Events Calendar 

6/22 Dan McCarty Golf Classic

7/27 Cruisin' For Charity Car Show

Special Announcements 

Recruiting Update 

Business Valuation 

What is your business worth? Valuation discounts are still available to minimize gift taxes and maximize your gift value. Now is the time to have a business valuation completed if you are thinking about transferring ownership to the next generation. 

Contact your UHY professional today.

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Applying the New Net Investment Income Tax to Trusts and Estates       

The Health Care and Education Reconciliation Act of 2010 created new chapter 2A of the Code, imposing the net investment income tax (NII), a Medicare contribution tax of 3.8% on unearned income of individuals, estates and trusts. In December 2012, the IRS issued regulations on the tax. The NII applies to trusts and estates for tax years beginning after December 31, 2012. For those estates and trusts permitted to have a fiscal year, some portion of the unearned income of an estate during 2013 might not be subject to the tax. For example, an estate with a fiscal year end of September 30 would not be subject to the tax until October 1, 2013.

The tax does not apply to the following estates and trust:

• Business trusts that are treated as business entities
• Certain state-law trusts
• Tax-exempt trusts, even if subject to unrelated business taxable income and that unrelated business taxable income contains NII
•  Charitable remainder trusts
•  Grantor trusts
•  Foreign estates and trusts (with some exceptions)

The tax is imposed at a rate of 3.8% on the lesser of:

•  The undistributed NII for the tax year, or
• The excess (if any) of the adjusted gross income (AGI) for the tax year, over the dollar amount at which the highest tax bracket begins for the tax year ($11,950 for 2013).

This threshold is much lower for estates and trusts than it is for individuals: modified AGI of $250,000 for joint filers and $200,000 for single filers. Thus, estates and trusts have a disadvantage.

The AGI of a trust or estate is computed in the same manner as for an individual. Deductions, however, are permitted to estates and trusts for personal exemptions, the amount of any distributable net income distributed to beneficiaries, and costs paid or incurred in connection with the administration of the estate or trust that would not have been incurred if the property were not held in such trust or estate and other deductions.

Undistributed NII of an estate or trust is its NII reduced by the share of NII included in deductions of the estate or trust for distributions to beneficiaries, and the share of NII allocated to a charitable deduction of the estate or trust. Thus, generally, to the extent that distributions of NII are made to beneficiaries, the NII subject to the tax at the trust or estate level is reduced.

For more information, planning or questions on this topic, please contact your professional at UHY LLP in Farmington Hills 248-355-1040 or Sterling Heights 586-254-1040, or visit us on the web at uhy-us.com.

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Events Calendar 

Save the date! More UHY events are just around the corner...

6/22 Eighteenth Annual Dan McCarty Golf Classic (D.M.G.C.)

7/27 Seventh Annual Cruisin' For Charity Car Show

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Special Announcements  

Experienced Recruiting Update

UHY Michigan is actively looking for experienced candidates to fill key positions in our local offices.  Please review the openings below and if you know someone who may be interested in any of these roles please reach out to Rina (Madias) Henning, Recruiting Manager, via email rhenning@uhy-us.com or phone 248 204 9331.

Sterling Heights

Tax Managers

Audit Seniors (2-5 years experience)

CSA (Full Charge bookkeeper with 1040 experience)

Website Content Coordinator (Bachelor's degree in Marketing, Business, Management Information Systems, or Computer Science)

Farmington Hills

Tax Manager