The Law Offices of Ralph W. Flick, P.S.

The Estate Tax After the Fiscal Cliff Deal

Ralph_Flick — Wed, 16 Jan 2013 17:28:22 +0000

Analysis keeps pouring in about how estate planning has been affected by the recent deal in Washington to avoid the Fiscal Cliff. Rather than re-write it all, I think this article provides a great summary of the impact of this deal. Overall, this deal has eliminated much of the uncertainty that we have been dealing with for the last several years and, regardless of what you think about the deal or the politics of it, the removal of at least this uncertainty is a good outcome (except, maybe, for those of us who do this for a living!)

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Predictability and the Estate Tax

Ralph_Flick — Wed, 09 Jan 2013 20:16:33 +0000

The fiscal cliff deal had a surprising result. It actually solved a problem. All of the uncertainty surrounding the estate tax over the last few years is finally over. This article from the New York Times explains it well but, for now, most Americans do not have to worry about an estate tax liability on the federal level. Of course, some states such as Washington, have their own stand-alone estate tax which we still have to deal with but it will be nice not to have to worry about what Congress is going to do for the foreseeable future.

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Fiscal Cliff and the Estate Tax

Ralph_Flick — Wed, 02 Jan 2013 16:00:24 +0000

I am very relieved to find out that the bill just passed by Congress to avert the fiscal cliff finally dealt with the federal estate tax and removed much of the uncertainty that we have been dealing with for the last two years. Here is a quick summary from Forbes:

ESTATE TAX: Always of significant interest to family-owned businesses. Estate tax was a bit of a mixed bag – the $5 million dollar per person exemption was kept in place (and indexed for inflation continued) however the top rate is increased to 40 percent – effective date January 1, 2013. This change to 40 percent increased revenues from 2012 policy by $19 billion dollars. Other good news for estate planning – portability is kept in place and estate and gift remains unified – ie the $5 million stays in place for gift tax purposes as well. All permanent law — hallelujah.

Click here to read the full article about all of the changes that affect small business.

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Happy New Year

Ralph_Flick — Tue, 01 Jan 2013 16:00:55 +0000

I wish everyone a safe, happy and prosperous New Year in 2013!

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Thoughts on the Fiscal Cliff

Ralph_Flick — Mon, 31 Dec 2012 04:20:23 +0000

With all of the talk about the so-called “fiscal cliff”, I feel as if the long-term issues that we face as a county are not part of the discussion among the political class who run our country. I highly recommend everyone invest some time to read articles like this one. The fiscal cliff is just the immediate problem but it pales in comparison to what we face in the not-too-distant future absent some dramatic restructuring.

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Foreclosure 1099s Back in 2013

Ralph_Flick — Wed, 26 Dec 2012 16:00:23 +0000

With all of the talk surrounding the uncertainty of the fiscal cliff and the estate tax, there is another federal tax law that is set to expire at the end of 2012 and for which there appears to be no political solution. That problem is the tax on the forgiveness of debt which affects homeowners in the event of foreclosure or short sale who now are protected from paying taxes on the forgiven debt. However, the law that provides that protection is set to expire at the end of 2012.

First, a bit of background. As a general rule, debt that is forgiven is considered “cancellation of debt income” under Internal Revenue Code (“IRC”) Section 61(a)(12) unless an exception applies such as if the debtor is insolvent (IRC Section 108) and, at least for now, a special exception that comes from the Mortgage Forgiveness Debt Relief Act of 2007 (the “Act”). As the fiscal crises began to take hold in 2007, homeowners began to default in large numbers and, when they did, the owner of the mortgage often took a loss on the sale of the home after foreclosure. The amount of that loss was considered forgiven debt which was, in turn, considered to be cancellation of debt income. So, not only did people lose their homes, they also were hit with a large tax bill for the cancellation of debt income.

The Act added an exception to cancellation of debt income resulting from foreclosure beginning in December 2007 and was originally intended to last for three years (for cancellation of debt income through 2009). President Obama’s stimulus bill in 2008 extended the relief through 2012 but the road ends there. Now, unless the federal government takes action before the end of the year (which, at this point is very unlikely), the cancellation of debt income problem for foreclosures will be back again. This article in CNN Money argues, I think correctly, that a failure to fix the problem could extend the housing problem because it will act as a disincentive for homeowners to cooperate with the foreclosure process, delaying the inevitable and extending the problem

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Happy Holidays

Ralph_Flick — Mon, 24 Dec 2012 14:59:47 +0000

Whether you celebrate Christmas or any other holiday, I hope that you have a safe and happy holiday season and a successful new year in 2013.

Many thanks to my friends at Bush Polen & Associates for the great annual holiday party and pictures with Santa!

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Tax Problems

Ralph_Flick — Sat, 01 Dec 2012 19:30:13 +0000

I help clients located in Washington and California to work with the IRS, the Washington Department of Revenue and the California Franchise Tax Board to settle tax debts, file appeals and, if necessary, take cases to state court or the United State Tax Court.

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Business Law

Ralph_Flick — Sat, 01 Dec 2012 19:26:12 +0000

After many years advising large corporations as an in-house lawyer, I now advise small and business sized business regarding corporation formation and maintenance, leases, contracts, employee matters and business transactions.

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Wills, Trusts & Probate

Ralph_Flick — Sat, 01 Dec 2012 19:24:00 +0000

Estate Planning includes the drafting of wills, trusts, powers of attorney and planning for state and federal estate tax.

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