News

Tax

Amend return if deferred gains not rolled over

My wife and I each owned a house when we got married. We sold one house at a gain, in February, 1997, and deferred that gain, planning on selling the other house, purchasing a new house, and rolling over the gain into the new house. We were not able to sell the other house, so we didn't buy a new house and therefore couldn't roll the gain into a new house. I understand that I need to file an amended 1997 tax return. When I amend the return, do I need to file all schedules (C, A, SE, etc.), or just the ones that
Tax

IRS thinks $25 is plenty to spend on a present

I'm getting ready to purchase some year-end gifts for some of my business associates. I assume I can take a deduction for these gifts. Where on the tax return do I take the deduction? D.P.
Tax

Investor gets no tax benefit of stock gift to son

I have a question pertaining to a stock giveaway. If were to give stock to my son, could I take a tax loss on my 1040 form? N.N. I assume from your question that your stock would generate a loss for you if you sold it rather than giving it away. If this is the case, you and your son are about to find yourselves in a very interesting tax situation.
Tax

IRA investments miss out on lower gains rate

When stocks are in an IRA and are being distributed as an IRA distribution, are they taxed as regular income or are they taxed at capital gain rate? If so, how do you do it? It seems as if they are to be listed on the tax form in the spot for IRA distributions and taxed at the regular rate. R.H., Indianapolis
Tax

Special "Money Watch 2000" Edition

Everybody knows about the April 15 deadline for getting tax returns in the mail. But getting them in the mail is only half the battle. Attaching the right attachments, putting the right forms in the envelope, putting correct postage on the envelope, this is where the fun begins. This year, before you seal up the envelope and send your tax return off to the taxing authorities, take a look at this quick checklist of the areas where taxpayers most frequently have problems with their tax returns:
Tax

Brave New (e-file) World

You may have heard something about our kinder, gentler IRS deciding that taxpayers need to climb on the e-file bandwagon, and you may be wondering just what this e-filing has to do with you. Or, perhaps you are one of the lucky 33 million taxpayers who received a strange e-file postcard in the mail last December and are wondering what, if anything, you are supposed to do with that card, not to mention wondering where you put it.
Tax

Calculate Tax To See If Gain Warrants Quarterly Payment

I sold a lot in 1997 as well as a small house I was renting to my son. Should I make an estimated tax payment before tax time? R.W., Indianapolis
Tax

Pair Can Deduct Mortgage Interest On Two Non-Rental Homes

My wife and I own our principle home in Seymour, IN. I work in Seymour. My wife works for a company in Indianapolis. Last April we purchased a condominium in Indianapolis. I understand only part of the closing costs are allowed as a tax deduction. My question is about the interest expense. Can we deduct the interest expense for both homes? R.R., Seymour, IN
Tax

IRA Amount Converted To Roth Will Count As 1998 Income

In the instructions for IRS Form 1040A, reference is made for an Estimated Tax Penalty. Under "Exceptions to the Penalty," it states that if a tax is owed with the tax return, no penalty will be owed if there was no tax liability for the prior year. I want to make sure this applies to us. My wife and I are retired and will have no tax liability for 1997. We plan to either make a sizable withdrawal from our IRAs (approximately $60,000), and/or convert our present conventional IRAs (approximately $300,000) to the new
Tax

Tax Act Begot Above-the-Line Deduction For Student Loan

I have some questions regarding the tax credit available for interest payments on student loans as provided in last year' s tax reform bill. When does the credit take effect? What are the ceilings for each year? Is it an above-the-line deduction? How many years can you receive the credit? Are there any exceptions (especially for loans taken out for a graduate or professional degree)? M.M.P., Indianapolis
Tax

Scandal Presents Players With Tax Pitfalls, And Opportunities

Taxing Information for Those Making News in Washington This week's column is devoted to providing answers to questions that haven't yet been asked, but that I know are on the minds of all Americans. In light of the recent controversy surrounding our president and his alleged dalliances, have you stopped to consider the tax consequences of all of this confusion? Well, you can be sure the IRS is paying careful attention to the events as they unfold. Quarterly estimated payments:
Tax

Social Security On Self-Employed Is Burden At First Look

I just filled out my tax return and find myself in a state of shock. I started my own consulting business last year. My net income on my Schedule C is approximately $50,000. I itemize my deductions to the tune of about $11,000. I'm single with no dependents. The way I see it, my income tax is about $6,000. But when I fill out the forms on my computer, I keep getting something called self-employment tax which is even more than the income tax! What's going on here? Surely this can't be right? C.K., Indianapolis
Tax

IRS Publication Provides Answers To Tough Tax Questions

In a recent column regarding the Barrett Law ("Cost of switching from septic to sewer system is deductible," December 1, 1997), you said that the interest expense relating to a switch from septic to sewer is deductible as real estate taxes. The IRS telephone representatives I spoke with weren't knowledgeable about this rule. Can you point me in the direction of IRS documentation for this deduction? M.D., Indianapolis Information regarding deductions for interest paid on
Tax

IRS Has Strict Rules For Figuring Home Office Deductions

I split my bedroom between office space and sleeping quarters. It's the only place where I work. I've been told I have to use the room for business only if I'm going to try to take a home office deduction. Is this true? K.S., Carmel, IN. It's okay to claim a home office deduction for the part of your bedroom that qualifies as office space, you don't have to set aside an entire room for your workspace. There must, however, be a clear definition of what space is used for work and what space is used for personal purposes.
Tax

Stock Spin-Offs Get Unusual Tax Treatment

I have owned 1200 shares of "Company A" stock for several years. I bought this stock for $26 per share. Last May there was a spin-off, and I received 600 shares of stock in the new company, "Company B." On the day of the spin-off, Company A was quoted at $31 per share and the new company at $17.50 per share. If I should want to sell my shares in the Company B stock, what would be my acquisition cost for determining capital gain or loss? W.H., Indianapolis
Tax

Lawmakers Cut Gains Taxes, But They Didn't Make It Easy

This week's column features a multiple choice question. If you own stock and sell the stock at a gain, at what rate will the gain on the stock be taxed? 10%, 15%, 20%, 25%, 28%, 31%, 36%, 39.6%, If you guessed any one of the above rates, you may have the right answer. That's right. Depending on factors such as the amount of non-capital-gain income you earned and the date on which you sold your stock, any one of the above rates might be the one for you.
Tax

Symphony Tickets Provide No Deductions Due to Benefit Of Music

I own season tickets to the Indianapolis Symphony. If I donate money to the Symphony I can take a tax deduction. Does part of the cost of my tickets qualify as a tax deduction too? The person I called at the Symphony office said, no, but I thought I'd check with you before foregoing a deduction. T.A., Indianapolis
Tax

Tax Law Limits Contribution To $500 For Education IRA

A new, little-advertised feature of the tax law this year is the Education IRA. Here's how this little baby IRA works. Starting in 1998, you can contribute up to $500 per year to an IRA established for the benefit of a child who will eventually attend college. Sounds simple, right? No way. The establishment of this new IRA raises nearly as many questions as there are picky rules accompanying this tax "break."
Tax

Here Are A Few Suggestions For Eleventh Hour 1040 Filer

Several years ago I was a participant in a bizarre conversation in which a friend asked me if I had picked up my new license plate yet (this must have been the year the "Amber Waves of Grain" plates were unleashed), and I replied that my plates weren't due for renewal until March. My friend asked when I expected to get my plate, and I continued to insist that I didn't need to get my plate until March.
Tax

Amount not covered by car insurance may be deductible

I was in a car accident recently and my insurance only paid for part of the damage. Does the casualty loss deduction apply to this situation? B.P., Crawfordsville

Pages


Already a member? log in here.