1. My client turned 70 and ½ in December 2019 but did not take his RMD, thinking with the new law he no longer would have to take it in 2020. What is the rule here?
If the taxpayer turned 70 and ½ before 1/1/2020 the old RMD rules apply This means he must take his 2019 RMD by 4/1/2020 and his 2020 RMD (yes that’s right) by 12/31/2020. The only folks who get to use the new age 72 RMD are those who turn 70 and ½ after 12/31/19.
2. I thought I heard Bob say you could get a credit for putting an electric car charger in your home is that right?
With the reinstatement of the alternative fuel refueling credit retroactive to 2018, that is correct. Individuals use Form 8911 to take a 30% credit up to a $1,000 max credit, business get the same rate subject to a $30,000 maximum. The credit is nonrefundable.
3. Do you have to have an electric car to get the credit? Since it expires at the end of this year I was thinking about putting a charger in now for when I buy a car next year.
There is no requirement in IRC 30C to own a vehicle in order to get the credit.
4. Can I take Sec. 179 on residential rental property roof?
No the 179 rule does apply to commercial roofs, but not to residential roofs. Residential roofs are either repairs or 27.5 year life improvements.
5. Did the RMD rules also change to 72 for 401-k’s?
An interesting question. Technically now RMD’s for all retirement accounts is 72 but, employer’s maybe did not change it from 70 and ½, and there is a rule that if you are still working at the employer with a 401k you do not have to begin drawing until the year after you stop working if the employer’s 401k allows that. This rule does not apply however to >5% owners.
6. Do we really have to use the new W-4 from last week’s newsletter?
Yes for new hires, anyone who wants to change withholding or anyone who claimed exempt in 2019. IRS has a downloadable Excel calculator as we had in the newsletter-I don’t remember it.
7. At the 1040 Bob talked about something called the barrier removal deduction. Does that apply to building a new office that is ADA compliant?
This one is not just for small businesses like the disabled access credit is. But, IRC Sec. 190 does not allow for the deduction for new construction.
8. What does a new client need to really provide us for the new due diligence rules?
Need 2 pieces of ID (1 with picture & 1 with address of tax return) for efiling. For due diligence verify valid SSN (card that matches or something (letter from social security) for everyone on return. Something with the kids name to prove residency at same address of parents, and something to prove kids age.
9. If I sell my warehouse and carry the loan over 20 years do I have to recapture all the depreciation in the year of sale?
Sec. 1250 requires recap as payments are received, not in full in year of sale. A building is usually 1250 property. However, 1245 personal property is recapped in full in year of sale.
10. Does an IRA get protected from creditors in bankruptcy?
Well, the current limit is about $1.36 million. Qualified plans usually get unlimited protection. Rollovers from qualified plans usually retain that protection, but check with the attorney and do not co-mingle with regular IRAs.
11. Did the revise the 1065 K-1 again to do away with the tax capital account disclosure?
The latest version just calls it the capital account!