Court Grants IRS “John Doe” Summons in Gift Tax Case

After previously refusing to do so, a district court in California has granted an IRS request for lists from the California Board of Equalization of grantees of real property between nonspouse relatives, looking for taxable gifts. In Re Does, (DC CA 12/15/2011) 108 AFTR 2d 2011-5589. The IRS has already received such information from Connecticut, Florida, Hawaii, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin. Even though Colorado is not yet on that list, keep in mind that a conveyance without consideration to a child, for example, is a taxable gift and a gift tax return should be filed to report the gift. In addition, because Colorado gives a joint tenant the right to unilaterally sever and convey his or her interest in real property, adding a child to one’s title as a joint tenant is also a taxable gift (unlike the use of a Beneficiary Deed). For more information on Beneficiary Deeds, see the article entitled Property Transfers on Page 3 of our Spring 2005 newsletter at http://www.wadeash.com/newsletter.asp.

The Cost of the Items in "The 12 Days of Christmas"

According to PNC Wealth Management’s 28th annual index, the cost of the items in the song “The 12 Days of Christmas” is $101,119.84. This is a 4.4% increase from last year and the first time the cost of the items has topped $100,000. Some of the items increased in cost this year, but the three French hens, eight maids-a-milking, nine ladies dancing, and ten lords-a-leaping all cost the same this year as they did last year. A list of the items, their cost, and their price increase or decrease from last year is below:

1. Partridge in a pear tree: $185 (+14%) 
2. Two Turtle Doves: $125 (+13%) 
3. Three French Hens: $150 (unchanged) 
4. Four Calling Birds: $600 (-13%) 
5. Five Golden Rings: $650 (-1%) 
6. Six Geese-a-Laying: $162 (+8%) 
7. Seven Swans-a-Swimming: $6,300 (+12.5%) 
8. Eight Maids-a-Milking: $58 (unchanged) 
9. Nine Ladies Dancing: $6,294 (unchanged) 
10. Ten Lords-a-Leaping: $4,767 (unchanged) 
11. Eleven Pipers Piping: $2,428 (+3%) 
12. Twelve Drummers Drumming: $2,630 (+3%)

See Quentin Fottrell, The ’12 Days of Xmas,’ Itemized, Family Money, Dec. 2, 2011.

And Just When You Thought You'd Heard It All . . .

We hear unusual requests from clients all the time when discussing desires for disposition of last remains. From the thoughtful to the funny, clients have strong ideas when it comes to this issue. But Alan Billis, a sixty year old English taxi driver, volunteered to be mummified after his death by a research team making a documentary about the ancient Egyptian practice of mummification, to learn more about the process. Mr. Billis read about the planned documentary, and contacted the researchers to volunteer. Dying of lung cancer, Mr. Billis saw this as an opportunity to benefit science and get an appearance on TV. Although he regretted not being able to see the final product.

In order to assist citizens in the fulfillment of their last wishes for the disposition of their remains, the Colorado legislature passed the Disposition of Last Remains Act, CRS 15-19-101, et seq., The 2003 Act creates a form that allows us to specify the manner in which our body is disposed, what kind of service or funeral is held, and who ultimately makes those decisions. Being mummified might be a bit out of the average estate's price range, but if these issues are important to you, be specific about your wishes, and make sure those wishes are known.

For more information on this topic, go to www.wadeash.com and use our search function at the top right of the screen to search for specific topics. There are several references to "last remains".

A Volatile Stock Market Can Provide Capital Losses

The stock market has been very volatile the past several months. If you or your business has capital gain income for 2011 (or for corporations, in the last three tax years), discuss with your investment advisor whether it would be beneficial to consider sales to lock in offsetting capital losses before the end of the year.

Expiring Tax Provisions for Businesses

In addition to the individual tax provisions that are expiring, there are a number of business tax provisions that are scheduled to end in 2011, including 100% bonus depreciation for qualified property; 15-year writeoff for certain realty assets such as leasehold, restaurant and retail improvements; increased expensing elections; a number of credits such as the work opportunity tax credit (this was extended for qualified veterans), research credit, renewable and alternative fuels credits, new markets credit, energy efficient homes credit, and the energy efficient appliance credit; and enhanced charitable deductions in a number of areas. Again, if any of these apply to your business, act now to take advantage of these provisions before the end of the year.

Expiring Tax Provisions for Individuals

The failure of the "Super Committee" to agree on deficit reduction makes even more uncertain the fate of a number of tax provisions that are scheduled to expire at the end of 2011. Included in that list for individuals: the contribution of up to $100,000 from an IRA directly to charity by an individual at least age 70 ½; enhanced deductions for contributions of conservation easements; reduction in payroll taxes (although this may be extended separately); increased Alternative Minimum Tax exemption; a number of credits such as the adoption credit, energy property credit, first-time homebuyers credit, increased deduction for qualified tuition expenses; and exclusion of 100% of gain on certain small business stock. If any of these apply to your personal situation, act now to take advantage of these tax provisions before the end of the year.