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Tax News: September ’17

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in Small Business Tax

Form over substance. After a 35-year-old taxpayer filed for divorce, but before the marriage was dissolved, he depleted his IRA and gave his ex-wife half. Then he paid the tax on the IRA distribution. Unpleasant tax surprise: He also owes the 10% tax penalty on early IRA distributions. There’s an exception for payouts pursuant to a qualified domestic relations order, but that exception only applies to qualified retirement plan distributions, not distributions from IRAs. (Summers, TC Memo 2017-43, 6/26/17)

Demise of myRAs. The Treasury Department has announced that it is phasing out the myRA. This retirement-savings device, which was officially launched in 2015, never seemed to catch on with the public. The Treasury will be contacting participants about the steps for moving funds into a Roth IRA, a similar type of account. We will have more information in next month’s issue.

A bad review. Be wary of claiming a large business ...(register to read more)

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