Jeff Haywood, CPA

Posts Tagged ‘Capital Gains’

3 Things to Know About Gifts of Property and Gift and Estate Taxes (US)

November 23rd, 2012 | Author: admin

The Gifter (Generous Aunt)

If your aunt is gifting you and your brother some land there should be no immediate tax consequences other than the requirement that your aunt file a gift tax return. She should not owe any taxes as a result of making the gift as long as she has not made gifts totaling over $5 million (the current unified credit amount = current value of estate that is not taxable). The way it works is if the property gifted is worth say $350,000 and your aunt gifts it to you and your brother she gets an annual exclusion of $13,000 (this year) for each of you. So she would report the $350,000 less the $26,000 in annual exclusions which would be subtracted from her unified credit of $5 million. The difference would be the remaining amount of her estate that would not be subject to estate tax given the current exclusion amount of $5 million. Anything over the $5 million less the used unified credit used would be subject to the estate tax when she passes away.

The Giftee (You)

Now for you the gift recipients, you and your brother, you would receive the gifted property with a basis equal to your aunt’s basis, either her cost less expenses or the value when she inherited the property. When you sell the property the amount it sells for less your basis and cost of the sale would be subject to capital gains tax. When you inherit a property you get a basis equal to the current market value at the time of death. So if the value of the property was much less when your aunt obtained the property than it is now you would be better off waiting until she dies to inherit the property.

Capital Gains Tax Rates

The other thing to consider are the capital gains tax rates. The capital gains tax rates are due to increase in 2013. If your plans are to sell the property you should take the capital gains rates into consideration/tax planning.

By the way, when your aunt makes the gift, I can prepare the gift tax return for you.

Jeff Haywood, CPA
CPA Tax Superhero
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in Texas
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estate/Gift
Trusts
Federal and State Returns

I especially value discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Business, Financial Literacy, Income Taxes, Life, Tax Planning | Tags: Business, Capital Gains, Capital Gains Tax, CPA, Credit, Current Market Value, Entity, Entrepreneurs, Estate, Estate Taxes, Gift, Gift Taxes, Income, Inheritance, Interest, IRS, Land, Money, Property, Questions, Retirement, Return, Tax, Tax Return, Tax Scams, Tax Tips, Taxes, Tips, Unified Credit, Value | No Comments »

IRS: 10 Things To Know About Capital Gains and Losses

February 24th, 2012 | Author: admin

What is a Capital Asset and what do I need to know about Capital Gains and Losses? The IRS recently addressed this topic with this post copied below for your benefit:

Ten Things to Know About Capital Gains and Losses

IRS Tax Tip 2012-35, February 22, 2012

Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When you sell a capital asset, the difference between the amount you paid for the asset and its sales price is a capital gain or capital loss.

Here are 10 facts from the IRS about how gains and losses can affect your federal income tax return.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.

2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.

3. You must report all capital gains.

4. You may only deduct capital losses on investment property, not on personal-use property.

5. Capital gains and losses are classified as long-term or short-term. If you hold the property more than one year, your capital gain or loss is long-term. If you hold it one year or less, the gain or loss is short-term.

6. If you have long-term gains in excess of your long-term losses, the difference is normally a net capital gain. Subtract any short-term losses from the net capital gain to calculate the net capital gain you must report.

7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2011, the maximum capital gains rate for most people is 15 percent. For lower-income individuals, the rate may be 0 percent on some or all of the net capital gain. Rates of 25 or 28 percent may apply to special types of net capital gain.

8. If your capital losses exceed your capital gains, you can deduct the excess on your tax return to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.

9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.

10. This year, a new form, Form 8949, Sales and Other Dispositions of Capital Assets, will be used to calculate capital gains and losses. Use Form 8949 to list all capital gain and loss transactions. The subtotals from this form will then be carried over to Schedule D (Form 1040), where gain or loss will be calculated.

For more information about reporting capital gains and losses, see the Schedule D instructions, Publication 550, Investment Income and Expenses or Publication 17, Your Federal Income Tax. All forms and publications are available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

When you have capital gains and losses there should be much tax planning to minimize your taxes but also consider your entire situation. Call me using my contact information below to discuss your situation with a CPA with years of experience preparing tax returns for the public.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter
Also, Click Here to Follow My Twitter Account: Taxesforxpats

In addition here are links to a few of my articles about income taxes for expatriates:

Income Tax Returns for Expatriates
US Income Tax Help for Expatriates
Foreign Earned Income Exclusion
Are You Required to Report Foreign Bank and Financial Accounts?

Click Here to Follow My Twitter Account: Taxesforxpats

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

Posted in Income Taxes, Tax Planning | Tags: Capital Gains, CPA, Income, IRS, Tax, Tax Return, Tax Tips, Taxes, Tips | No Comments »

IRS Top Ten: Tax Tips for Individuals Selling Their Home

August 30th, 2011 | Author: admin

IRS Top Ten: Tax Tips for Individuals Selling Their Home

Did you sell your home or are you considering selling your home? If so these tax tips found on the IRS website will be of interest to you.

Ten Tax Tips for Individuals Selling Their Home

IRS Summertime Tax Tip 2011-15, August 8, 2011

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
If you can exclude all of the gain, you do not need to report the sale on your tax return.
If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
You cannot deduct a loss from the sale of your main home.
Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

Publication 523, Selling Your Home ( PDF)
Form 5405, First-Time Homebuyer Credit and Repayment of the Credit ( PDF)
Form 8822, Change of Address ( PDF)

If you need assistance preparing your tax returns I would be happy to assist you. I am a CPA with many years experience preparing tax returns for the public. Feel free to contact me using the information below.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

I especially enjoy discussions about you, your business, your dreams and goals.

Click Here to Follow Jeff Haywood, CPA on Twitter

For recent US income tax content see the following links:

IRS Tax Tips: Do You Owe the IRS Money? What You Need to Know.
Does the IRS Have Money Waiting For You
Ideas: How Young People Can Become Entrepreneurs and Find a Home
IRS Top Ten: Facts about Amending Your Tax Return
Are You Ready To Get Your First Apartment/Home?
How to Succeed in Business: Pricing
Credit for Education Expenses: American Opportunity Credit – Extended Through 2012
How to Prepare Before a Disaster Strikes
IRS: Summer Day Camp Expenses May Qualify for a Tax Credit
IRS Tax Tips for Students Starting a Summer Job
IRS Tax Tips for Deducting Charitable Contributions
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Tax Tips – Tip Income
Stratospheric Success
Are You Ready to Purchase a Home? Factors to Consider.
Foreign Earned Income Exclusion
A Most Valuable Resource for Entrepreneurs
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If the band you are in starts playing different tunes
Where Is It? Tax Refund
Deadline for 2010 Personal Tax Returns Moved
Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return

For a full list of prior posts see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

Comments:

If you have a comment to share about this post or for me, please email me at jeff.jhtaxes@gmail.com.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Posted in Income Taxes | Tags: Capital Gains, CPA, IRS, Sale of Home, Tax Return, Taxes | 1 Comment »

10 Important Facts About Capital Gains & Losses

April 2nd, 2011 | Author: admin

10 Important Facts About Capital Gains & Losses:

Mr. CPA, I sold some stocks out of my securities account this year. What tax consequences am I looking at? Typically when selling stocks out of an investment account (not a retirement account) the resulting profit or loss is considered a capital gain or loss. The good news is if you have a profit on the sale you may not have to pay tax on all the proceeds. Here are 10 tips from the IRS about Capital Gains and Losses for you:

Ten Important Facts About Capital Gains and Losses

IRS Tax Tip 2011-35, February 18, 2011

Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When a capital asset is sold, the difference between the amount you paid for the asset and the amount you sold it for is a capital gain or capital loss.

Here are ten facts from the IRS about gains and losses and how they can affect your Federal income tax return.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.

2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.

3. You must report all capital gains.

4. You may deduct capital losses only on investment property, not on property held for personal use.

5. Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.

6. If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.

7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2010, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.

8. If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.

9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.

10. Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040.

For more information about reporting capital gains and losses, see the Schedule D instructions, Publication 550, Investment Income and Expenses or Publication 17, Your Federal Income Tax. All forms and publications are available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Links:

Publication 17, Your Federal Income Tax (PDF 2015.9K)
Publication 550, Investment Income and Expenses (PDF 516K)

To have an experienced CPA help you prepare your tax returns and help you reach your goals contact me at the phone number below.

Jeff Haywood, CPA
972-439-1955
jeff.jhtaxes@gmail.com

I prepare the following types of tax returns:

Personal
Business
Estates
Trusts
Federal and State Returns

Also, I am available for tax planning and discussions about business, retirement planning and life goals.

For recent US income tax content see the following links:

Now is the time to file those late tax returns for previous years
IRS: 8 Things to Know if You Receive an IRS Notice
IRS: Nine Fact on Filing an Amended Return
IRS: Eight Facts on Penalties
IRS Top Ten: Making Federal Tax Payments
Forming a New Business – Please Consult With Your CPA First
Questions After I Have Filed My Return

For a full list of prior post see the CPA Tax Blog.

Standard Disclaimer:

As always keep in mind that the content provided on this site is general in nature and may or may not apply to your particular case. It is best to check with a tax professional about your circumstances and what is best for you personally. Also, IRS regulations and tax laws are constantly changing and the information on this site is not constantly updated. Again please check with me about your particular circumstances and what will be best in your situation at the given time and law.

This article was written by Jeff Haywood, CPA.
Jeff is a licensed CPA in both Texas and Illinois.
He has prepared income tax returns for the public for over 10 years.
He also has an MBA in Finance from Loyola University in Chicago and he has 24 years experience in Corporate Finance and Business Analysis.

Comments:

Comments posted below will be considered for approval if they relate to the subject of the post and the poster has a verifiable email address. It may help if you picked up on and referenced typos, quotes, or just plain silliness. Of course a reference to something written in the article always helps. “I am just saying.”

Posted in Income Taxes, Tax Planning | Tags: Capital Gains, CPA, IRS | 7 Comments »