All charitable remainder trusts described in Internal Revenue Code Section 664 must file Form 5227. All pooled income funds described in IRC Section 642(c)(5) and all other trusts such as charitable lead trusts that meet the definition of a split-interest trust under section 4947(a)(2) must also file Form 5227. A Form 5227 is to report the financial activities of a split-interest trust, provide certain information regarding charitable deductions and distributions of or from a split-interest trust, and to determine if the trust is treated as a private foundation and subject to certain excise taxes. For the first return filed a copy of the trust must be filed with the return. If you have questions about Form 5227, need us to prepare it, or have questions about charitable remainder trusts, pooled income funds, or other types of split interest trust click here to contact Paul.
Legislation enacted in July 2010 extended the closing deadline on the first-time homebuyer credit from June 30 to Sept. 30, 2010. Legislative changes in November 2009 expanded and extended the credit and also added documentation requirements for claiming the credit. Here are the new requirements:
- You must have bought — or entered into a binding contract to buy — a principal residence on or before April 30, 2010.
- If you entered into a binding contract by April 30, 2010, you must close (go to settlement) on the home on or before Sept. 30, 2010 (recent legislation extended the June 30 deadline previously in effect).
If you have any questions regarding the first-time homebuyer credit, contact Paul by clicking here.
Depletion is the using up of natural resources by mining, quarrying, drilling, or felling. The depletion deduction allows an owner or operator to account for the reduction of a product’s reserves. There are two ways of figuring depletion: cost depletion and percentage depletion. For mineral property, you generally must use the method that gives you the larger deduction. For standing timber, you must use cost depletion. Cost depletion is computed on the basis of initial capitalization costs. Over the life of the well, a portion of these costs can be recovered each year based on the percentage of the production for the year as compared to the estimated recoverable oil and gas reserves at the beginning of the year. Percentage depletion is computed on the basis of the income from the property rather than capitalization costs. The tax shelter provided by percentage depletion may result in a larger deduction than cost depletion. Percentage depletion allows a tax deduction equal to 15% of the gross revenue from and oil or gas producing property. If you have questions regarding depletion or related issues click here to contact Paul.