New Webcalculator for Unitrusts

Posted on by August 6, 2018

A new Webcalculator has been added to my on-line service to provide factors, and values, for the valuation of unitrust remainders, such as charitable remainder unitrusts (CRUTs).

These factors and computations are based on tables published by the Internal Revenue Service.  As previously explained for income, remainder, and annuity factors, the intention is to add custom computations (such as for three or more lives) for paid subscribers, but leave the tables-based computations accessible to the public for free.  (Registration is required.)

Expanded ABLE Account Contributions

Notice 2018-62, 2018-34 I.R.B. ___ (8/20/2018), provides guidance on the application of the new expanded contribution limits to “ABLE” (“Achieving a Better Life Experience”) accounts under IRC section 529A.

According to the IRS, a designated beneficiary who works may contribute (in addition to the annual gift tax exclusion) up to the lesser of  (1) the designated beneficiary’s compensation for the tax year, or (2) the poverty line for a one-person household in the state in which the designated beneficiary lives.  However, an employed designated beneficiary is not eligible for the increased contribution limit for the taxable year if any contribution is made on behalf of the employee to a 401(a) defined contribution plan or 403(a) annuity contract, a 403(b) annuity contract, or a 457(b) eligible deferred compensation plan.

Notice 2018-62 states that the Treasury Department and the IRS intend to issue new regulations on these contribution limits, and that the guidance provided by the notice may be relied upon until regulations have been issued.

New Pennsylvania Income Tax Withholding

Posted on by August 6, 2018

The Act of October 30, 2017, No. 43, P.L. 672, amended the Tax Reform Code of 1971 by adding new requirements for the withholding of Pennsylvania income tax from payments of Pennsylvania source income to nonresidents, and the Department of Revenue has recently published some guidelines regarding the new rules in its bimonthly newsletter, “Tax Update” (No. 197, June/July 2018), and on its website.  Although the Department of Revenue describes these new withholding rules in very broad terms, it appears that these new rules do not apply to distributions from estates and trusts to nonresident beneficiaries.

Specifically, the Act adopted new withholding rules for the following:

  • Payments of Pennsylvania source income for which a Form 1099-MISC is required.  (See new Code § 316.2, added by Act § 13.)  This would include payments made in the course of a trade or business for things like non-employee compensation for services performed in Pennsylvania, or royalties paid for mineral interests in Pennsylvania.
  • Payments by lessees of Pennsylvania real estate to a nonresident lessor, but only for lease payments in the course of a trade or business.  (See new Code § 324.4, added by Act § 25.)  According to the Department of Revenue, this does not apply to residential leases.

So these new provisions might apply to an estate or trust, but only if the estate or trust were conducting a trade or business and were making the kinds of payments described above.  Even then, other exceptions might apply.

New Webcalculators for Life Estates, Remainders, and Annuities

Posted on by July 30, 2018

In addition to the domain change that has been announced for Webcalculators, two new calculators have been added:

  • Factors to determine the present value of the income interest and remainder for terms of years, one life, two lives, and the shorter of a life or a term of years.
  • Factors to determine the present value of an annuity for terms of years, one life, two lives, and the shorter of a life or a term of years.

These computations are all based on tables published by the Internal Revenue Service.  The intention is to add custom computations (such as for three or more lives) for paid subscribers, but leave the tables-based computations accessible to the public for free.  (Registration is required.)