February 2015

February 2015


Full Replacement For the ACA Offered – Implications for Pending U.S. Supreme Court Case

The U.S. Supreme Court hears oral arguments next month in a case that could ultimately be the death knell for the Affordable Care Act (ACA).  The case involves the Premium Assistance Tax Credit (PATC) of I.R.C. §36B, and the question before the Court is whether the credit is available to a taxpayer who acquires health insurance from a federal exchange.  If it is not, then the ACA could be doomed because both the individual mandate and the employer mandate would be unraveled.  In light of the Supreme Court decision which is expected by the end of June, legislation has emerged in the Congress that would repeal the ACA and replace it with new provisions.  That’s important because the lawyers arguing the government’s position in the Supreme Court case were certain to argue that the Court shouldn’t eliminate the PATC for millions of taxpayers because there was no alternative legislation, and the Supreme Court could be inclined to leave the law in place if there is no reasonable alternative on the table

During 2014, several different federal courts issued rulings on the availability to taxpayers of the premium assistance tax credit.  The ACA establishes the PATC to help offset the cost of health insurance premiums. Basically, the PATC is available (for the 2014 tax year) to an individual that has income between $11,490 and $45,960 during the year.  For a family of four, the PATC is available in income ranges from $23,550 to $94,200.  The text of the ACA states that that the PATC is available to anyone who buys health insurance from an exchange "established by the State...".  Continue reading here.


FAA's Proposed Small UAS Rules Good News for Ag

The Federal Aviation Administration (FAA) has taken a large first step toward allowing operators to legally fly small “drones” or unmanned aircraft systems (UAS) for commercial purposes on a widespread basis in the United States. On February 15, 2015, the FAA released long-awaited proposed regulations to integrate small UAS (those weighing less than 55 pounds) into the national airspace, paving the way for myriad agricultural uses like croup scouting or soil sampling. These proposed rules, which are subject to a 60-day public comment period, are much less restrictive than many in the industry had feared. Although commercial UAS cannot legally fly until the rules are finalized, the proposed rules are a solid first step toward integrating the burgeoning technology into the national airspace. They are largely good news for agriculture.

As we’ve explained in past articles, although farmers can currently fly UAS for hobby purposes, the FAA has taken the position that flying UAS for any commercial reason—including farming uses—is generally prohibited. The only groups authorized to fly UAS commercially are those companies to whom the FAA has granted special exemptions. As of February, the FAA had granted 24 regulatory exemptions for the commercial use of UAS in the United States. These exemptions have allowed their recipients to use small UAS for commercial purposes by waiving the certificate of airworthiness required for other aircraft. These exemptions, however, still require the companies to fly their UAS only with a licensed pilot and only with a separate visual observer. Many were concerned that the FAA would integrate these costly requirements into their new small UAS proposal. That didn’t happen. Continue reading here


Primer on the Income Taxation of Trusts and Estates

We get numerous questions at CALT concerning income tax issues associated with trusts and estates.  This month we provide a short primer on a few of the basic principles of trust and estate taxation.  We have and will continue to develop more in-depth articles on TaxPlace, but here we address some of the key points on a surface level.

Clearly the income taxation of estates and trusts is much more the focus of estate planners today than it was in the past.  With the federal estate tax exemption being $5.39 million per decedent, the vast majority of estates have no need for estate planning as a means of saving federal estate tax.  At the same time, however, income tax rates have gone up.  With the compressed tax brackets that apply to trusts and estates, that puts income tax planning at a premium.  Presently, the top bracket rate of 39.6 percent is reached when income levels exceed slightly over $12,000.  When state tax is added in, and the net investment income tax, that rate could be nearly 50 percent.

General rules.  Subchapter J of the Internal Revenue Code governs the income taxation of estates and trusts (I.R.C. §641, et seq.).  Here’s a rundown of the basic concepts. Continue reading here.


Baby, It's Cold Outside!

We received this truck dashboard picture from a loyal reader in Minnesota today and had to pass it along for our readers in warmer climates. If -35 degrees has you down, remember there are only four more weeks of winter! The summer seminars are looking awfully good right now.

And, don't forget our free "The Scoop: Hot Issues from the Front Line" to keep you up-to-date on the latest tax information of relevance to you. Kristy Maitre's next session is March 4, from 8:00 to 9:00 a.m. We hope you'll join us!

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CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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