TAX BASIS IS NOT ALWAYS YOUR COST By John R. Bullis

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Well it happened again.  A lady died in August 2010 but the heirs prepared their own form 1041 Income Tax Return of Estates and Trusts.  The heirs used the original cost of many years before death when they should have used the fair market value at date of death. The form 1041 they prepared showed big capital gains for the …

WATCH CAPITAL GAINS AND LOSSES By John R. Bullis

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If you lost money in the stock market in 2014, or if you have capital loss deductions from 2013 that carry over to 2014, look at your actual (or possible) 2014 sales of capital assets (stocks, real estate, etc) before the year is over. Long term capital losses (from sales of items held over 1 year) are used to offset …

SOME TAX DEBTS ARE NOT DISCHARGED BY BANKRUPTCY By John R. Bullis

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In 2003 William M. Hawkins, III filed Chapter 11 (reorganization) Bankruptcy Petition that (as usual) was later converted to a Chapter 7 (full discharge) Bankruptcy.  The District Court affirmed the Bankruptcy Court holding that as to Mr. Hawkins the tax debts were not discharged by the bankruptcy, but the tax debts of Mrs. Lisa Hawkins (his second wife) were discharged.  …

PROTECT YOURSELF FROM FINANCIAL ABUSE By John R. Bullis

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The Federal Trade Commission say scams against the elderly are increasing.  You have heard about the telephone calls “your grandchild is in trouble, send money now…” that are not true. But it is not only the telephone scams of various types to be concerned about.  Family members account for nearly 60% of the cases of senior financial exploitation.  Friends, neighbors …

WILL IMMIGRANTS PAY BACK TAXES? By John R. Bullis

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The Sunday, Dec. 14, 2014 Reno paper had an article “Will Immigrants pay Back Taxes”. As I read that, I wondered if anyone had really tried to guess how much taxes an immigrant living illegally might pay if they lived in the U.S. for five years. There seems to be some confusion on whether they must pay back taxes. The …

TAKE CARE OF THE CAREGIVER By John R. Bullis

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Older adults now face more caregiving challenges than ever before.  The number of adult children assisting aging parents has more than tripled in the past 15 years.  At the same time, some are helping their own adult children who are living at home longer and needing more financial help.  Some grandparents are finding themselves responsible for their grandchildren.  And, lots …

WHAT IS THE “NANNY TAX”? By John R. Bullis

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It is not enough to pay income tax and when you die there may be a death tax. If you have household employees (not independent contractors) you as the employer must withhold and pay FICA taxes on their wages if the cash wages paid during 2014 or 2015 total $1,900 or more. The employment taxes for household employees is reported …

IT’S GREAT TO LIVE IN NEVADA! By John R. Bullis

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The federal death tax exemption (amount each person can leave behind at death) is increased to $5,430,000 in 2015.  Many folks think that is all there is to be concerned about.  However if you live in some of the other states you may have a state death (estate) tax. Massachusetts levies a state death tax if the total taxable assets …

WHAT IS A “WORTHLESS SECURITY”? By John R. Bullis

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A security (stock or bond) that becomes worthless during the tax year is treated as if it had been sold on the last day of the tax year.  If it is a capital asset, the resulting loss is usually a capital loss that is subject to various limits. Capital losses first offset capital gains (both long term and short term) …

FIRST TIME PENALTY ABATEMENT By John R. Bullis

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IRS charges many different penalties.  Failure to File (on time, including extensions) can be 25% of the tax due.  Failure to Pay is more like additional interest.  Congress felt too many taxpayers were not paying IRS because the cost of the interest was low compared to getting a bank loan. The Failure to Deposit penalty relates to payroll taxes not …