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 changed? The instructions in the tax booklet do not seem clear to me. Also, it is my understanding that the amended return is due April 15, 1999. Is this correct?
You're rushing this process somewhat. The rules for rolling over a gain on the sale of a house and adding that gain to the basis in a new house give you two years from the date of the sale of the former residence to purchase a new house. So you still have a few months in which you can purchase a new house and roll over the gain of the old house, thus avoiding capital gains tax.
If it is clear that you won't purchase a house by February, 1999, and you have a gain on the sale of the former residence that is going to be subject to tax, you are correct in your understanding that you must file a Form 1040X to amend your 1997 income tax return. The forms you will attach to your amended tax return are just the ones that change. The due date for the amended return is three years after the due date for the return you are amending, so you actually have until April 15, 2001, to file the return. Please note, however, that even though your amended tax return isn't due for over two years, underpayment penalties and interest will accrue on tax owing on the amended return, until you file the return and pay the tax.
Be sure to amend your Indiana return as well as the Federal return.
For those readers who are saying to themselves, "Wait a minute! I thought you couldn't roll over the gain on a house sale anymore! And I thought these gains on the sale of a house weren't going to be taxed!" . you're absolutely right. But the rollover rules were in still effect for houses sold through May 6, 1997, so the old rules apply to this particular situation.
I am planning a 1999 wedding and recently had a friend inform me that there is a tax deduction available for wedding-related expenses. She had found out about it at a bridal show. When I asked my fiancé's accountant about it, he laughed and assured me that there was no such tax deduction. Does one exist? I would appreciate any information you could provide.
What a wonderful wedding present , the first joint deduction for the happy couple! I've racked my brain trying to think of a way to take a tax deduction for wedding expenses, and I've come up with all sorts of excellent ideas.
Maybe you can find a way to characterize the wedding as a business expense by saying the marriage is crucial to the furtherance of your career, your customers have suddenly all decided they will only deal with married people, or your future as a marriage counselor depends on having first-hand experience. Perhaps you or your fiancé work in an environment with rigid standards where the powers that be insist that you must be married to keep your job. But you might not want to look at your wedding as a business expense, where's the romance in that?
Well then, perhaps the wedding fulfills a psychological need for one or both of you and could be construed as a medical expense. But you probably don't want to consider your wedding as a cure for an illness.
Hmmm. I suppose you could argue that, if the marriage fails, the expenses represent a gambling loss and can thus be netted against gambling income to create a tax deduction. That's a pretty defeatist attitude to bring to a wedding.
No, I'm afraid you're just going to have to bite the bullet and enjoy yourselves, withowithout any assistance from Uncle Sam.