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About Vanessa Powell
(Top Expert on this page)

Expertise
General taxation and tax law questions. Federal income tax, California income tax, payroll tax, sales tax, estate tax. Individuals, trusts, estates, partnerships, corporations, exempt organizations, employee benefit plans. No property tax questions, please.

Experience
I'm a CPA candidate finishing up my testing. I received a perfect score on the regulation section of the exam, which deals with taxation and business law. I work for a large accounting firm in Southern California. Half of every year I spend in the tax department, and the other half in the audit department.

Organizations
California Society of CPAs.

Education/Credentials
I graduated summa cum laude from Colorado Tech with a B.S. in accountancy. I will obtain my CPA license by the end of 2009 (in CA). I've completed all educational and experience requirements for my license, I need only to pass the final test section (I saved the easiest test for last.) My firm requires all accounting staff to fulfill the same continuing professional education as CPAs. I take 80 hours every two years, and take at least 16 hours of CPE every year in taxation.

Awards and Honors
Graduated Summa Cum Laude (highest honor) If I get another perfect score on my final section of the CPA exam, I will be in the running for a Watt Sells Award.

Past/Present Clients
I have clients from all over the world and United States of all varieties. I work with a lot of employee benefit plans, farms, not-for-profits, partnerships, and wealthy individuals.

   

You are here:  Experts > Business > Corporate Law > Tax Law (Questions About Taxes)

Questions Answered By Expert  Vanessa Powell 
In Category  Tax Law (Questions About Taxes)

SubjectDate Asked

Loan to LLC10/29/2009
  Q: In a recent reply you advised the sole proprietor of an LLC regarding loaning the LLC money to ...
  A: Ah! Good point! I have a habit of focusing too narrowly on a specific point when I'm answering ...
Rental Property Sale10/28/2009
  Q: I am considering the sale of my rental in CA. I purchased the home in 1996 and it was my primary ...
  A: You will owe capital gains tax on the difference between your basis in the property and the 290k, ...
City has authority to tax church?10/28/2009
  Q: Here's the scenario: The City of Oklahoma City has required a registered 501c3 church in Oklahoma ...
  A: Unless an item is specifically excluded by your state from sales tax, even by nonprofits like ...
LLC vs S corp10/28/2009
  Q: I am purchasing a franchise from an existing franchise owner with corporate approval. The cost will ...
  A: No, that's not true. Neither pays taxes (unless you set up the LLC like a C-Corp, which is rare, ...
buying a franchise10/28/2009
  Q: I am purchasing a franchise from an existing franchise owner with corporate approval. The cost will ...
  A: The advice has merit to it, but it's not really going to matter for what amounts, essentially, to a ...
depositing euros into American bank account10/23/2009
  Q: I am an Irish citizen ( also have American citizenship, as of recently) living in NY. I am a ...
  A: If it gains attention, and the IRS questions it, all you need to do is explain the situation. ...
LLC Partnership10/23/2009
  Q: Vanessa I hope you can help. I am actually asking this as an interested third party. I have an ...
  A: Yes, the IRS is correct- in matters of tax, they usually are. :0) However, each partner shouldn't ...
Income tax10/21/2009
  Q: I sold my ½ share of a piece of property about 25 years ago and took back a note from the buyer with ...
  A: Ah- sorry about that. I forgot to answer that part of your question. Generally, yes. When you ...
Income tax10/16/2009
  Q: I sold my ½ share of a piece of property about 25 years ago and took back a note from the buyer with ...
  A: You can take a deduction for personal bad debt, but there are limitations and special rules. This ...
Business Taxes10/15/2009
  Q: Vanessa, Our company develops custom software applications for various companies. On occasion we ...
  A: I'm a little confused about the question. If you're asking whether or not the income to the ...
Tax Amendment10/15/2009
  Q: Both of us are resident aliens and got married outside US in Dec 2001. We each earn roughly $100K ...
  A: You know what? I had completely forgotten about that rule. You're right. I know you can switch ...
First time HomeBuyers Credit10/14/2009
  Q: The loan is in my name but both our names are on the title. This is my husband's 1st home purchase ...
  A: Not for the home purchase, unfortunately. But go here: ...
Lines 12A and 12B10/14/2009
  Q: Powell, I had my taxes professionally prepared last year. I do not understand why both my wife's and ...
  A: Hm. Tough to say. That wonderful "taxable amount unknown", with regards to civil service ...
Tax Amendment10/13/2009
  Q: Both of us are resident aliens and got married outside US in Dec 2001. We each earn roughly $100K ...
  A: 1) Yes, but why would you want to? It'll just end up costing both of you more money in tax, and ...
Lines 12A and 12B10/9/2009
  Q: Powell, I had my taxes professionally prepared last year. I do not understand why both my wife's and ...
  A: To answer your second question first, your quarterly tax estimate will include an amount for social ...
First Time Home Buyers Credit10/8/2009
  Q: I recently bought a house, revised and resubmitted my taxes in order to recieve this $8,000 tax ...
  A: It has been taking up to six months to receive the credit. The average is around 5 months. So you ...
16 year old working10/7/2009
  Q: I'm sixteen years old; I was wondering if I will have to pay taxes if I work?
  A: It doesn't matter how old you are. What matters is how much money you make and whether or not ...
Tax Law10/7/2009
  Q: We are sorry, but WILLIAM D MCCONNAUGHY wasn't able to answer yourFacts as Follows: 1) John Doe ...
  A: No. Insurance proceeds are sometimes taxable income to the recipient, but not to the owner of the ...
First- Time home Buyers Credit10/6/2009
  Q: I bought my first home earlier this year, after I had filed my 2008 taxes. Shortly thereafter, I was ...
  A: Unfortunately, the current wait time for the credit is as long as 6 months. So if you need it ...
Child Tax Deduction10/4/2009
  Q: Who gets to claim the child tax deduction in a 50/50 joint custody? We, my ex and I, live in ...
  A: Whoever the child is with for the most nights out of the year. Even in 50/50 custody cases, the ...
Tax on 109910/4/2009
  Q: I am an Indian student. I graduated in Dec 2008 after doing MS in Computer Engineering. I am right ...
  A: The first thing you'll need to to is to estimate the tax you owe on the $13,000 and make an ...
IRS form 2553 opt for S-Corp10/2/2009
  Q: I just started an LLC and recieved my EIN today. Now I am trying to fill out Form 253 to be ...
  A: If you started an LLC, then you can't elect to be an S-Corp. They're two different entities. If ...
Taxes on private personal loans10/1/2009
  Q: Powell, I needed to ask my father for a loan in order to pay some debt. He is going to make a ...
  A: You don't need to explain anything. If the IRS sends an inquiry letter, or looks into it, you'll be ...
child care and taxes10/1/2009
  Q: We are currently paying a friend $125.00 a week ($500 a month) to baby sit our 15 month old. Soon ...
  A: Disregarding the legal and ethical implications of your friend evading taxes and you agreeing not to ...
Non-Cash Contributions of Artwork to a Charity9/30/2009
  Q: My nonprofit organization is considering organizing as a fundraiser a sale of artwork donated by ...
  A: If no appraisal is done, then the donor can only deduct what the organization eventually sells it ...
Personal Loan-Gift?9/30/2009
  Q: I have a client with a situation that I am not familiar with. She wants to loan a family member a ...
  A: Yes, the interest is taxable. Since it is actually a loan, then, no, it is not considered a gift. ...
Are federal taxes really legal?9/30/2009
  Q: Are federal taxes really legal? I have seen many documentaries and did some research on formed IRS ...
  A: Yes, federal taxes are legal. This is a long standing "conspiracy theory" that is, frankly, ...
Mystery 401k Distribution9/29/2009
  Q: I left a former employer in 2003 and recently received a letter from the IRS saying I had ~$10k in ...
  A: Unfortunately, the IRS doesn't do much automatically. What you need to do is file an amended return ...
Non-Cash Contributions of Artwork to a Charity9/28/2009
  Q: My nonprofit organization is considering organizing as a fundraiser a sale of artwork donated by ...
  A: Okay, let's break this down into the component parts. First of all, you don't need to have anything ...
Negative AGI9/28/2009
  Q: Due to loss of income (personal and rental), I expect that I will be incurring a negative AGI for ...
  A: Okay, when I look at your description of *what* you do (since you obviously met the hours test), you ...
Independent contractor9/28/2009
  Q: I just got certified to teach group fitness classes. I am considered an Independent Contractor and ...
  A: I'll answer your questions in order: 1) Yes, on the schedule C, it would go under either "taxes and ...
Negative AGI9/28/2009
  Q: Due to loss of income (personal and rental), I expect that I will be incurring a negative AGI for ...
  A: There are two types of losses involved here, it sounds like. When you have losses from the rental ...
CLAIMING GRANDSON9/25/2009
  Q: Grandson was thrown out of fathers place and then where his mother is living,now lives with me his ...
  A: It depends on a few things. First of all, no one else can claim him, and he can't claim himself if ...
gifts9/24/2009
  Q: If someone files a gift tax return in your name and states that it is foregiveness of debt, should ...
  A: If there was never any debt between Person A and Person B, and Person B never received any money ...
Dependent9/24/2009
  Q: I am 23 years old, and I just finished school. I decided not to start school this fall, and now I ...
  A: If you just finished school, then your father can likely still claim you as a dependent. You're ...
business taxes9/23/2009
  Q: My husband owns a construction business and he is sole proprietor. I am on the payroll as the book ...
  A: Okay, I think I see what you mean, now. Your husband can, indeed put you on payroll. He can also ...
hardship withdrawal IRA9/23/2009
  Q: This is a tortuous question. I have been unemployed for over two years. My wife is 58. Recently our ...
  A: I am so sorry to hear about your situation. What makes it worse for me is that I have to be the ...
business taxes9/22/2009
  Q: My husband owns a construction business and he is sole proprietor. I am on the payroll as the book ...
  A: That's not true. Owner draws have nothing to do with income taxes. What matters is the company's ...
gifts9/22/2009
  Q: If someone files a gift tax return in your name and states that it is foregiveness of debt, should ...
  A: If there were gift tax returns filed for $20,000 for 5 years, then Person A is saying that they gave ...
Mileage Reimbursement9/21/2009
  Q: When my company hired me 2 years ago, they asked me to move to the Montgomery area. I have recently ...
  A: My answers depend on my understanding of your question, so bear with me. When you say you got a ...
childcare9/21/2009
  Q: I am paying an individual for childcare (non-related) since my husband and I both work. We were ...
  A: No, it won't hurt her. Well, as long as she's filing taxes if she should be, then it won't hurt ...
gifts9/18/2009
  Q: If someone files a gift tax return in your name and states that it is foregiveness of debt, should ...
  A: Wait a minute. Let me get this straight. Person A gave Person B a loan. Then, at some point ...
California Vacation Payout9/18/2009
  Q: My job in California is requiring all vacation time be paid out at the end of the year. I think ...
  A: Your vacation pay-out will be taxed just like the rest of your wages. Think about it like this- if ...
Taxable income9/17/2009
  Q: We have hired a new Sales Manager and as part of his enticement to accept employment we offered him ...
  A: Yes. That is definitely taxable income. There is actually very little that is not considered ...
Per Diem laws in CA9/16/2009
  Q: My husband has been forced to take an assignment in Milpitas, CA. It's about 2.5 hours from our ...
  A: https://www.dir.ca.gov/dlse/2802Regs/2802Regs-ProposedText13700-13706.pdf That is the actual law ...
1041; qualified dividends and sked D loss9/14/2009
  Q: The only income with complex 1041 trust is ordinary dividends, with a portion being qualified. At ...
  A: Total dividends aren't reduced by qualified dividends. You only pay "regular tax" on ordinary ...
gifts to volunteers9/14/2009
  Q: Our high school football coaches want the booster board to pay their volunteer coaches as a ...
  A: You're correct. You need to give out 1099's for any payments to volunteers. Gifts cannot be over ...
California Community Property9/14/2009
  Q: My wife passed away in 2008. She had an IRA account without a beneficiary listed valued at a little ...
  A: As her spouse, you are the beneficiary of her IRA. Not only is CA a community property state, but ...
Any taxes on lump sum distributions??9/14/2009
  Q: I am designated as sole beneficiary of my mother's Tiaa-Cref pension. My father is deceased and I am ...
  A: No problem- sorry for the confusion. Typically, the administrator will withhold taxes- an arbitrary ...
Any taxes on lump sum distributions??9/12/2009
  Q: I am designated as sole beneficiary of my mother's Tiaa-Cref pension. My father is deceased and I am ...
  A: The distribution would be taxable to you as the beneficiary. You will receive a 1099-R for the ...
LLC company and 1099's vs. W2's9/11/2009
  Q: There are 3 individuals that want to start an LLC company but I have some tax questions I am hoping ...
  A: An LLC is, essentially, a partnership with certain liability advantages. That being said, the ...
payment via 10999/11/2009
  Q: I have a job that pays me the traditional way, where taxes are handled by the employer. I have ...
  A: If you find that you would like some professional help with tax matters, I would go to either a CPA ...
Taxes on Deceased Vet's Estate9/10/2009
  Q: My uncle recently died at age 88. He was a 100% disabled WWII American veteran who received ...
  A: If your uncle does, indeed, owe back taxes on these annuities, then his estate is responsible for ...
Taxes on Deceased Vet's Estate9/10/2009
  Q: My uncle recently died at age 88. He was a 100% disabled WWII American veteran who received ...
  A: It could definitely be true. If your uncle should have filed income tax because of these annuities, ...
money off the books?9/10/2009
  Q: I have been doing odd jobs for "my boss" for quite some time. I help him out, he pays me in cash. ...
  A: $400. If you make over $400, then you'll have to file a tax return as being self-employed and then ...
Corporate Inheritence9/10/2009
  Q: This is a little unusual. A C corporation was assigned a partnership interest in an LLC upon ...
  A: This is a complicated situation, but from what I can gather here, it sounds like the corporation ...
Investments9/9/2009
  Q: I recently graduated from college and have proven myself when it comes to investing. I have 5 people ...
  A: First of all, depending on what state you live in, you may not be able to form an LLP. For ...
payment via 10999/7/2009
  Q: I have a job that pays me the traditional way, where taxes are handled by the employer. I have ...
  A: Of course you should accept the extra compensation if you have the time and desire to take the extra ...
ESOP Tax Question9/7/2009
  Q: I am almost vested and looking at paying off debt, but I would like to know what penalties would I ...
  A: ESOPs seem much more confusing than they really are. Think about the plan like a 401(k). The only ...
1099 filing9/7/2009
  Q: I work for a property manager (sole proprietor) He hires leasing agents from a broker. The broker is ...
  A: No, it's not necessary. Some companies provide 1099s to all individuals and very small business ...
Financial Aid for married college students9/6/2009
  Q: I was told that married couples in college received more financial aid for college. However, I was ...
  A: If you are married, it doesn't matter where you live for financial aid purposes. When you marry, ...
Permanent resident abroad with a US inheritance9/6/2009
  Q: Vanessa, I am a US citizen living in Japan since 2005. I payed US taxes on my 2005 income, but ...
  A: Jocelyn- The problem isn't the bank account. Go ahead and have it sent wherever is most convenient ...
real estate9/4/2009
  Q: We are about to sell a piece of property that we had lived on, but, the house burnt down (total ...
  A: If you lived on it (regardless of whether or not the house itself is no longer standing) for that ...
Taxed by both Georgia and Florida?9/4/2009
  Q: I am technically a resident of Georgia, however, I am now living and working in Florida. I have not ...
  A: Florida doesn't have an income tax, so you don't need to worry about that. As for Georgia, you only ...
Estate Account9/3/2009
  Q: State of Texas Letters Testamentary states me as "qualified according to law as INDEPENDENT ...
  A: You're not required to set up a separate account, but it's almost always best to do so. Where ...
volunteer gifts9/2/2009
  Q: what are the rules in compensating volunteers with gift cards through a business that works with ...
  A: Unless you're only planning on giving them less than $25, you shouldn't give volunteers any gifts. ...
Milage9/1/2009
  Q: Are the miles driven back and forth from my job everyday tax deductible?
  A: No. Commuting miles aren't deductible. Only those miles you drive for your job that you aren't ...
LLC and Spouse Income8/31/2009
  Q: I do consulting work and have formed an LLC this year. My husband is a realtor that has had a loss ...
  A: That's not limited to realtors. On schedule A, if you itemize and have over 7.5% of your AGI in ...
Owner Pay vs Family Pay business entity8/31/2009
  Q: Currently, my husband and I are equal portion owners of an LLP in MN. We were going to change the % ...
  A: Let me break this down into the different questions you've asked. First, how to make you the ...
Managing member refuses to provide K-1 info8/30/2009
  Q: and thank you for taking my question. My husband was part owner of over 30 LLC's in Florida ...
  A: I honestly don't know whether or not it's technically illegal, but I CAN tell you that the IRS isn't ...
tips and taxes8/29/2009
  Q: If I can give away $1 1,000 dollars to anybody tax- free why are tips taxable income?
  A: Actually, it's $13,000 per year before you pay gift taxes. But you're right in that the person ...
Contract work8/29/2009
  Q: I am an occupational therapist that just took a 14/hr a week contract job in my towns elementary ...
  A: What you'll need to do first is print out the 1040-ES from the IRS website. There's a worksheet ...
2nd home sale8/28/2009
  Q: I have been reading some about long-term capital gains for 2008 and 2009; if you're in the 10-15% ...
  A: That actually goes all the way through 2010, and you are correct. It has nothing to do with real ...
married but filing separately and mortgage8/28/2009
  Q: My husband recently purchased a home. Although, I co-signed, he makes all payments. We always file ...
  A: 1) Unless you claim the interest as an itemized deduction, no. And you don't have to claim the ...
S Corp tax liability8/27/2009
  Q: I recently sold my shares in a California S-corp back to the company. I never received profit-share ...
  A: S-corporations most commonly "behave" like partnerships. While those starting the organization have ...
Small business Sales Tax8/27/2009
  Q: My partner and I run a small business based in Utah, but we sell our product mostly out of state. ...
  A: You should withhold sales tax if you actually go to these places. If you were only selling online, ...
i need help8/27/2009
  Q: The job that i am currently "employed" at is paying me under the table.I graduated beauty school ...
  A: The best, easiest, and most effective way to report tax fraud (which is what this is) is to complete ...
Lottery winnings/ trust fund tax8/26/2009
  Q: Father in Law won State of Ohio lottery few years back. Gets yearly payouts, he passed away two ...
  A: Okay. This is, indeed, a pretty complicated issue from the sound of it. I'll do my best. 1) With ...
Can I claim my siblings as dependents?8/26/2009
  Q: My father and step mother signed a Power of Attorney for me to have rights over 4 of my younger ...
  A: You cannot claim them as qualifying children if they did not live with you for more than half of the ...
1099 vs W28/26/2009
  Q: A North Carolina employer has its employees working under a W2 tax status; state and federal taxes ...
  A: I'm not sure why they mentioned a 1099. You're right about the difference between a W-2 and a 1099, ...
Tax write off (mortgage) question8/25/2009
  Q: For the last few years (3-5 to be exact) my husband and I have been paying the mortgages on my ...
  A: Ah, yes, we accountants have a bad habit of accidentally terrifying taxpayers. I'm sure that wasn't ...
Inheriting Death Benefit from Retirement Plan8/25/2009
  Q: My uncle passed away and left behind two accounts totaling $125,000. I've done the paperwork to ...
  A: One thing you need to consider is whether or not your uncle's estate was large enough to require ...
ESOP Distribution8/25/2009
  Q: I am eligible for an ESOP distribution from a employer I left 5 years ago. I my total share is about ...
  A: Unfortunately, ESOPs work the same way as any other defined contribution plan as far as ...
fed and state taxes8/24/2009
  Q: I was wanting to know how many exempts I need to claim in order to have no taxes taken out of my ...
  A: That's a bad idea, considering that you'll then owe penalties and interest far in excess of whatever ...
Personal Loan From A Relative8/22/2009
  Q: My father loaned my son $60,000 to start a business. My son agreed to pay his grandfather $500 a ...
  A: With gifts, it's the giver who must pay tax. However, as long as this is truly a loan, then it's ...
Tax write off (mortgage) question8/21/2009
  Q: For the last few years (3-5 to be exact) my husband and I have been paying the mortgages on my ...
  A: You don't need to worry about the IRS coming and knocking menacingly on your door. While ...
Taxes8/21/2009
  Q: Are student loans taxable to the extent they are not used for school?
  A: No. While grants and scholarships usually are taxable if not used for qualified education expenses, ...
Mystery 401k Distribution7/30/2009
  Q: I left a former employer in 2003 and recently received a letter from the IRS saying I had ~$10k in ...
  A: Your employer is supposed to make a reasonable effort to find you if they need to (for whatever ...

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