IRA's-Invest-Insurance
IRA’s
Keep this rule in mind if you are contemplating a traditional IRA rollover: The money you take from your IRA must be re-contributed within 60 days of the withdrawal date or it is taxed. The Service offers relief in certain situations if you deposit the withdrawn funds into the same IRA or another traditional IRA after the 60-day period, and you self-certify that you qualify for a waiver of the rule. The late rollover must be for one of 12 reasons and the rollover must be completed within 30 days after the reason for failing to do it timely in the first place ends. If you don’t satisfy the requirements for self-certification of a late IRA rollover, you will have to request a private letter ruling from IRS and pay a user fee.
IRS gives a fraud victim more time to do an IRA rollover in this ruling. The taxpayer was lured into a fraudulent scheme by scammers who falsely claimed that a computer virus had spread to his financial accounts, including his IRA. The scammers used forged bank documents and other materials to convince him to transfer funds from his IRA and other accounts to a cryptocurrency account owned by the scammers. The man later figured out he was a victim of a scam and contacted governmental authorities to report it. Those agencies helped him to recover the money, which he deposited into the bank. He then asked the Service for more time to put the withdrawn money back into his IRA, since the 60-day period for doing a tax-free rollover had passed. IRS granted him relief in a private ruling.
Investments
Investors in qualified small-business stock get a nice capital gains tax break. The main tax benefit for many holders is 100% gain exclusion when they sell. Individuals who acquire QSBS after Sept. 27, 2010, and sell more than five years later can exclude 100% of their gain. The gain is also exempt from alternative minimum tax. The amount of excludable gain is capped at the greater of 10 times your stock basis or $10 million ($15 million for QSBS bought after July 4, 2025). The gain exclusion is 50% or 75% for QSBS acquired between Aug. 11, 1993 and Sept. 27, 2010.
The OBBB gives a partial gain exclusion for QSBS bought after July 4, 2025, and held less than five years before the sale date. The exclusion is 50% for QSBS sold after three years and 75% for QSBS sold after four years. Generally, for QSBS held five or more years before the sale date, the gain exclusion remains 100%.
Here are the main QSBS requirements: Only C corporation stock qualifies. The shares must be acquired in an original issuance from the corporation. Stock bought from an existing shareholder or in a secondary market doesn’t count. The C corp must be a qualified small business when you acquire the stock. The firm’s gross assets at the time of the stock issuance and immediately thereafter cannot exceed $75 million ($50 million for QSBS acquired before July 5, 2025). At least 80% of the C corp’s assets must be used in the active conduct of one or more qualified trades or businesses, so stock acquired in passive companies isn’t considered QSBS. And stock of corporations in certain lines of business doesn’t qualify as QSBS. The businesses include banking, leasing, insurance, financing, investing, hotels, restaurants, oil and gas, farming, plus personal service businesses in the fields of health, law, engineering, architecture, accounting, consulting and more.
Life Insurance
An appeals court sides with IRS on split-dollar life insurance…policies in which insurance benefits are shared between employers and their employees. Here, a dentist engaged in an abusive split-dollar life insurance arrangement using his wholly owned dental practice and creating two subtrusts, one of which owned a life insurance policy covering the life of the dentist. The dental practice deducted the full amount of premiums paid on the policy, but the dentist, on his Form 1040, reported a quarter of the premiums as income. The appeals court disallowed the dental practice’s premium deductions (McGowan, 6th Cir.).