Michael Gray, CPA's

Real Estate Tax Letter

May 6, 2013

© 2013 by Michael C. Gray
ISSN 1930-0387

A monthly report focusing on tax issues for the homeowner and real estate investor.

Table of Contents

Tax season is done. Extension season is here.

Thank you to the clients we were able to serve during tax season 2013.

The extended due date for 2012 individual income tax returns is October 15, 2013.

The extended due date for calendar year 2012 corporate, partnership and fiduciary income tax returns is September 16, 2013.

If you would like us to prepare your extended income tax return, please call Dawn Siemer at 408-918-3161 for an appointment.

We can also prepare amended income tax returns to clean up tax returns that were previously filed.

Return to Table of Contents

Missed the tax filing deadline? File your tax return soon.

The late filing penalty is 5% of the unpaid tax per month, to a maximum of 25%. In some cases, California imposes a penalty based on the total tax without considering payments. To avoid these penalties, finish and file your income tax returns right away.

If your tax returns are more than two years late, you can also lose your tax refund. Another reason to keep current with filing your income tax returns.

Return to Table of Contents

IRS continues "hands off" audit directive for repairs.

The IRS has directed its auditors not to begin auditing repair expenses pending the issuance of final regulations. The directive applies for tax years beginning on or after December 31, 2012 and before 2014. The directive now applies to tax years beginning in 2012 and 2013.

(LB&I 04-0313-001.)

Return to Table of Contents

Attention tax professionals! Michael Gray live tax planning presentation.

Michael Gray will give a luncheon presentation to the Santa Cruz Discussion Group of the Silicon Valley, San Jose chapter of CalCPA. The title is "Income tax planning in a new tax environment." It will take place from noon to 1:30 p.m. on Thursday, June 13 at Michael’s on Main in Soquel. The investment is $20 for CalCPA members and $25 for nonmembers. For details, see the CalCPA web site resources, www.calcpa.org, local chapters or call Stephanie Stewart at 408-983-1122.

Return to Table of Contents

Real estate pros an IRS target.

In order to qualify as a real estate professional, not subject to passive activity loss limitations, an individual must work at least 750 hours per year in real estate as a developer, broker, landlord, etc. The individual also must spend most of their time in a real estate field. The IRS is targeting taxpayers who have substantial W-2 or other earned income from other employment for tax audits. This has been a very productive area to raise revenue by disallowing deductions. (The Kiplinger Tax Letter, April 12, 2013.)

With the new 3.8% additional tax on investment income, there is another incentive to qualifying as a real estate professional. Rental income of a real estate professional may not be subject to the additional tax.

If you are thinking of claiming real estate professional status, you would be wise to consult with a tax advisor about whether your claim will work or not.

Return to Table of Contents

Please share your good experiences with Michael Gray, CPA.

As you know, more and more people are going to the internet to find information about service providers. We hope you will share some good words about experiences that you have had with our firm. Some of the sites where you can share your experiences include yelp.com, siliconvalley.citysearch.com, and Google+.

Return to Table of Contents

Community public access television needs our help.

As you can see below, public access television is a vital part of our educational outreach to various communities. These are usually nonprofit, charitable organizations, like public television stations. Unlike those stations, most of the programming for the public access stations comes from local producers.

This programming includes the local arts, productions by students at local schools, community outreach by churches, independent local producers discussing current social issues, educational programming by local providers like ourselves and much more. In other words, public access television makes a unique, important contribution to the communities it serves.

With the difficult times we are experiencing, many public access stations are facing severe financial challenges, and might not survive without more community financial support. I urge you to consider making a donation to your local public access television station. Here is a link for a list of public access television stations in California: www.communitymedia.se/cat/linksca.htm.

Return to Table of Contents

Financial Insider Weekly broadcast schedule for April and May.

Financial Insider Weekly is broadcast in San Jose and Campbell on Fridays at 8:00 p.m., Pacific Time. You can watch it on Comcast channel 15 for San Jose and Campbell. The show is broadcast as streaming video at the same time at www.creatvsj.org.

Here are the scheduled interviews for April and May:

May 10, 2013, attorney James V. Quillinan of Hopkins & Carley, "Estate planning with portability of a deceased spouse’s federal estate and gift tax exemption amount"
May 17, 2013, attorney James V. Quillinan of Hopkins & Carley, "Tax planning for real estate change of ownership in California"
May 24, 2013, Don Pollard, CLU, ChFC of Advanced Professionals, "Health insurance for individuals"
May 31, 2013, Don Pollard, CLU, ChFC of Advanced Professionals, "Group health insurance plans for small businesses"
June 7, 2013, attorney David Howard of Hoge, Fenton, Jones & Appel, "Federal reporting requirements for foreign bank and brokerage accounts"
June 14, 2013, Dick Blakeley, The Blakeley Group, Inc., "Benefits of a virtual family office"
June 21, 2013, attorney Scott Haislet, "Passive real estate loss limitations and electing to be a real estate professional"
June 28, 2013, attorney Scott Haislet, "Tax considerations for selling a principal residence"

Financial Insider Weekly is also broadcast as follows:

Back episodes available at https://www.youtube.com/user/financialinsiderweek.

Let me know any ideas that you have for topics or guests. Guests will usually have to be located in or near the Silicon Valley in California.

Hope you can watch or record the show. Please tell your friends about it!

Return to Table of Contents

Follow me on Social Media!

Want to see new episodes of Financial Insider Weekly as soon as they're posted on Youtube? Like to see Michael Gray's blog posts as soon as they're live? We post them (and more) on social media!

If you enjoy Twitter, please follow me at www.twitter.com/michaelgraycpa. I would especially appreciate retweets of our messages announcing episodes of Financial Insider Weekly.

you can also follow me on other social media sites, Facebook, LinkedIn, and Google+.

Return to Table of Contents

Check out my blog.

I have also started a blog at michaelgraycpa.com. Check it out!

Return to Table of Contents

Do you know about our other newsletters?

For general tax developments, tax planning ideas, business development ideas and book reviews, subscribe to Michael Gray, CPA's Tax & Business Insight at taxtrimmers.com/subscribe2.shtml.

Have employee stock options? Subscribe to our free newsletter, Michael Gray, CPA's Option Alert! To learn more, visit stockoptionadvisors.com/subscribe.shtml.

Return to Table of Contents

Subscribe to the Real Estate Tax Letter

Did you find this newsletter helpful? If so, subscribe now!

Return to Table of Contents


Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday


Connect on LinkedIn
Connect on BlueSky
Connect on Instagram


Our Blog
© 2025

Subscribe to Michael Gray, CPA's
Tax & Business Insight


We respect your email privacy

Powered by AWeber Email Marketing