Tax Tip of the Day

“When will the new 1099-B reporting requirements that require that brokerage and financial institutions include the cost as well as the proceeds from a stock transaction become mandatory?” The new reporting requirement will take effect in 2011 for stocks purchased in 2011, then in 2012, mutual funds and fixed income securities will be included in the reporting requirement. Comment: Over time, the requirement to report cost basis, will increase CPA job security, as the CPA will keep up with the basis of assets to be sold. With the complex issues of computing and tracking basis and tracking the basis, it could extend over generations, if asset are held that long.

Tax Topic of Today

“What is the small business tax credit designed to help me pay for employee health insurance premiums in 2010?” The credit is available for employers with 10 or fewer employees, with average wages of $25,000 or less, and is calculated by formula, also excludes owners. You must pay 50% or more of the employee health coverage to take the credit! The credit is equal to 35% of the amount paid. For employers with greater than 10 but less than 25 equivalent full time employees, partial credits apply. Comment: I calculated the payment for our company, and it did not apply due to wage limitations.

Tax Topic of the Day

“What are the current estate tax rates for 2010, what will the rate be in 2011 and thereafter?” For the year 2010, there is no estate tax, so you can pass your estate to your heirs tax free. Basis of assets passed to heirs will remain at the deceased’s tax basis, with limited exceptions. In 2011, unless Congress changes the tax law, an estate will be allowed a $1,000,000 exemption from the gross estate value, you may further consider the unlimited marital deduction, which can wipe out the estate tax on the first to die spouse when the second spouse dies, after the million dollar allowance for each spouse, any amount over $2,000,000 would be taxed at rates ranging from 40% to 55%.

Oklahoma Passes a Temporary Business Activity Tax (BAT)

The State of Oklahoma has passed a new Business Activity Tax (BAT) that is effective for tax years 2010 through 2012.

For tax years beginning on or after January 1, 2010, an annual flat tax of $25 is imposed on each “person” doing business in Oklahoma. Also, a 1% tax is assessed on the “net revenue” that is allocated or apportioned to Oklahoma. For tax years 2010 through 2012, any taxpayer subject to the franchise tax is not subject to the 1% tax but must pay an amount that equals their franchise tax liability for the tax period ending prior to December 31, 2010.

For individuals, the BAT is due and payable on the same date that individual income tax returns are due.
For all other “persons”, the BAT is due and payable on or before July 1 following the close of the taxable year.

For more information regarding Oklahoma’s BAT, please call Jeff Lovelady, Pancho Espejo or Brady Pipkin at 501.753.9700 or e-mail jeff.lovelady@bellandcompany.net.