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Tax Blog
“Taxing” is a word synonymous with “onerous” and “wearing.”  Bond Beebe, Accountants & Advisors, have created a user friendly blog called “It’s Taxing” to inform and educate our clients and business associates on timely topics related to tax, estates, accounting and finance.  We hope our blog answers your questions and alleviates the heavy burden and anxiety related to understanding complicated tax laws and related matters. 


No More Estate Closing Letters Unless Requested

As an executor/personal representative, you are responsible for carrying out the terms of the decedent’s will or Trust, which includes ensuring all debts are paid and each beneficiary receives his or her designated property from the estate. The estate administration process may include estate tax filings with the IRS and state jurisdictions, probate court filings, in addition to the funeral proceedings and wrapping up any outstanding personal matters of the decedent. Often times this is not a quick process despite adequate and appropriate estate planning.

When an estate is subject to tax at the federal or state level, a return is required nine (9) months (in most cases) following the date of death. Historically, the IRS would issue an estate tax closing letter upon completed review of the estate tax return. This closing letter would take an additional four to six months of processing time by the IRS to confirm the estate tax filing is accepted. Also, this estate tax closing letter is a final piece needed to close an estate with the probate court in some jurisdictions. The estate administration period can take longer than one year before the beneficiaries receive the residual estate property. If you are the one inheriting property from an estate, time ticks away ever so slowly.

Is Your Trust Subject to State Income Taxes?

There are four (4) main questions to determine whether the Trust is subject to state income taxes as a resident trust.

  • Was the grantor domiciled within the state at the time of creation?
  • Where does the trust document or agreement indicate the trust is to be governed?
  • What state does the trustee(s) reside?
  • What state does the beneficiary(s) reside?

A Trust may be considered a non-resident trust. Generally, if a Trust is not considered a resident trust, then it is a non-resident trust which is subject to income tax to the extent the Trust generates state sourced income from an activity earning income within the state, such as a rental activities or business interests.

New Highway Act Changes Filing Deadlines for Certain Business Tax Returns

President Obama signed into law the “Surface Transportation and Veterans Health Care Choice Improvement Act at the end of July. The Act implements due date changes for business tax returns beginning with 2016 tax returns.

Currently, partnership tax returns are due April 15 (or 3 ½ months after year-end). Under the new rules partnerships will be required to file by March 15 (or 2 ½ months after the close of its tax year). This is the same due date already in place for S Corporations. A six-month extension will be available. The new deadline will apply to returns to taxable years beginning after December 31, 2015.

OPM Data Breach Victims vs. Tax-Related Identify Theft: What to do?

Unfortunately, it is not uncommon to read a headline on a routine basis highlighting a private data hack (see OPM, Target, Home Depot, IRS, etc.) impacting thousands, if not millions of individuals, with each instance. More and more personal and financial data is stored electronically and this identity theft epidemic is only growing. Perhaps this is an unintended consequence to the speed and accessibility of your digital record-keeping. Although words can barely express the sense of loss when your personal and financial information is compromised or stolen. It is a frustrating experience leaving victims feeling helpless and vulnerable.

A data breach, or cybersecurity incident, as described by the Office of Personnel Management (OPM), is a different type of crime compared to tax-related identity theft. The OPM cybersecurity incident resulted in the theft of sensitive, personal information such as names, addresses, birthdates, and Social Security numbers. Even though this data was stolen, OPM has stated “there is no information to suggest misuse of the information that was stolen from OPM’s systems.” Tax-related identity theft occurs when someone ‘uses’ your stolen Social Security number to file a false return claiming a fraudulent refund.

Amended Maryland Tax Return for Wynne Decision- What and When to File

As mentioned in our previous post, the Supreme Court recently ruled that Maryland’s tax law for income earned outside of the state is unconstitutional. Each year, Maryland residents pay a Maryland state income tax and a local income tax based on the county in which they reside. Prior to this decision, Maryland residents who earned income from states outside of Maryland were only allowed to claim a tax credit against the Maryland state tax. With the Supreme Court ruling, Maryland residents who pay taxes to other states for income earned from outside of Maryland will now be able to claim a tax credit against not only their Maryland state tax, but also the local county tax.

Should I file an amended return?
If you are a Maryland resident who has been paying taxes to states outside of Maryland, the first step to determining if you should file an amended return is to review the your previously filed returns and see if the tax credit was limited. This can be determined by looking at the Form 502CR filed for each state and comparing the allowed credit (Line 8) versus the total taxes paid to the other state (Line 7). If the allowed credit is equal to the taxes paid, your credit was not previously limited and no amended return needs to be filed. However, if the allowed credit is less than the actual taxes paid to the other state, then you may want to file an amended return as the credit will increase.


Each month, the IRS provides various prescribed rates for federal income tax purposes. These rates, known as Applicable Federal Rates (AFRs), are regularly published as revenue rulings.

The AFRs for August 2015 are as follows:

Annual Semi-Annual Quarterly Monthly
Short-Term: 1-3 years 0.48% 0.48% 0.48% 0.48%
Mid-Term: >3 & up to 9 years 1.77% 1.76% 1.76% 1.75%
Long-Term: >9 years 2.74% 2.72% 2.71% 2.70%

IRS Proposes Regulations that Would Allow Individuals with §83(b) Elections to e-File Tax Returns

BACKGROUND: Section 83 of the Internal Revenue Code states that you do not have to recognize income from owning equity in a company until that stock vests.

Section 83(b) refers to a special election you can make with the IRS to let them know that, despite the fact you have not yet vested your stock, you still want to recognize the income associated with ownership immediately.

If you file the 83(b) election before your stock has appreciated from it’s strike price there will be no income and therefore no tax owed. You have 30 days from the date of exercise to get your 83(b) election form to the IRS.

PROPOSED REGULATIONS: In order to remove obstacles to electronically filing individual tax returns, the IRS has issued proposed regulations which would eliminate the requirement that a copy of the §83(b) election be submitted with the taxpayer's tax return for the year the property is transferred.  

This change would apply as of January 1, 2016 and would apply to property transferred on or after that date.

This proposal does not eliminate the requirement to make the §83(b) election no later than 30 days after the date the property was transferred.  

We will keep you updated on any events related to this proposed regulation. Please call us at 301-272-6000 if you have any questions regarding this or any other tax matters.

Avoid the Christmas Rush: Mid-Year Tax Planning

Summertime is commonly a time to relax and take a break from the pressure of everyday life. However, a little planning now while things are otherwise slow can go a long way towards simplifying your life at the end of the year when tax and financial planning are frequently undertaken.

Mid-year tax planning can give you more time to map out and execute a smart plan that can save you time and money later. It can also be a good time to discuss your situation and get planning advice from your tax or investment professional while they have more time available. 

Here are a few taxing items to consider:

Changes in your life – Did you get married, divorced or gain or lose a dependent? Did you or your spouse get a new or additional job? Any of these can affect your tax and may require an adjustment in your withholding or estimates to keep you from being under- (or over-) withheld come tax time. It may also offer new deduction opportunities (or drawbacks) for you.

Are you taking full advantage of your retirement plan options? At a minimum everyone should contribute enough to get their employer’s full matching contribution. Ideally you should strive to increase your contribution every year until you get to the maximum contribution limit; for a standard 401(k) or 403(b) plan that is currently $18,000 + $6000 more if you are age 50 or more. If your income is below the phaseout for a Roth ($183,000 to $193,000 for married people) consider a contribution here as well: $5,500 + $1,000 more if you are age 50 or older. Make sure your beneficiary designations are correct.

Consider your itemized deductions. Too often people only look at these after the year is over. At that point there’s no planning left to be done. Considering your medical or miscellaneous deductions now can allow you to shift some costs into the current or next year to maximize the potential deduction. Consider making donations to charity now rather than waiting until December.

You can plan your charitable giving budget and allocate the money to the causes you like the best. Get a batch of unused clothing and household items together while you have time to document the details of what you are donating and their value rather than the “3 bags of clothing” descriptions we see all too often. Vague listings like this aren’t likely to get you full value for your donation and are difficult to support in an audit. (See our prior posts on charitable deductions and documentation)

Review your insurance coverage. Auto, life, home and health; any changes in your life can require updates to your policies. Shop for competitive quotes every year or two, before your policies are due to renew to be sure you are getting the best value. Make sure the limits are consistent with your current situation and your beneficiaries are also current.

Review your investments. Check on your taxable gain or loss to date and review whether you have any clunkers that it might be time to sell. Too often this is only done at the end of December, and as a result, many tax planning opportunities are lost. A good review plan would include considering whether your investment goals have changed and is your portfolio consistent with your current goals and needs. Based on this, you might consider asset allocation, reviewing individual holdings for performance and to see whether they still make sense to your portfolio, and evaluating whether you have sufficient liquidity available to meet any expected needs over the next 6 months to a year.

A little planning now could save you some money later as well as time trying to manage this at the end of the year when it becomes a crisis.

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