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Imagine an exciting race between two great sailing ships. They are about to glide along a sea filled with sand bars and uncertain currents. The ships are identical in all respects – except one. One ship has a rudder; the other does not. Wagers are about to be placed on the outcome of the race. [...] The IRS released on May 1, 2009, two Revenue Rulings dealing with how life insurance policies are taxed when they are surrendered or sold to an investor. The rulings mention both cash-value contracts and term contracts. The first ruling deals with how the original owner of the policy is taxed. The second deals with how [...] True or false? Life insurance is tax-free. The general income tax rule is that money received from life insurance when the insured dies is not taxable income (though it may be subject to state and federal death taxes). Congress, however, always likes exceptions to the rule and, in 2006, they created one huge exception to this [...] Consider an orange. Each part of the orange is worth more – or less – to different people. To some the juice is all that’s important. Others find the greatest value in the seeds. Yet others swear up and down that the skin of the orange is most valuable. As long as each gets what [...] As it does each year, the IRS has released its Dirty Dozen – the top tax scams taxpayers should be aware of. This year the IRS has included a 30-second video on YouTube warning: “If it seems too good to be true, ask a reputable tax advisor or go to www.irs.gov.” Unfortunately, after watching the [...] Here’s a 60-second course in charitable giving. If you understand this, you’ll have a framework to help understand complex charitable gifts. Start your stopwatch. Picture in your mind Bessie, the milk cow. (You can read about her on the famous cows website.) That’s it. That’s all you need to know. If you can picture Bessie, you understand [...] Because it looks like income tax rates will go up in future years (how else will Congress pay for all the bailouts they’re making?), Roth IRAs promise to become even more popular. Although we usually focus attention on the income tax benefits of a Roth IRA, there are also estate planning (and not just estate [...] Senate Finance Committee Chairman Max Baucus (D-MT) introduced legislation (S. 722) the end of March to make “permanent” many of the tax cuts passed in 2001. While the bill also includes changes affecting income taxes, this article focuses on the estate and gift tax terms. (Anyone who has studied changes in tax law understands that “permanent” means anything but permanent.) If you die in 2009, the estate tax exemption is $3.5 million and the top rate after that is 45%. In other words, if your estate is under $3.5 million, you pay no estate tax. If it’s more $3.5 million, the tax on everything over $3.5 million is 45%. Under current law, the estate tax disappears in 2010 and then reappears in 2011 with a $600,000 exemption and a 55% top rate. Estate planning isn’t anything mysterious. Most importantly, it’s not just about tax planning. And it really isn’t all that complicated either, not once you understand some basic principles. Estate planning is really nothing more than what I call the ‘Five Rights’ – doing what is needed to make sure the right things get to the [...] |
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Copyright © 2012 Walter Bristow - All Rights Reserved
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