TO OUR MOST VALUED CLIENTS:

Beginning on Tuesday, May 26, 2020, our receptionist will be available in the office from 9:00 a.m. until 11:30 a.m. and from noon until 3:00 p.m.

At all other hours, you may leave a message on our main number.  The mailbox is checked frequently throughout the day and messages are delivered to the appropriate party.  You may also use the dial-by-name feature to leave a personal message.

In addition, you may send a message via our contact submission form on our website - www.thedenverlawyers.com.  Please be sure to indicate the individual with whom you wish to communciate.  Those messages are also monitored at all times.

Thank you and we hope to be able to assist you with whatever your needs may be.

IRS Extends 2019 Tax Filing AND Payment Deadline                          

In an effort to alleviate financial pressure from the mass shutdowns related to mitigating the spread of Covid-19, the IRS announced on March 18th that taxpayers would receive an automatic extension of time to pay any tax liability due on their 2019 individual income tax returns. On March 20th, the filing deadline was also extended thereby alleviating taxpayer’s obligation to submit an extension by April 15th. The new filing and payment deadline for individual income tax returns is now July 15, 2020.

During this three-month automatic extension, no late payment penalties or interest will accrue. Late filing penalties will also be waived.

Taxpayers do not need to take any action to receive this extension. It will be granted automatically to all eligible taxpayers. This does not mean that you should delay in compiling your information. Tax professionals will undoubtedly be overwhelmed in the coming months—especially as individuals who are unable to pay existing tax debts seek relief in the form of offers-in-compromise.

Taxpayers who expect a refund should file as soon as practicable. Since penalties only apply if tax is due, timely filing is not as critical for taxpayers receiving refunds. Delays in the payment of refunds could increase as time goes on, so filing timely is always encouraged.

If you cannot timely file your return by the new July 15th deadline, you may request a filing extension. You must submit Form 4868 https://www.irs.gov/pub/irs-pdf/f4868.pdf via mail or ask your tax preparer to submit the form electronically. You can also access many of the IRS’ free online filing partners to file your return or an extension request online https://www.irs.gov/filing/free-file-everyone-can-file-an-extension-for-free.

To Our Valued Clients:

Our office will be open on a very limited basis.  There will be employees in the office at varying times and we will make every attempt to accommodate your needs, however, in an effort to keep everyone safe, we encourage you to change any in-person appointments to telephone conferences. Of course, document signing requires in-person meetings and we will continue to meet with those who must come in

Please email us via our websit or leave messages on our voicemail system and we will return calls as promptly as we can.

If you or an immediate family member are experiencing symptoms of illness, please contact us and we will gladly reschedule any upcoming appointment. We appreciate everyone’s understanding and cooperation.

When we are in the office, we are implementing additional procedures within our office to insure your safety, and ours, including social distancing and more frequent cleaning of common areas, as well as asking our employees and guests to follow all safety guidelines as proposed by the CDC for personal protection.

Thank you for your trust in us and please stay safe !

New Distribution and Taxation Rules for Inherited Retirement Accounts

by Harley K. Look, Jr.

Under the SECURE Act of 2019, effective for all retirement accounts inherited after December 31, 2019, the IRA stretch has been repealed, with few very limited exceptions, to raise an estimated $15.7 billion in tax revenue over the next decade.  A spouse named as the beneficiary of a retirement account still receives the tax benefits of an IRA spousal rollover, but for nonspousal beneficiaries, the IRA stretch is gone, so they are no longer allowed to take required minimum distributions over their life expectancies to minimize their income taxes or to allow their inherited Roth IRAs to continue to grow tax-free.  Rather, the general rule is that for any beneficiary other than a spouse, all retirement accounts, including any 401(k), traditional IRA and Roth IRA, must be distributed within ten years after the account holder passes away.

For taxable accounts, distribution will trigger income taxes, and if distributed all at once after ten years, will result in a large tax bill.  Many trusts have IRA stretch language to distribute only the required minimum distributions to help protect beneficiaries from commingling or spending their inherited retirement accounts.  There are no more annual required minimum distributions for most beneficiaries, so a beneficiary could receive nothing for ten years, then a lump sum in the tenth year.

Beyond naming a spouse, the very limited exceptions of eligible designated beneficiaries who may still take required minimum distributions are chronically ill or disabled beneficiaries, those who are no more than ten years younger than you, and your minor children, but not other  beneficiaries such as grandchildren, even if they are minors.  When any of these beneficiaries are no longer eligible designated beneficiaries, as for example when a minor child reaches the age of 18, the remaining balance of the retirement account must be distributed by age 28.

Although a spouse is still eligible for the benefit of a spousal rollover, the spouse can later change the secondary beneficiary to a new spouse or other beneficiaries.  Similarly, although most other beneficiaries, including trusts for their benefit, must pay taxes within ten years, they can then commingle or spend the remaining net after-tax retirement funds.  Please keep in mind that all benefits payable to a named beneficiary pass outside of any trust or will directly to the named beneficiary.

You may therefore want to consider naming your trust as the primary or secondary beneficiary to control the net funds after required minimum distributions to a spouse and the net funds after income taxes for other beneficiaries. It will be imperative for you to review and potentially amend your trust to help protect your retirement accounts.

Katz, Look & Onorato has been named as a finalist in the 17th Annual Mergers & Acquisitions Awards for Industrials Deal of the Year Category for Partner Brian Onorato's work on behalf of a client of the firm.

The firm is proud to congratulate Brian for his work on behalf of the firm's client.

Katz, Look & Onorato, P.C., is happy to congratulate Partner, Klaralee R.Charlton, who was recently appointed to the Board of Trustees for the Denver Bar Association.  Klaralee is a very active member of both the Denver Bar Association and the Colorado Bar Association.   Click Here to View the Article from "The Docket" - August/September, 2017

 

Katz Look & Onorato, Firm Newsletter, August 2017

 Click Here for Link

Katz, Look & Onorato, P.C.

June 2017 Newsletter Topics:   

Are Calls from the "IRS" Real ? by Klaralee R. Charlton

Are Your Kids Covered if You're Away ?  (What You Need to Know About a Colorado Power of Attorney For Temporary Guardianship of a Minor Child) by Tanja W. Leung)

Click link to view Newsletter: Link

 


Klaralee R. Charlton will be presenting during this Continuing Legal Education seminar through Stafford Publishing.

 

Form 1041 Reporting of Pecuniary Property-in-Kind Distributions: Tax Impact on Trusts and Estates

Tax Treatment of Formula Bequests, Distributions of Substitute Property to Satisfy Pecuniary Provisions, and Section 643(e) Elections

A live 110-minute CPE webinar with interactive Q&A


Wednesday, May 3, 2017 (in 5 days) 
1:00pm-2:50pm EDT, 10:00am-11:50am PDT


This webinar will provide tax professionals who advise fiduciaries in trust and estate matters with a thorough and practical guide to reporting pecuniary property-in-kind distributions from trusts and estates on Form 1041. The panel will discuss proper reporting for property substitutions to meet pecuniary bequests, pecuniary formulas, and available tax elections to optimally apportion gain recognition. The program will also offer specific illustrations of the tax calculations and reporting of property distributions to meet pecuniary designations.

Description

A pecuniary bequest is defined as a grant of a specified sum of money from a trust or estate. In its simplest form, a pecuniary bequest consists of a distribution of an amount of cash or a specific asset designated in the trust or estate document. Payment of a pecuniary bequest represents an exception to the general rule that trust or estate distributions carry out estate income to the beneficiary to the extent of DNI.

However, when assets have to be sold to meet the pecuniary amount, or when the amount is specified as a formula, this can create significant tax issues for the trust. When an executor or trustee substitutes an asset for a property named in a will or trust, the income does not carry out to the beneficiary, and the gain is recognized at the fiduciary level. Similarly, in the case of formula pecuniary bequests, the language of the trust document or will determines the tax reporting treatment.

Formula pecuniary bequests also affect GST tax consequences in funding trusts and distributions to beneficiaries. As the federal estate tax exemption has increased substantially so that few U.S. estates are subject to estate taxation, NRA estates, with only a $60,000 U.S. asset exemption, deserve special care with pecuniary bequests being made to beneficiaries, especially ones with foreign beneficiaries.

Fiduciaries may elect to recognize gains on distributions at the estate or trust level with proper reporting. It is critical for tax advisers, trustees and estate administrators to understand the rules and planning opportunities of pecuniary bequests to avoid costly tax results as well as beneficiary challenges.

Our panel will provide tax professionals who advise fiduciaries in trust and estate matters with a practical and comprehensive guide for the tax treatment governing in-kind property pecuniary bequest distributions.

Outline

  1. Default rule for treatment of pecuniary bequest distributions
  2. Distribution of substitute property
  3. Sale of assets to satisfy pecuniary bequest distribution provisions
  4. Formula pecuniary bequests
  5. Using IRA or other IRD assets to satisfy pecuniary bequest
  6. Section 643(e)(3) elections

Benefits

The panel will discuss these and other important topics:

  • What language in formula pecuniary bequest provisions will trigger gain recognition by the fiduciary?
  • Treatment of interest income on funding pecuniary bequests
  • Mechanics of sale/exchange treatment on distribution of appreciated property to satisfy a pecuniary bequest provision
  • Section 643(e)(3) election to recognize gain or loss on property distribution at the fiduciary level
  • Form 1041 reporting of in-kind distributions to satisfy pecuniary bequests

Learning Objectives

After completing this course, you will be able to:

  • Identify property distributions that do not qualify as pecuniary bequests that receive income carry-out treatment
  • Recognize the circumstances where it is advantageous to make a Section 643(e)(3) election for distributions of property
  • Discern the specific reporting requirements on Form 1041 for distributions of property other than identified assets to satisfy pecuniary bequests
  • Determine the proper reporting treatment for distributions of IRA amounts and other income in respect of a decedent (IRD) assets to satisfy pecuniary bequests

Faculty

Lawrence H. McNamara, Jr., CPA, FVS, TEP
Bend, Ore.

Mr. McNamara has over forty years of experience practicing in the areas of trust, estate, gift and inheritance taxation. He has extensive trust and estate accounting and administrative services experience. In addition to consultation and tax preparation services, he successfully represents clients in tax audits and has been engaged as the U.S. agent to represent foreign trustees and executors in tax return filings and communications with IRS and other tax authority representatives. He also performs fiduciary accounting services for clients.

Klaralee R. Charlton, J.D., LL.M.
Katz Look & Onorato, Denver

Ms. Charlton practices fiduciary tax, estate administration, and business transactional law. As part of her practice, she guides clients through the process of administering an estate including the collection, valuation, management and transfer of assets including financial accounts, real estate, and business interests with a focus on minimizing estate and income tax liability. She also works closely with trustees of ongoing trusts to ensure compliance and prepares clients’ fiduciary income tax returns annually. She writes and lectures on topics including fiduciary income tax reporting and U.S. regulations governing the valuation of small family businesses.


Registration per Person for Live Event

Additional lines for this conference can be purchased at 25% off. For orders of five or more lines, further discounts will apply and will be automatically reflected in the cart.

Live Webinar $73.50

Includes 50% off with Special Offer

Live Webinar & CPE Processing $108.50

Includes Live Webinar 50% off with Special Offer


CPE per Person on Live Event

Continuing Professional Education credit processing is available for an additional fee. CPE processing must be ordered prior to the event. To qualify for CPE you may not listen via the telephone.

This program is eligible for 2.0 CPE credits. Click for NASBA details.

NOTE: CPE credit processing for all attendees must be ordered by 2pm Eastern the day of the program to receive a Certificate of Attendance within 24 hours.

 

Katz, Look & Onorato, P.C., proudly announces that Attorneys Krista K. Look and Klaralee R. Charlton were named Shareholders of the firm on April 14, 2017.  Please see their individual biographical sketches for detailed descriptions of their practice areas.  Both are happy to assist you with any of your legal needs.  You may reach them by calling our office at 303.832.1900

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