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About John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com.

Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill College

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Tax Law (Questions About Taxes) - tax on sale of vacant property

Expert: John Stancil, CPA - 11/3/2009

Question
QUESTION: Hi. I got married in December of 2006. Earlier that same year, my now husband sold a vacant property that he had owned for many years. He bought the property for 40K and sold it for 312K. His tax accountant told him to prepay tax in the amount of 35K to cover the costs of capitol gains, purchase price subtracted from selling price times 15% (and I know that the figure he prepaid is not exactly 15%). He prepaid before we were married. We did use some of that money to make a down payment on our modest house about a year later. I'm not sure why, but my husband did not file taxes after we got married until 2008. (We had extensions the other years, but never filed.)His salary the year in question was about 50K and his workplace took out taxes every pay period. I recently opened a letter addressed to him that said that he owed additional taxes for 2006 and the best I could tell, it looked like that determination was based on the sale of the vacant property. So, here are my questions: Is it possible that he would owe more than the 15% capital gains tax that he was advised to pay? And, since we got married in the middle of December the same year that he sold the property, I am responsible for any tax if he does owe additional taxes or would he be solely responsible?

ANSWER: Stephanie,

Thanks for your question.

The tax would be 15% maximum on the gain. However, since he did not file and report the sale, the IRS is presuming that it is all gain with no basis, and likely are treating it as ordinary income. He needs to respond, giving the IRS the details of the transaction.

You are responsible only if you file jointly with him. If you file married, filing separate, you cannot be held liable for his tax liability.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Does filing jointly in 2008 impact whether or not I can file separately for the year in question, 2006? And, as a side note, is it typically 'better' to file consistently as either joint or married filing separately? #I know there is a slight advantage to the tax breaks when filing jointly, but that is not what I'm asking.# It would seem to me that it 'looks' better to do it one way or the other, but I really don't know much about it!

Answer
Stephanie,

If you filed separately in 2006 you are not liable for any misstatements on the return or the tax debt. However, if you file jointly in any subsequent year, the refund can be taken to satisfy a past tax debt unless you have filed as an injured spouse with Form 8379.

Consistency in filing status from year to year does not matter. You can file whichever status you qualify for that best meets your needs at the time.

Hope this helps.

John Stancil, CPA

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