In an effort to modernize the IRS and to better reach taxpayers, the IRS has launched an iPhone and Android app called IRS2Go. The download is free. You can download the App from either the Apple App Store or the Android Marketplace depending on your device. Taxpayers will be able to get the status of their refund and can get user friendly tax tips sent to their email address. The tax tips are sent daily during the tax filing season and periodically during the rest of the year. The tips are simple and straightforward with information regarding tax planning and preparation tips.

Barbara Sutton, CPA, MBA

The IRS allows gifts to any one person of $13,000 per year without requiring the filing of a gift tax return. Anytime a gift is made in excess of that amount a gift-tax return must be filed even if the gift is not taxable due to the taxpayer’s lifetime exemption amount.

The IRS is now checking state land transfer records for evidence of omissions in reporting land gifts between family members. Tennessee is one of the states that is providing such information to the IRS. In some cases these gifts are subject to tax, penalty, and interest depending upon when the gift was made and then current exemption amount. They are also checking for transfers that are not at the fair market value. It is very important that you seek the advice of your tax professional before any gift is made to be sure that you are in compliance.

M. Scott Miller, CPA

The United States is one of the most generous countries with hundreds of millions of dollars donated each year to charities offering a wide variety of services.  With the amount of funds being donated to charities throughout the year it is important to verify that the charity is legitimate and not a scheme.  The IRS is responsible for overseeing tax-exempt organizations and takes this job very seriously.

The IRS maintains a list of tax-exempt organizations and maintains a “search for charities” list on the IRS website (www.irs.gov) under the charities & non-profits tab.

Churches are a little different in that churches that meet the requirements of Code Sec. 501(c) (3) are automatically considered tax exempt and do not need to apply for and obtain recognition of the tax status from the IRS.  Taxpayers may claim a charitable deduction for donations to a church that meets the Code Sec. 501(c)(3) requirements even though the church has neither sought nor received IRS recognition that it is tax-exempt.

Submitted by M. Scott Miller, CPA

WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“This year’s increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman. “We are taking this step so the reimbursement rate will be fair to taxpayers.”

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2011-40 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Mileage Rate Changes

Business  currently  51 cents, changing to 55.5 cents

Medical  currently 19 cents, changing to 23.5 cents

Charitable  currently 14 cents, staying at 14 cents

Many financial frauds and deceptions fall into two basic categories:

• Misstatements on company financial reports (balance sheets, income statements, and so forth).
• Misappropriation of company assets.

It’s important to understand the risk factors that tend to be associated with these types of fraud and to have good internal and external reviews.  For more information, give our assurance specialists a call at Dempsey Vantrease & Follis.

The IRS has issued guidance on how the new business depreciation tax breaks work and the options available to taxpayers.  The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act included a favorable provision that allows 100 percent first-year bonus depreciation for qualified new assets.  The new IRS guidance includes rules clarifying the deduction as well as rules about a retroactive extension of 50 percent bonus depreciation for the part of last year.

For a  quick summary of the key points in IRS Revenue Procedure 2011-26, and what is qualified property, just give us a call at 615-893-6666 or email us at info@dvf-pllc.com.

Thankfully, Congress just-passed the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act which means none of the attempted 1099 changes will take effect. So if your business is currently handling 1099s and payee statements without any problems, you can continue with the status quo. However, if you know you have compliance deficiencies, the harsher penalties are now in effect.  So, it’s time to clean up your act and get in compliance. For additional information about these new changes, just give Dempsey Vantrease & Follis at call and we’ll send you a complete update.

Written By Francesca Zelasko

If a key partner decided to retire or became disabled, would your firm have a plan for transitioning clients, choosing a replacement leader, and ensuring continuity of firm vision and strategy? If your firm has a large number of accountants who will reach retirement age in the next decade, it’s not too early to develop a success plan that will insure the likelihood of retiring partners being able to receive the full value of their retirement funds and/or deferred compensation payments.

Click on the link below to read the full article.

http://www.accountingweb.com/topic/accounting-auditing/don-t-go-another-year-without-succession-plan

PAUL B. VANTREASE, JR., CPA, PFS

I receive the question about nursing home expenses regularly.  Particularly, are costs paid to nursing homes deductible as a medical expense.

The simple answer is if the main reason an individual is in a nursing home is to obtainmedical care, then the entire nursing home cost, including meals and lodging, is deductible as a medical expense.  If an individual has entered a nursing home and the primary reason is not to obtain medical care, then only the portion of the fee spent on medical treatment is deductible.  That’s the simple answer, the complete answer is a bit more complex.

Mark Follis, CPA

So, you should try to anticipate that and make sure to get the complete name, address, and tax ID number as the services are provided so you will be ready at the end of the year.