Owner: Gina's Tax Blog URL:http://glgcpa.blogspot.com/ Join Date: Tue, 08 Aug 2006 11:21:09 -0500 Rating:1 Site Description: This blog provides general information about U.S. and Texas taxes by Gina L. Gwozdz, CPA. Gina is the owner of Gina's Tax Service. Her main goal is to help all her clients minimize their tax liability within the constraints of the law. Site statistics:Click here
Is My Refund Taxable? 1970-01-01 00:59:59 SD would like to know:
I overpayed my both state and federal by about $12,000.
Since the money I used to make the payments was already subject to taxation, can I assume the state and federal refunds will not be taxable on my return, or is my logic flawed ?
Thank you kindly. SD
My reply:
Thanks for visiting SD! This may sound like a simple questions, but since it's tax related it isn't as Read more:Refund
Defer income by using multiple corporations 1970-01-01 00:59:59 There are many reasons you may want to have multiple corporations
, one of which is the ability to defer income. This is accomplished by having different fiscal year ends.
A client owns an auto supply store and an auto repair shop. The auto repair shop maintains no inventory and purchases it as needed from the auto supply store. The auto supply store has a January 31 year end and the auto
College Professor Expenses 1970-01-01 00:59:59 Brenda has a few questions:
I have a doctoral degree and am a post-doctoral candidate at a local university. I am not a professor. I am an employee of the university. I have several questions regarding my ability to deduct (or partially deduct) my unreimbursed expenses.
Do I qualify for the Educator Expense Deduction?
Do I qualify as a "College
Professor" as defined in Schedule A - Read more:Expenses
Don't Mess With Taxes: Carnival #6 1970-01-01 00:59:59 Tax Carnival
# 6: Decision 1040, is available for your viewing at Kay Bell's Don't Mess With Taxes
Blog. Kay has graciously included my post on Family Reverse Mortgages. She has assembled a lot of interesting posts so click on over and take a look.
Tax Free Exchange of Real Estate 1970-01-01 00:59:59 You can defer capital gains taxes, ordinary income taxes and depreciation recapture taxes when you exchange real estate that you are holding in your trade or business or for investment. This is known as a Section 1031 exchange. You can exchange properties as many times as you like effectively creating almost unlimited tax deferral.
You must exchange your property for "like-kind" property. Read more:Exchange
, Estate
, Real Estate
IRS Prenuptial Agreement 1970-01-01 00:59:59 Erik from Austin, Texas asks:
Hello Gina, I owe the IRS about $45,000 in back taxes and am looking at an Offer in Compromise or payment plan. My question is about getting married. My girlfriend and I live together now and want to get married sooner than later. She makes significantly more money than I do right now and I'm wondering how to protect her from my debt. I don't want the IRS to Read more:Agreement
Gift stock or proceeds? 1970-01-01 00:59:59 Doug would like to know:
My mom wants to transfer some her stock to me as a gift (generous mom :) ). There is a 43% capital gains increase since she purchased the shares. If she transferred the stock directly to me, who pays the tax on the capital gains? Should I have her sell the stock and just give me the proceeds?My reply:
Thanks for visiting Doug!If your mother gives you her stock, then her
Conversion of Home to Rental Property 1970-01-01 00:59:59 Trisha has owned her home for over 20 years. She originally purchased her home for $100,000 and there is not currently a loan on the home. Her home is estimated to be worth $300,000.
Trisha wants to move closer to her only grandchild and needs the cash from her current home in order to put money down on her new home. Trisha has strong ties to this area and hopes to move back here in a few Read more:Conversion
, Rental
RMD from IRA to Charity 1970-01-01 00:59:59 Joseph from Springfield, MO asks:
I understand that for 2006 & 2007, a person can take their RMD from their IRA, have it sent directly to a charity (church) and not have to report that amount as income on Fm 1040. The receiving charity would have to provide verification the gift was indeed received. Do you have any information on how the gift is handled, i.e., can it in fact be done? Is there Read more:Charity
Capital Gain Breakeven Point 1970-01-01 00:59:59 Elizabeth purchased 500 shares of stock on November 18, 2005 for $5 per share, giving her a basis of $2,500. The stock is now trading at $30 per share (potential selling price of $15,000). Elizabeth wants to realize her profit because she's afraid it will decline in value, but she is concerned about her taxes because selling before November 18th will result in a short-term capital gain and
Deductible Investment Advisor fees 1970-01-01 00:59:59 Tony asks:
I paid $500 to an investment adviser and bought securities that should yield me about $4,800 in tax exempt interest and $1,200 in taxable interest. Do I get to deduct the amount I paid to the investment adviser?
My response:
Hello Tony! Expenses that are allocable to tax-exempt income are not deductible. You should try to ask your investment adviser to break out the fee between Read more:Deductible
S Corporation Election 1970-01-01 00:59:59 Ted asks:
I just incorporated my business last week. How long do I have to make my S-Corp election?
My response:
Excellent question Ted! The IRS has two general rules for determining when to make your S-Corporation
election:
If you want your S-Corp. election to be effective for your current tax year, then you have until the 16th day of the third month. When a corporation begins its tax Read more:Election
A tax freak? 1970-01-01 00:59:59 I am now a founding member of "TaxBlogger.org".
TaxBlogger is a new network of tax professionals or as TaxBlogger stated,"a loose confederation of bloggers, writers, and other tax freaks who like to write and talk about taxes".
Many of my favorite tax writers are also founding members. I strongly encourage you to visit the site and perhaps add these tax writers to your favorites as well.
Stock Class Action Suit 1970-01-01 00:59:59 Robin would like to know:
I am holding stock in my IRA. I just received a check from the result of a class action suit regarding one of the stocks I hold in this IRA. Shouldn't this check have gone to my IRA custodian to put in my IRA, instead of directly to me? Are there any tax implications to this income? Is it okay if I deposit this check? Just so you know, this IRA can no longer be Read more:Stock
, Action
Expenses after Business is Sold 1970-01-01 00:59:59 Jeff inquires:
I had an online internet sales company that I recorded as a Schedule C business, which I sold in 2005. In 2006 I have incurred some expenses relating to this same business (customer refunds, bank fees, interest on a business loan, etc.). Am I out of luck in deducting these expenses since I sold my business?
Thank you,
Jeff
My response:
Hello Jeff! Thanks for visiting my Read more:Expenses
, Business
Overview of Casualty Losses 1970-01-01 00:59:59 The IRS defines a casualty loss as the damage, destruction or loss of property resulting from an identifiable event that is sudden, unexpected or unusual.
In general, a sudden event is an event that happens instantly. If you wake up one morning and notice, all of a sudden, that you have wood rot under your bathroom sink due to a slow leak, the IRS would not consider that event a "sudden" event, Read more:Overview
, Casualty
, Losses
Prepare for Year-End Payroll 1970-01-01 00:59:59 I am a strong advocate of having a professional handle your payroll as many small businesses end up paying unnecessary interest and penalties due to late or inaccurate payroll forms and tax payments.
Short of that, please use this as a general guide prior to performing your year-end payroll duties:
Verify the accuracy of your employee's address and social security numberVerify the accuracy of Read more:Payroll
Deductibility of Automobile Loss 1970-01-01 00:59:59 Jason from Round Rock, Texas writes:
Hello Gina. Nice site you have going here.
I have an unusual question regarding the IRS definition of "loss". If I have a automobile that I sell for less than I owe ( ie upside down), is that a deductible loss in the eyes of the IRS?
Jason
My response:
Jason,
Thanks for writing and thanks for the kind words about my site!
As for the loss on your Read more:Automobile
Importing Quicken to TurboTax 1970-01-01 00:59:59 Mike was wondering:
I use Quicken
which generates a Schedule D into my TurboTax. I just now noticed that on last year's return it didn't list the number of shares in 'box A' like the example shows on the tax form. It just put a line that says "CHEVRON" for example and then all the rest of the relevent stuff (dates, sales price, cost basis, & gain/loss). Do I need to amend my return and state " Read more:Importing
How long do I need to keep my records? 1970-01-01 00:59:59 The following is a simple list to help you remember how long to keep your records for tax purposes:
Although income tax returns can generally only be audited for 3 years, it is best to keep income tax returns and supporting documents (bank statements, canceled checks, credit card statements, deposit slips, charitable contribution receipts, and medical bills) for at least 4 years and preferably 6
Basis in Partnership? 1970-01-01 00:59:59 Chad asks:
I recently formed a LLC with my brother as equal partners. I contributed land worth $5,000 and my brother contributed $4,000 of cash and his old computer, which we agreed was worth the other $1,000 he needed to make us equal partners. Now our accountant is telling us that we aren't equal partners, how can this be?
My reply:
I'm glad to hear you have an accountant because partnership Read more:Basis
Installment Sales 1970-01-01 00:59:59 Zack sold his investment property to Nicholas for $150,000. Zack's investment property had a mortgage on it of $50,000 that Nicholas assumed. Nicholas will pay the remaining $100,000 in 10 equal annual installments of $10,000, plus interest. Zack's basis in his investment property was $75,000 and he had no selling expenses.
Zack's gross profit is $75,000 ($150,000 less his basis of $75,000). Read more:Sales
Deductibility of Home Phone, Interent & Cell Phone 1970-01-01 00:59:59 Reg from Bourbriac, France writes:
After many decades as a salaried wage slave, I am a freelance journalist again. The trade that paid my way through college. Although I am in France, I must (also) report my income to the U.S. IRS in pretty much the same way as anyone in the same line of work would in the US. On schedule C to Form 1040. So, the answer (if there is one) may be of interest to Read more:Cell Phone
Car and Truck Expenses 1970-01-01 00:59:59 The IRS believes that taxpayers are not properly deducting their car and truck expenses to the tune of $30 billion in unpaid taxes annually. In an effort to curb this abuse, the IRS has issued another fact sheet, to help educate taxpayers on the proper deductions available for car and truck expenses.
Car and truck expenses for trips on behalf of your trade or business are a deductible business Read more:Expenses
, Truck
SIMPLE IRA to ROTH 1970-01-01 00:59:59 Francine from Houston:
Hi Gina!
I have a SIMPLE IRA through my employer. I having been making regular contributions to this plan for three years.
I would like to do a SIMPLE to ROTH conversion before the end of this year. In the past, I did a ROTH conversion of my employer account just after I left my employer. However I plan on still being employed by this employer well into next year.
Can
Tax Cuts Have Been Extended! 1970-01-01 00:59:59 From various news sources it appears that several tax cuts have been extended including:
Taxpayers in states without income taxes (Texas, Nevada, Florida, Alaska, Washington and South Dakota) have the option of deducting, as an itemized deduction, their state and local sales taxes through 2007.Classroom supplies purchased by teachers can be deducted (up to $250) as an adjustment to their income Read more:Extended
, Tax Cuts
Tax Relief & Healthcare Act of 2006 1970-01-01 00:59:59 The Tax Relief & Healthcare
Act of 2006 is now awaiting the President's signature. Many of the tax breaks that we saw last year have been extended including:
Itemized Deduction for State and Local Sales TaxesAbove-the-line Higher Education Tuition DeductionThe HOPE & Lifetime learning creditsAbove-the-line Teacher's Classroom Expense DeductionNew tax breaks include:
Tax Credit for hiring
Capital Gains Realized on Real Estate 1970-01-01 00:59:59 Lisa from Amarillo, Texas asks:
Can capital gains realized on real estate sale be invested in stocks within the 45 day time frame or must the replacement be real estate?
My reply:
The net proceeds that you receive (which may be all or part of your taxable capital gain) from the sale of real estate can be invested in anything, with no time limit.
However, if you are really asking how to defer Read more:Realized
, Estate
, Capital Gains
, Real Estate
Getting Married? 1970-01-01 00:59:59 Most people are aware that getting married changes their tax situation. If you get married before January 1, then you can file a joint return for the entire prior year. This is beneficial for most taxpayers.
Most married couples end up paying less in taxes filing jointly because a lot of the "marriage penalty" was removed from the tax laws. Couples with combined incomes of less than $123,700 Read more:Getting Married
A friend on "The Panel".... 1970-01-01 00:59:59 Kay Bell, a fellow Texan and blogger, has been selected to be a part of the Taxpayer Advocacy Panel
. Members of this panel are volunteer taxpayers (individual citizens, small business owners, etc.) who's objective is to listen to taxpayers, identify their tax issues, and make suggestions for improving IRS service and customer satisfaction. Read more:friend
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