TAX NEWS BLIPS 11/2013

29 Nov

FUTA TAX
Some employers will pay higher FUTA taxes in CA and NY. Both states have been
unable to pay back loans taken from the federal government used to pay unemployment
benefits. For both states this equates into a .9% additional tax or $63 per employee for tax
year 2013.
FORM 5498
Trustees will have to separately report the value of nonpublicly traded assets. Two boxes
will be added to the 5498 form for 2014; One for valuing these investments and the other
for listing the assets by category, such as stock in closely held firms, real estate,
ownership interest in LLCs and nonpublicly tradable debt obligations. Expect IRS to use
these reports to look for potential audit issues, such as violations of the prohibitedtransaction
rules.
INTEREST PAID ON UNRECORDED MORTGAGE ISN’T DEDUCTIBLE
A couple borrowed funds from the wife’s mother to buy their primary home, signing a
mortgage note requiring them to pay only interest during the 30 year term, with the
balance due in a lump sum after that. Although the mortgage was secured by the home,
the mother-in-law never recorded the note to protect her rights. Thus, because the
mortgage would not be valid if the couple had sold their home to a buyer who had no
knowledge of the note, the lost the ability to deduct the almost $20,000 in interest they
paid on the loan during the year. Please be very careful when borrowing funds from
family and make sure the loan gets recorded.
COMMUTING
No matter how long the driving time is, commuting to a permanent work site is not
deductible. An engineer drove 150 miles a day to and from his job in the Nevada desert.
The site was not acceptable to public transportation. Since the job was not temporary, he
cannot deduct his driving expenses.
50 YEARS AGO
Income tax rates started at 20% and maxed out at 91% on taxable income over $200,000
for singles and $400,000 for joint filers.