foreign Asset Reporting

Contemporaneous Recordkeeping Key to Avoiding Loss Limitations

Expect to be Paying Elementary or Secondary School Costs in the Future?

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Got ISOs?
You Need to Understand Their Tax Treatment

Incentive stock options allow you to buy company stock in the future at a fixed price equal to or greater than the stock's fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they're then trading for.

ISOs must comply with many rules but ...(Read More)

Client Quotes

"Been a customer for my company and personal since 1989. They treat you as if you are the most important client they have. A true professional group."

- Joe & Carroll Fingar

"We've never been disappointed with the service we have received from Gilbert Associates"

- Benjamin & Suzanne Collins

MAY 2015

Many times taxpayers are caught off guard with an unexpected tax liability because of the passive activity loss rules, which restrict the taxpayer's ability to deduct losses on their tax returns. In this issue we discuss the material participation tests and substantiation requirements.

We've also included an article on foreign asset reporting requirements.
This continues to be a hot topic for the IRS and we want to be sure you are well informed.

If you have any questions that aren't answered in these articles give us a call. We're here to help, so that you can relax.

Keep Up With Your Foreign Asset Reporting

Are you up-to-date on your foreign asset reporting? The question may make you think of the box you checked to indicate you had a foreign account on the Schedule B you filed with your 2014 federal income tax form. Or maybe you thought of "Form 8938, Statement of Specified Foreign Financial Assets," which is also filed with your Form 1040.

But even if you completed those two forms, you might still have to complete another report - one that is not mailed with your tax return, is due by June 30, can only be filed electronically,..(Read More)

Contemporaneous Recordkeeping Key to Avoiding Loss Limitations

Taxpayers who run up tax losses in a business must be prepared to prove that one of the material participation tests was passed to avoid having the losses characterized as a passive activity loss (PAL) that cannot be currently deducted. Adequate contemporaneous records that detail the taxpayer's tasks and time spent in the activity are crucial in attempting to sidestep the PAL rules.

Records created after-the-fact are better than nothing, but they are much less believable than contemporaneous records. If losses are disallowed by the IRS, interest and penalties may be added to the unpaid taxes...(Read More)

Expect to be Paying Elementary or Secondary School Costs in the Future? Consider an ESA

As the school year draws to a close, it's a good time to think about Coverdell Education Savings Accounts (ESAs) - especially if you have young children.

One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren't limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private...(Read More)