STRATEGIC
ISSUES...ONLINE
For week of December 6, 2004, Issue #190
Featured Articles:
1. Tips for End-of-Year Car Donations
2. Amendments Address Federal
Unemployment Tax Deposits
3. Tax Tips
4. More Excerpts From "2004 Report to the
Nation on Occupational Fraud and Abuse"
5. Timely Tech Tip: Computer Preventative
Maintenance: A Little Can Go A Long Way
1. Tips for End-of-Year Car
Donations
The IRS has provided tips for taxpayers who are planning on donating a
car to charity by the end of the year. In addition, the IRS has alerted
taxpayers to changes to some of the rules on donations of used cars,
boats, planes and other motor vehicles made by the American Jobs
Creation Act of 2004 that will take effect in 2005.
Under the new rules that go into effect in 2005, if the claimed value of
a donated motor vehicle, boat or plane exceeds $500, and the item is
sold by the charity, the taxpayer's deduction is limited to the gross
proceeds from the sale. The charity must provide an acknowledgment to
the donor stating the amount of the gross proceeds within 30 days of the
sale. Also, under the new rules, the charity must provide an
acknowledgment to the donor within 30 days of the contribution if the
charity will significantly use or materially improve the motor vehicle.
In that case, the donor generally may deduct the market value of the
vehicle.
Taxpayers who will be donating a motor vehicle to charity by December
31, 2004, may still be able to deduct the fair market value of the
vehicle under the current rules.
In addition, the IRS is reminding taxpayers who donate a car to an
eligible organization that they will benefit from a charitable deduction
only if they itemize their deductions.
The IRS also is cautioning taxpayers that they cannot merely claim a
deduction based on the highest value listed in a used car buyer's guide
for the make and model of their car. The actual amount that may be
deducted for 2004 is limited to the fair market value of the car, which
must take into account factors such as the car's condition, mileage and
accessories.
2. Amendments Address Federal
Unemployment Tax Deposits
The IRS has amended Reg. 31.6302(c)-(3), raising the minimum threshold
for Federal Unemployment Tax Act (FUTA) tax deposits from $100 to $500.
Under the new amendments, employers will be required to make a quarterly
deposit of FUTA taxes only when their accumulated tax liability exceeds
$500. The regulation is effective January 1, 2005.
3. Tax Tips
Don't ignore 2005 when you do your 2004
year-end tax planning. Accelerating deductions into 2004 and
deferring income into 2005 may cost you more if you expect to be in a
higher tax bracket next year.
Consider culling losers from your portfolio.
Capital losses can offset all of your gains plus $3,000 of other income.
Watch out for the wash-sale rule. If you sell
securities at a loss, and then buy identical securities within 30 days,
the loss is not deductible until the replacement securities are sold.