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Tax Law (Questions About Taxes)/Questions Answered by Expert Dan Lively, Esq., LLM (Tax), CPA

Subject	Date Asked
Move From Kansas To Georgia	3/21/2010
Q: I moved from Kansas to Georgia on Oct 14, 2009. The Company I worked for the entire year is based in ... A: You pay taxes in the state where you intend to be a resident (it is intent based). You would file a ...
First time homebuyer tax credit	3/21/2010
Q: My fiance currently owns a home in which I live. My name is not on the deed or mortgage. If he ... A: You can only take the home buyer credit for the purchase of a new home. You cannot get the credit ...
Changing from Joint to Separate	3/14/2010
Q: Just found out that tax refund was taken due to husband's debt. He had no income and I don't want to ... A: Once you file a joint return you can change your filing status to separate only if you file an ...
Mortgage Interest Rate Deduction	3/13/2010
Q: I currently own a property in CA and just purchased a second home in OR. My loan on my CA property ... A: You can write off the interest on your principal residence up to a loan amount that is equal to your ...
NOL carry forward	3/12/2010
Q: I am a sole proprietor. I had a 2008 NOL which I carried back to 2006 and 2007. I had remaining NOL ... A: You combine all your NOL's and report them on your 1040 just as you have in the past. This can, and ...
cancellation of debt question	3/12/2010
Q: I received a 1099-C from a lender for a short-sale in 2009. I lived in the home 2+ years (3/06 - ... A: Since you were renting the house and claiming it most likely on your schedule E of your form 1040 ...
Ira	3/11/2010
Q: I am currently disabled due to cancer. Is there anything I can do to avoid selling some of my ... A: Sorry to hear about your illness. I truly hope you are in the 6 percent that survive this disease. ...
Short Sale tax - PMI paid difference	3/11/2010
Q: I sold my investment property as a short sale in 2009, which I've had for 8 years. I had private ... A: Your sales price would be the Sales price that you received on the short sale, but you need to ...
IRS Audit	3/10/2010
Q: I was audited by the IRS in 2009 and decided to appeal. I hired someone to represent me at a cost of ... A: If this was an audit of your business tax return, then it is deductible as an ordinary and necessary ...
Using 401K for a business loan	3/10/2010
Q: My husband was laid off last year and he has a 401K with Suntrust Bank for about $70,000. We want ... A: You cannot roll the money into an IRA and then make a loan to your self for a business. This would ...
Us Savings Bonds	3/9/2010
Q: Upon my Father's death we converted the bonds my Mother held joint with him and listing me as ... A: When you were added as a joint tenant this was a gift. If the amount exceed your mother's annual ...
is a insurance settlement taxable?	3/9/2010
Q: .several years ago i received an insurance settlement for a dental malpractice lawsuit i was ... A: A settlement is not taxable to the extent that it is compensation for physical injuries. Look at ...
Mistake on Schedule C	3/8/2010
Q: I just noticed on my printout that on a Schedule C of 2008, that i didnt include the income, the ... A: You should file an amended return to correct this. You know about the error and are now obligated ...
Taxes for LLC	3/8/2010
Q: "Group-LLC" is a LLC owned by "T-individual" and "D-individual". "Publishing-LLC" is a LLC that is ... A: Yes, Publishing LLC is a disregarded entity because it only has one member. However, your state may ...
FMV of home sold within family?	3/7/2010
Q: There is one interesting question about our estate plans that I have been unable to find an answer ... A: You can have a local broker give you a letter of value indicating the value of the home. A formal ...
Filing a final return for the deceased	3/7/2010
Q: My mom died just recently (in 2010). Her total income was from social security and she hadn't filed ... A: Sorry to hear of your loss. You would be required to file a return at the end of the year by April ...
personal tax- rental income	3/6/2010
Q: This is a complicatedWe bought a house in 1983 for $56,000 At that time it was rented out for 3 ... A: I will answer your questions in the order you presented them: 1) No, you do not have to rent your ...
condo rentals deduction	3/5/2010
Q: Last year I rented a condo, and I had a loss of about $2000 (utilities+mortgage+tax - rent) I am not ... A: When you rented the condo for tax purposes you are considered in the rental business. You report ...
Limited partnership passive losses	3/5/2010
Q: Dan, I'm only a rocket scientist, so tax laws are too difficult to understand. I bought units in a ... A: As Einstein said: "The hardest thing in the world to understand is the income tax." When a ...
distribution of corpus from Complex trust	3/5/2010
Q: According to the complex trust that was set up for me a third of the corpus is to be distributed ... A: The distribution from the trust will be shown on Form 1041. Any income from the distribution will ...
foriegn entity buying a sub chapter S	3/4/2010
Q: Can a foreign (Guatemala) entity buy a sub-chapter S corporation? If so what are the tax ... A: No, a foreign entity is not allowed to own S Corporation stock. It would cause a disqualification ...
corporate vehicles	3/4/2010
Q: My brother and I just started a new S-corp. We are wondering whats the cheapest way, and the tax ... A: Have the corporation give you a car allowance that covers your monthly expenses. Any individual ...
8,000 first time home buyers tax credit. Do I claim it as income?	3/4/2010
Q: So, I bought my first house in May 2009. In April when I knew I was buying, I filed for an extension ... A: A federal income tax refund is not income. You do not need to claim this as income for 2009. Any ...
State Taxes	3/2/2010
Q: I moved to VA from MD in late 2008. I lived in Virginia all of 2009, but my employer didn't change ... A: You should have your employer correct the W-2 form. If you were a resident of Virginia for alll of ...
18 yrs old should i claim myself?	3/2/2010
Q: im 18 yrsold I have two part time jobs I am not in school n e more I live with my mom but I am only ... A: Only one person can take the deduction. If your mom claimed you, then you cannot claim your self. ...
Claiming loss on joint brokerage account	3/1/2010
Q: In July 2009 my mother in law asked I trade some of her money on her behalf. I opened a brokerage ... A: This is a little more involved than you think. When your mother in law transferred the amount into ...
Failure to pay personal income taxes	2/21/2010
Q: Is there a criminal penalty for failure to pay personal income taxes on past tax returns that have ... A: There is not a criminal penalty for failure to pay personal taxes. There is a criminal penalty of ...
Paying Corporate debt with Life Insurance payout	2/21/2010
Q: My husband is taking out a term life insurance policy, and we are unsure how to achieve our two ... A: You may want to consider two life insurance policies to accomplish your goals. One where his ...
CA Form 3885A	2/20/2010
Q: I have a rental property only, no property under section 179, no listed property. Do I have to file ... A: You only have to file Form 3885A if your State Depreciation is different form you Federal ...
sch. E or sch. A	2/19/2010
Q: We bought a home in June 2009, but was later relocated to Japan for a federal job. The house is ... A: Income and expenses from a rental property are reported on Schedule E of Form 1040. When you come ...
Unpaid Salary from LLC Deductable?	2/19/2010
Q: Mr. Lively... I am one of two Manager/Members of a small California LLC (which we are most likely ... A: As an individual tax payer you are on a cash basis for reporting income and taking deductions. ...
Inheritance taxes	2/16/2010
Q: My grandmother died recently in Oregon and left some money to five grandchildren who live in ... A: Estate taxes are paid by the estate and not by the recipient of the inheritance. Therefore, this is ...
IRS property seizure	2/10/2010
Q: My brother and I jointly own a one lot, two home property. We each occupy one of the residences. ... A: Most likely the IRS will place a lien on the property. However, you are not responsible for your ...
dependents	2/10/2010
Q: I am under 18, and can still be claimed as a dependent.However, my mother has given my information ... A: Inform your mother that you will be contacting the IRS if this does not stop immediately. This is ...
1099 on short sales	2/10/2010
Q: Dan, I read your answer on Oct. 22, 2009 in re: California enforcement of 1099's on short sales. ... A: For 2007 and 2008, California conformed, with modifications to IRC section 108 (a)(1) (E) that ...
claiming child on taxes	2/9/2010
Q: I have a question. Im hoping that you are able to help me with it. Let me start off with I have 2 ... A: Fortunately, in the law regarding dependent deductions changed in 2009 to your benefit. In order for ...
stock tax write-off	2/9/2010
Q: I have several stock issues that date back to 2000 and one to 1999. some are no longer listed and ... A: Capital losses carry forward indefinitely. It seems that your problem will be a matter of proof. ...
First Time Home Buyer	2/9/2010
Q: My wife and I bought our first home from my parents we went throught a bank and a lawyer which both ... A: The original first-time buyer credit law nixed the credit if the home sale was between related ...
1099-misc, wrong box selected	2/9/2010
Q: opposing counsel deposed me and his client paid my expert witness fee directly to me. On the ... A: You should ask for a corrected form. Regardless, if the 1099 is incorrect you will still have to ...
tuition	2/8/2010
Q: If you get a student loan, then you receive a 1098T from the University for amount billed. Do you ... A: Yes, Student loan interest is tax deductible if you meet the following criteria: 1. Your filing ...
1099a	2/8/2010
Q: Received a 1099a from the lender. Acquisition or abandonment of Secured property. Line 2 shows ... A: If you have income from cancellation of debt, and it does not meet an exception, it is reported on ...
Trust and a rollover question	2/8/2010
Q: I actually have 2 separate questions: (1) I am trustee for a trust that by year end all received ... A: Your Mom does not receive any special benefit for the non-taxable distributions, they are not ...
claiming a child and form 8332	2/7/2010
Q: My friend went to get her taxes done. She didn't make enough money so claiming her child wouldn't ... A: No this is not legal. The purpose of Form 8332 is to release the dependency deduction from a ...
Marital Settlement Buyout of Home	2/7/2010
Q: Lively, My wife and I divorced and part of the marital settlement agreement (signed by the court ... A: Since you meet all of the requirements for a division of property incident to divorce, this ...
tax credit for donated items already written off as medical expense	2/7/2010
Q: My father took a tax credit for it as a medical expense in the year of the purchase. (2008) Now that ... A: You are mixing up tax credits and tax deductions. Tax credits are a direct offset to taxes due, and ...
1099C	2/7/2010
Q: Can cancelled debts reported on a 1099C be excluded from income because of insolvency? Also, after ... A: Canceled debts can be excluded from income if you are insolvent or bankrupt. You should not receive ...
trust taxes	2/6/2010
Q: my real estate taxes are paid from my family trust. can they be deducted on line 21 of form 1041? A: If your family trust is a revocable grantor trust you do not need to file a Form 1041, and your ...
Filing status	2/6/2010
Q: My husband and I were on and off during the tax year. We lived together for aprox 6 months. We filed ... A: If you are married on the last day of the tax year (12/31) you can only file as married filing ...
filing	2/5/2010
Q: I got married in June last yr. Everyone is telling me that I should file married joint. I've gone ... A: When you are married you can no longer file as single. Your only choices are Married Filing Jointly ...
Capital loss	2/4/2010
Q: my wife's mother signed her house over to my wife and her sister, equally in 1999. She passed away ... A: Your wife would calculate her gain or loss on the sale by deducting the proceeds she received from ...
stock receive for service rendered	2/4/2010
Q: if we receive stock for the service rendered for a coporation in 2009, shall we report it in our ... A: Receiving stock for services is a taxable event. Your basis in the stock is equal to the income you ...
cell phone deduction	2/4/2010
Q: My husband is an over the road trucker. He will be itemizing this year on his taxes. My question ... A: To the extent he uses the phone for business it is deductible, the personal use portion is not ...
S Corp loan loss	2/4/2010
Q: My husband and I loaned an S Corp $100,000 in 2006. The S Corp went out of business in 2009 without ... A: The loss is treated as a short-term capital loss on Schedule D. You can use this loss to offset ...
Head of Household filing	2/4/2010
Q: Due to a divorce proceeding in which my ex-husband is now claiming our daughter as an exemption on ... A: You can claim HOH status still. You must provide over half the support of a household and have a ...
Child Support & Claiming Dependents	2/3/2010
Q: I currently pay child support for my two children, and my ex has full custody of them. I was curious ... A: As the non-custodial parent you can only claim the deduction if you have a signed Form 8332 from ...
Negative Adjusted Gross income.	2/2/2010
Q: I was a full time student in 2008 with no income. I had a credit of $524.00 on form 8917 (Tuition ... A: This is a personal loss and cannot be carried back. Also, if you did not use the Tuition Deduction ...
1099 Taxes	2/2/2010
Q: For the first time in my life I will expect to receive a 1099 for 2010, and I am unsure what taxes I ... A: Income from a 1099 is subject to income and Self-Employment tax. The SE tax is 15.3 percent, but ...
SSD backpay & taxes	2/1/2010
Q: if my 2009 ssa-1099 (social security disability) has backpay from 2007 & 2008 is there a way to ... A: Unfortunately, as a cash basis taxpayer you recognize the income in the year received. Any ...
Order of Corporate NOLs	2/1/2010
Q: If a corporation has multiple years with NOLs, do those NOLs have to be used in order from oldest to ... A: NOL's are accumulated, and carried forward or back based on then existing law. They are carried ...
SALE OF INHERITANCE IN THE PHILIPPINES	2/1/2010
Q: I inherited part of a property in the philippines before I became a US citizen. My father, me and ... A: You will not need to pay any tax on the original amount you received. However, you will need to ...
eic	2/1/2010
Q: Can you get the earned income credit if all your income was just unemployment? A: The short answer to your question is no. Without earned income you cannot receive an earned income ...
Tax on inheritance	2/1/2010
Q: I live in Michigan and just got a check for just under 12,500, which I inherited from my ... A: Your research is correct. Under section 102 of the Internal Revenue Code inheritances are excluded ...
income tax question	1/31/2010
Q: I am a tax preparer in New York. The question is... if a person's spouse has been incarcerated for ... A: The rule is that she cannot file MFJ if he has been incarcerated for over 6 months. She should file ...
excess of stock losses	1/30/2010
Q: i have excess of losses from sale of stock. how do i report the excess on next years income tax. do ... A: Excess capital losses from the sale of stock are reported on Schedule D as a carry over loss. It ...
TAX REFUND FROZEN CP 75	1/30/2010
Q: I learned today that my tax refund that I efiled last week is frozen. I called and spoke to an IRS ... A: Form CP 75 is sent to taxpayers when the IRS has concerns about you taking the EIC. This credit has ...
Form 1041 Early Withdrawal Penalty	1/29/2010
Q: How should interest early withdrawal penalty from form 1099-INT, box 2 be reported on Form 1041? A: Report it as an administrative expense. Any individual seeking legal advice for their own situation ...
Form 706 Schedule E Part 2	1/27/2010
Q: A home is owned by two sisters as joint tenants with rights of survivorship. One of the sisters died ... A: Since this is an asset that is owned as joint tenancy the survivor owns the asset outright by ...
Being the beneficiary	1/25/2010
Q: My father passed away in June 09. I was his beneficiary on his pension and life ins policy. Pension ... A: If your father directly left these items to you, and then you gave it to the grandchildren, in ...
Taxes on sale of gifted house	1/24/2010
Q: My Mother gifted me her home via a quick claim deed in 2005. At the time she owed about $24,000 ... A: Sorry to hear about the loss of your mother. When your mom gifted you the house you received a ...
Unified credit	1/24/2010
Q: Dan, I am wondering how the unified credit works on gift tax. Could you please explain to me? ... A: For gift taxes you receive an annual exclusion of $13,000 per person you give to. You also receive ...
morgage interest	1/23/2010
Q: i own two houses, A and B A is for my own living B, total three bedrooms, i rent two bedrooms out ... A: You can claim the interest on house A on schedule A - up to $1,000,000 of acquisition debt, and ...
Form 8332 (dependent children)	1/23/2010
Q: I have been divorced since 1998, and it is in the agreement that my ex and I each claim one child. ... A: Form 8332 is new for 2009. It requires that all non-custodial parents receive a signed Form 8332 ...
2008 Form 1041	1/22/2010
Q: "I am the trustee on two irrevocable trusts that came into existence, pursuant to our living trust ... A: The capital loss should be carried over to future years to offset against future capital gains. ...
Living in one state and working in another	1/22/2010
Q: I live in nc with my wife and kids. There was no work in nc so I took a job in ohio. I have to ... A: The drive that you make to and from work would be considered your commute and is not deductible. ...
federal tax	1/22/2010
Q: My husband made approximately 15,000 this year and his employer only took 55.10 out in federal ... A: This does sound unusual. His employer is required to take out taxes on each check based on the ...
K-1 inheritence	1/21/2010
Q: We will receive a K-1 form due to land being sold in a Grandfather's estate. Will we have to ... A: Yes, this could be why you would receive a gain on the K-1. The gain will be computed by the ...
Assigned Vehicle business vs commute miles	1/21/2010
Q: I have an assigned vehicle which I drive home each night. My assigned office is about 50 miles away ... A: Depends. If you then drive to work it would be business miles. Unless you go over your normal ...
tax help	1/20/2010
Q: My wife and I are using our 401k to purchase our first home. Our question is, are we going to be ... A: Distributions from your 401(k) must be in accordance with the plan documents. A distribution form a ...
corporation buy house	1/20/2010
Q: If C corp buys house and lets its clients and employees use it can they deduct the expenses, ... A: To take this as a business deduction the company would have to meet the requirement that this is an ...
student	1/20/2010
Q: I have a boy age 21 and a full time student can I claim him on my tax return. He has a job and makes ... A: He is a full time student under 24 so you can deduct him on your return. It is also possible for ...
Small Business	1/17/2010
Q: My wife and I are Canadians and non-US residents who have invested in a startup small business ... A: An LLC is a pass through entity and does not pay taxes itself, unless the state you are in imposes a ...
K-1 inheritence	1/16/2010
Q: We will receive a K-1 form due to land being sold in a Grandfather's estate. Will we have to ... A: If you are receiving a K-1 it is most likely from the filing of a Form 1041. You may have taxes due ...
selling on Amazon	1/14/2010
Q: I have been selling items on Amazon this past year. It has been mostly my old books and video games. ... A: It depends. You probably do not have a taxable gain, because the amount you are selling these items ...
Beneficiary of a Friends Accounts	1/13/2010
Q: My friend made me the beneficiary to 3 Bank Accounts and he recently passed away. He has a sister ... A: If you are the beneficiary on the bank accounts you will need to obtain a death certificate and take ...
Incarcerated husband	1/13/2010
Q: Can I claim my incarcerated husband as an exemption, not a dependant, if he has been in state prison ... A: You cannot claim him as an exemption, because he is supported by the State and not you.. You are ...
estate tax versus gift tax	1/13/2010
Q: The problem is this: if a mom and dad gave their three children say 1.2 million (split up among the ... A: It is confusing because the credit is no longer unified. That is, the lifetime gift exclusion and ...
selling farmland	1/12/2010
Q: My parents deeded farmland to the kids 10 years ago. They retained a life estate to pay their ... A: A carryover basis is the basis your parents had. Most likely, this was the amount they paid for the ...
selling farmland	1/5/2010
Q: My parents deeded farmland to the kids 10 years ago. They retained a life estate to pay their ... A: This was a gift to the kids and they receive a carryover basis in the property equal to the basis ...
Quit Claimed Property - Any tax implications	1/4/2010
Q: My brother purchased a home for cash in 2007. In 2009 he quit claimed the home to me, no money ... A: This would be considered a gift to you. There is no income tax implication to you. However, your ...
Auto Miles	1/4/2010
Q: I work for Union Pacific Railroad. Sometimes when I go to work at a location, I drive 140 miles one ... A: Yes you can claim the miles beyond your normal commute as business miles on form 2106 of Form 1040. ...
Employee vs Independent contractor	12/30/2009
Q: I have worked as an "independent contractor" for a company for 19 years. I believe we have always ... A: You have filed your tax returns and paid your taxes. This should have no tax affect on you ...
Stock Cost Basis	12/29/2009
Q: When I was 13 my grandmother and I bought some stock under the minor act. I am now 23 and that ... A: Your basis in the stock is amount that you originally paid for it in 1998. When your grandmother ...
Home Health Nurse taxes	12/28/2009
Q: 1. My company gives us a gas card currently, can I deduct miles on my car at all? 2. I have been ... A: 1. You can take the mileage on the car on form 2106 of form 1040, but you will have to deduct the ...
Taxes on the sale of a parent's home	12/28/2009
Q: My 93 year old mother will soon move to an assisted living residence. What are the differences in ... A: If you sale the home now you will use your mother's tax basis to determine the gain on the property ...
Estate distribution K-1?	12/28/2009
Q: I received a letter from attorney for my late cousins estate distribution, asking for social ... A: J., The attorney is preparing a Trust tax return for the estate (Form 1041). If you are a ...
Loan Loss	12/27/2009
Q: I loaned a friend $6000,in June 2009,to help start up her new business. A money order was made out ... A: Yes, you can claim this loss in 2009 since the loan loss occurred in that year. You claim this loss ...
Directly paying a medical supplier	12/26/2009
Q: I understand that I can directly pay for my adult daughter's medical insurance above and beyond the ... A: In addition to the annual exclusion for gift taxes there is an unlimited exclusion for amounts paid ...
Expenses on S Corporation Return	12/24/2009
Q: I owned an S Corporation, a one car limousine company, and my accountant filed the return putting ... A: Your CPA is correct. If the expenses are reclassified to another part of the return, the net tax ...
TAX	12/24/2009
Q: My primary residence is on 7.5 acres. In 2009 I sold an easement on my property which my primary ... A: Sales of personal capital assets are reported on Schedule D of form 1040. However,if you qualify ...
Certificate of Deposit	12/22/2009
Q: My father in law is leaving a $100,000 certificate of deposit to my husband upon his death. If he ... A: There would be no tax ramifications to the recipient of the gift (your husband). He would get the ...
Can lawsuit losses or attorney fees be deducted from federal taxes?	12/22/2009
Q: My husband and I were personally sued in a civil lawsuit and settled out of court prior to any court ... A: When you relinquished control of the property should be considered the "sale date". The value ...
Gift Card Bonus and taxes	12/21/2009
Q: I received a 50.00 gift card from my company and it was counted and taxed as income on my paycheck. ... A: A distribution of a gift certificate or gift card to an employee that is readily convertible to cash ...
Lawsuit fees	12/21/2009
Q: In 2003 a few family members and I purchased a house to renovate and resell. In Feb 2009 the home ... A: I would have reported the sale of the house on schedule D as an investment. I can see why you put ...
Gift Tax	12/21/2009
Q: I am wondering about the $1,000,000 lifetime gift. For the past twelve years my mother has been ... A: The $13,000 per year annual exclusion is separate and apart from the $1,000,000 life time exclusion. ...
Tax Deductions for a Physical Therapist doing 1099 work	12/21/2009
Q: I'm a physical therapist in new york city with a full time employment where I get a W2 for $75,000 ... A: First, I wouldn't form an entity for this activity until it makes at least $100,000 per year. I ...
Tax from Money Use to Purchase home	12/20/2009
Q: Last year (2008) a relative passed away and left me some money. I have been receiving monthly ... A: If you are paying tax on this money, then it must have come from an IRA that is being stretched. ...
Legal Fees	12/20/2009
Q: In June 2008 we hired an attorney for a business acquisition. The whole thing was a lengthy ... A: Yes. Since you never started the business you can deduct the start up expenses of the business that ...
Non-Resident Property Tax	12/20/2009
Q: I am in the Marine Corps currently stationed in California. I am a resident of New York State, I ... A: Military personnel are subject to special treatment with respect to residency in California. Out of ...
Gifting money	12/19/2009
Q: My mother has monies in a mutual fund and would like to gift me the allowable amount (IRS rules for ... A: Your mother can give you up to $13,000 per year as a gift without having to file any documents. ...
Travel Expenses Incurred on Behalf of Employer Taxed as Compensation	12/19/2009
Q: I work for a consulting firm and had incurred a large amount of expenses that I did not submit proof ... A: You include all business related expenses that you incurred in full on form 2106. There is also a ...
Cost basis of corporate bonds	12/18/2009
Q: My late mother owned corporate bonds which had "survivor benefit" - i.e. pays face value when ... A: The amount you paid for the bonds would be your cost basis when you sell them. Any individual ...
Childcare taxes	12/18/2009
Q: My wife runs a home daycare. I was wondering if we we didnt recieve payment for services rendered ... A: You can deduct all the expenses that you incurred for the services rendered for the child as usual. ...
Taxes on trading income	12/18/2009
Q: I'm currently unemployed. However, I have a large portfolio and have been earning a living trading ... A: This is a fuzzy area of he tax law. Whether you are a trader or an investor is a facts and ...
Estate Tax - Form 706	12/17/2009
Q: I have a client whom recently passed away and we are currently working on his Form 706 "Estate Tax ... A: Your analysis is how the U.S. Tax Court originally ruled. However, the Eighth Circuit disagreed: ...
CA short sale/ capital gains	12/17/2009
Q: I bought a home in California Dec '06 and total loan was $282,000 and put that property up for short ... A: There is no capital gains tax on the short pay of the loan. The tax you have to worry about is the ...
claiming children	12/16/2009
Q: I filed my tax return for 2007. my ex-husband had already claimed our children. i was told to file a ... A: My first question would be why they are changing what they originally decided. If you qualify for ...
Estate Tax - Form 706	12/16/2009
Q: I have a client whom recently passed away and we are currently working on his Form 706 "Estate Tax ... A: The self-canceling note does not cause any estate taxes, but does cause income from debt relief that ...
inheritance money	12/16/2009
Q: Both my parents passed away this year and they had a trust setup for my sister and I in Calif. and ... A: The money you receive should be tax free. The estate is responsible for paying the estate taxes. ...
Can lawsuit losses or attorney fees be deducted from federal taxes?	12/15/2009
Q: My husband and I were personally sued in a civil lawsuit and settled out of court prior to any court ... A: First, I am sorry that you had to go through this. When you transferred these assets in settlement ...
Lottery winnings	12/15/2009
Q: If someone were to win the lottery (say, over $1M) is there a way that he could protect the money? ... A: In California lottery winning are not taxable by the state, but they are taxable for federal tax ...
Taxation from Dissolution of Sub-S Corp	12/15/2009
Q: I have a sub-s corporation that I am closing down due to retirement. It is small (always has been). ... A: You can make a property distribution of the the rental house. However, the distribution will be ...
Am I required to file?	12/14/2009
Q: I received no income this year except for an inheritance from my grandfather's estate. I was one of ... A: The inheritance you received is not considered income. If you have no other income, you are not ...
taxes	12/14/2009
Q: I have run my business as a sole proprietorship. I own a small building that I run my business out ... A: This is an interesting question, because it goes in the opposite direction of what I normally see. ...
Taxed Debt Relief For A HELOC?	12/14/2009
Q: I live in California. I have to properties with HELOC's--one is a rental and the other is my ... A: You do not have to be bankrupt to meet the insolvency exception. This has to be proved to the IRS, ...
Gift Tax and Capital Gains	12/13/2009
Q: My mother deeded 40 acres of land to my brother and me shortly before her death. She had inherited ... A: To determine the value of the land at the date of death, you can get an appraisal or a letter ...
Taxed Debt Relief For A HELOC?	12/13/2009
Q: I live in California. I have to properties with HELOC's--one is a rental and the other is my ... A: When the debt is reduced you will have income from debt relief in the amount that is forgiven. The ...
IRA gift tax	12/12/2009
Q: I read that you can give up to $13,000 to a dependent without paying federal or state taxes ? A: You can give up to $13,000 each year to anyone without any gift taxes. This is not a deduction from ...
Tax on IRA payout to estate	12/12/2009
Q: My mom had a 68,000 IRA in a bank. I am the administrator of the estate, and there was not ... A: If the IRA owner didn't name a beneficiary or named his estate as beneficiary (as in your case), ...
Lottery winnings from Cdn gifted to US resident	12/12/2009
Q: My family are Cdn citizens, no assets in the US. They won the lottery in Canada, which they are no ... A: Yes, that is correct. You should also check with Canadian counsel to determine what the ...
hello	12/11/2009
Q: my question is me and my wife are divorce live seperate and have 3 kids and she has not work for the ... A: A non custodial parent can deduct their dependents if the custodial spouse agrees and completes Form ...
Inheritance Tax	12/11/2009
Q: My mother died in October. We are trying to get her house sold. How do the taxes work when we sell ... A: Sorry to hear about your loss. When your mom died the house's basis stepped up to the fair market ...
Tax on IRA payout to estate	12/11/2009
Q: My mom had a 68,000 IRA in a bank. I am the administrator of the estate, and there was not ... A: The money in the IRA account has not yet been taxed for income tax purposes. When you and your ...
Self-employed Health Ins Deduction	12/10/2009
Q: I am 100% self-employed, but pay health insurance premiums through a policy I am eligible to ... A: Your payments for health insurance are deductible as they are for any self-employed person. Any ...
Lottery winnings from Cdn gifted to US resident	12/10/2009
Q: My family are Cdn citizens, no assets in the US. They won the lottery in Canada, which they are no ... A: A gift is not taxable to the recipient in the United States. Make sure you document that this is a ...
Gift Tax and Capital Gains	12/10/2009
Q: My mother deeded 40 acres of land to my brother and me shortly before her death. She had inherited ... A: When you sell this land you will have to determine your capital gain by taking what you sell it for ...
Sale of house	12/9/2009
Q: We bought another house (house B) with the intent to sell our current house (house A) and to move ... A: The sale of a second home which has a loss is not deductible. This would be a personal loss. Since ...
caregiver status	12/9/2009
Q: My mother has dementia and requires round the clock care. My sister (her daughter) is POA and we ... A: This depends on your state law as to whether you are an employee or an independent contractor. ...
Real Estate Commission Tax deductable?	12/9/2009
Q: I am a home owner selling a home in California and have 2 questions: 1) Is the commission fee paid ... A: When you sell the home the net capital gain is determined by deducting the basis in the property and ...
Business Income	12/8/2009
Q: My husband and I own an S-corporation in NC. We are thinking of taking out a loan to gain some ... A: The money you borrow is not taxable, and remains that way so long as you pay it back. The money you ...
Capitalizing Interest and Taxes on Rental Property	12/7/2009
Q: Can an individual capitalize, as opposed to currently deducting, interest and real property taxes on ... A: No, you cannot capitalize interest and property taxes unless the property is under construction. ...
Quitclaim or sell?	12/7/2009
Q: My friend is a single, 84 year old woman who owns 2 vacant lots. She wants to give each of these ... A: She should put these lots in a trust and the two close friends can be beneficiaries. Then they will ...
Partial Property Transfer from Parent to Child with some cash exchange	12/5/2009
Q: Can a child exchange cash for partial interest in land (farm)of their parents? For example the farm ... A: Yes, this can be done. The difference between the FMV of the interest and the cash paid is a gift ...
Receiving a sponsorship	12/4/2009
Q: If an individual receives a 20K per year athletic sponsorship from a corporation, do you have to pay ... A: In that case the exclusion does not apply and this would be taxable income. Any individual seeking ...
Self Employment taxes	12/4/2009
Q: Regarding "bifurcation of the LLC interest, whereby each owner would own a managing member, and a ... A: Someone has to be the manager. Limited partner is a term exclusive to limited partnerships. In an ...
Self Employment taxes	12/4/2009
Q: Regarding "bifurcation of the LLC interest, whereby each owner would own a managing member, and a ... A: Depends. As most things, I could see a situation where what you are saying would be a way to go. ...
taxes	12/4/2009
Q: i have two children with my ex we were never married but he did live in my household until October ... A: A non-custodial parent (one that is out of the house)cannot claim the children as dependents on ...
Inheritance	12/3/2009
Q: My dad passed away in January and named me as executrix. His estate consists of his house, car, and ... A: Sorry to hear about your loss. You do not have to claim your inheritances on your income tax ...
income tax joint or not?	12/3/2009
Q: I am a Network Engineer for an IT company in Texas, and I am married and I have a daughter, I am ... A: As a married man you have two choices in filing. The first is Married filing separately and the ...
Taxes onTransfer of Title	12/3/2009
Q: My ex-husband owns property (land only) in California and wants to transfer the Title in my name or ... A: There is an allowance for unlimited gifts between spouses, so no tax ramifications for this ...
Receiving a sponsorship	12/1/2009
Q: If an individual receives a 20K per year athletic sponsorship from a corporation, do you have to pay ... A: Any amount received as a qualified scholarship by an individual who is a candidate for a degree at a ...
gift tax	12/1/2009
Q: my wife is set to receive about 16k from the sale of dads house, he passed and the house was in dad ... A: First you have to consider whether their is any tax due from the sale of the house. Take the sales ...
Work from Home in TN - Company is in CA/1099	12/1/2009
Q: Good morning Dan, Thank you for taking my questions. I moved to TN in mid-July and work from home ... A: If you are doing work in California, California will have you complete a tax return as a ...
Self Employment taxes	12/1/2009
Q: I am in a partnership LLC where all partners are limited (are not personally liable), but are active ... A: Net earnings from self-employment include net income derived from a trade or business plus an ...
Self Employment taxes	11/30/2009
Q: I am in a partnership LLC where all partners are limited (are not personally liable), but are active ... A: Funny you should ask this question. I recently wrote on my Blog about this very topic. Below is ...
SEP IRA Contribution	11/30/2009
Q: I specifically am interested in whether I need separate plans for my sole proprietorship and ... A: You only need one SEP IRA. All of your activities will be combined to determine your contribution ...
Improper 401K rollover	11/28/2009
Q: I received about 40k in the form of a trust that was a parents IRA. At the time I did not realize it ... A: This is treated as an excess contribution to an IRA. Tell your administrator that you made an ...
Revocable Trust	11/27/2009
Q: My wife and brother are about to inherit both a Revocable Trust and an Individual IRA totaling some ... A: The basis of the assets they inherit in the trust, and not part of the IRA will have a basis equal ...
Gift Taxes on large gifts	11/26/2009
Q: I have a question regarding gift taxes regarding large gifts. Let's say someone wins the lottery or ... A: Every individual can give anyone $13,000 free of gift tax per year. Every individual is also given ...
NOL Sec 382 divorce	11/25/2009
Q: Married for 19 years. Husband owns C corporation which has NOL for the past 5 years. If all of his ... A: The triggering event under Section 383 is an "ownership change". An ownership change requires two ...
Selling and buying a home	11/24/2009
Q: I am in the process of selling my home and our projected closing date is 12/30/09. However, the ... A: It is not a problem at all to sell your current home in 2009, and buy the next one in 2010. The one ...
change in basis	11/21/2009
Q: I have been depreciating the wrong basis amount on my rental property since 2003 and now I'm selling ... A: I am not sure what the fair market value from 2003 is being used for with regard to your basis, ...
change in basis	11/21/2009
Q: I have been depreciating the wrong basis amount on my rental property since 2003 and now I'm selling ... A: You depreciate what is allowed or allowable, If you miss taking the correct amount you can amend ...
estate 1040	11/20/2009
Q: My mother passed away on January 25, 2009. I understand I have to file 1040 and 1041. Her income ... A: Unfortunately, you cannot carryback stock capital losses. You can only carry these forward. If any ...
estate	11/20/2009
Q: My mother passed away on January 25, 2009. I understand I have to file 1040 and 1041. Her income ... A: Sorry to hear about the passing of your mother. There are 3 returns that you need to consider from ...
IRS Audit	11/20/2009
Q: We are getting audited for specifically Cost of Goods issue, because of a family farm. So there is a ... A: If the family business was filed as a schedule C on your form 1040, and was not a separate business ...
Taxes on Severance Pay	11/19/2009
Q: Is severance pay taxed like regular income or as a bonus? A: Severance pay is taxed as regular income. However, you can adjust your W-4 prior to the payout to ...
Payroll tax liability for C-Corp that's filing bankruptcy	11/17/2009
Q: If I own 50% of the stock in a C-Corp that is filing bankruptcy and the payroll tax liability is ... A: I assume that you are paying the Trust Fund Recovery Penalty that is assessed to responsible parties ...
Is paying someone's medical bills a taxable gift?	11/16/2009
Q: My sick friend D needs $28,000 worth of medical care. My friends and I want to pay for it, but it ... A: The recipient of a gift does not have to pay taxes on the gift, so the money you give to your friend ...
Capital Gains on Warranty Deeded House	11/11/2009
Q: My father, using a warranty deed with reservation of life estate, sold, conveyed and warranted his ... A: You are right as far as the transfer of legal title goes. Actual conveyance of legal title to the ...
gifting money	11/10/2009
Q: If a family member were to give a very large amount (over a million)is there a way to not have to ... A: First, the family member is entitled to an annual gift tax exclusion of $13,000 per year per person. ...
payroll tax withdrawal	11/10/2009
Q: My current employer is withdrawing state (Indiana) and federal taxes, and 401(k) contribution from ... A: This is a sign of a company in trouble. It is also a sign of the times, unfortunately. Your employer ...
Monetary gifts received by Widow	11/10/2009
Q: I have a friend whom recently passed away and left his wife with 3 children. The community has ... A: This would be treated as a gift for tax purposes. Gifts are not taxable to the recipient. ...
Capital Gains on Warranty Deeded House	11/10/2009
Q: My father, using a warranty deed with reservation of life estate, sold, conveyed and warranted his ... A: If I understand the facts correctly, your dad deeded the house to you prior to his death for no or ...
Distribution into HSA from roth IRA	11/6/2009
Q: My wife and I have a HSA health insurance plan and I would like to one time fund the HSA with money ... A: You can do a direct roll over from a Roth IRA to an HSA account, but it does not make sense. You ...
Pell Grant - FinAid ...	11/5/2009
Q: I am trying to get ready to go to college by starting my FAFSA application ... though I am worried ... A: For this dollar amount, you should should just pay the amount due. It will continue to accrue ...
inheritance tax	11/5/2009
Q: We need to have a gun collection appraised for the IRS for inheritance tax. Can anyone do it or must ... A: You need to use a qualified and experienced appraiser. Look at the appraisal as your insurance ...
tax laws	11/5/2009
Q: My wife and I are separated and headed toward divorce. I make about 40,000 this year and have quite ... A: To see how married filing separately will affect you, you can prepare your return this way and ...
2-member LLC for rental property	11/4/2009
Q: I set up a 2-member LLC with my father and I as members, so we can purchase rental properties as ... A: I will assume that the property title is held in the name of the LLC already. I will also assume ...
Corporate Owned Life Insurance Proceeds	11/4/2009
Q: The LLC is taxed as a corporation. The LLC is the owner and beneficiary of the life insurance ... A: Under Internal Revenue Code Section 101, Proceeds of life insurance contracts payable by reason of ...
Boyfriend/Foodstamps	11/4/2009
Q: Me and my biyfriend stay in the same home with our daughter. I receive foodstamps for me and my ... A: Food stamps are not taxable and will not affect your income taxes. Any individual seeking legal ...
estate sale of real estae	11/3/2009
Q: In advance thanks Dan for taking time to answer my question. My mother passed away in January 09, ... A: Unfortunately, you cannot distribute a capital loss on a trust tax return. So it never makes it to ...
incarcerated spouse	11/2/2009
Q: My question to you is:How should I file my taxes for the upcoming tax season when my husband is in ... A: Your spouse has to live with you at least six months or you are considered separated for tax ...
Tax Issue	11/1/2009
Q: I will try and keep this as concise as possible. I am a 34 year old male who currently owes the IRS ... A: Avi, Just because you owe over $25,000 does not mean that you cannot have a payment plan. ...
being claimed as a dependent	10/31/2009
Q: I'm 21. I've been taking care of myself since I graduated from high school in 2006. I moved on ... A: Your mom is not entitled to claim you as a dependent under these circumstances. Let her know that ...
possible fraudulent claim of a dependent	10/30/2009
Q: My father-in-law has lived with me since 2008. When I filed my 2008 taxes I claimed him as a ... A: Your first step should be to ask your father-in-law's if he filed and claimed himself. I have found ...
incarcerated spouse	10/28/2009
Q: My question to you is:How should I file my taxes for the upcoming tax season when my husband is in ... A: Sorry to hear that your husband is incarcerated. When you are married you only have two choices in ...
Deductions	10/27/2009
Q: I worked as accounts clerk and sale person, as well I studied University in accounting course. Can I ... A: You can only deduct these expenses if they were ordinary and necessary business expenses. Your car ...
Estate Final Return	10/26/2009
Q: My father's estate consists of stocks and there is a fair amount of dividend income. In the year ... A: The way that I handle this is by setting up an administrative trust for this very purpose. Run all ...
Tax Write-off	10/26/2009
Q: I need to know whether sponsoring a local soccer team can be considered a tax write-off. The ... A: This appears reasonable, but would be based on your particular facts and circumstances. This ...
Tax audit	10/26/2009
Q: I am being audited for the last 3 years. I guy who did my taxes I think buffed my return and/or did ... A: Most states have reciprocal agreements with the feds whereby they share the final results of their ...
noncustodial parent claiming minor child as deduction without proper form/papers	10/24/2009
Q: My former husband has claimed our daughter on his federal taxes for the last 12 years, per our ... A: The form you are talking about is Form 8332 which is a release of the exemption by the custodial ...
Inheritance Tax	10/23/2009
Q: My wife's mother in law passed away. She lived in Pennsylvannia. My wife's sister is named the ... A: The first obligation of the estate is to pay all its debts and taxes prior to making any ...
Tax Write-off	10/23/2009
Q: I need to know whether sponsoring a local soccer team can be considered a tax write-off. The ... A: To be deductible as a business expense, the expense must be ordinary and necessary. It is ordinary ...
Tax audit	10/22/2009
Q: I am being audited for the last 3 years. I guy who did my taxes I think buffed my return and/or did ... A: At a minimum, the tax preparer is liable for the penalties that were caused by his error. He may be ...
Short Sale Tax/1099	10/22/2009
Q: I am trying to buy a property on short sale, but the seller is having a difficult time getting a ... A: If they pay back less on the loan than was owed they will trigger a 1099 from the bank for income ...
Partnership Self Employment Income	10/22/2009
Q: I have a manufacturing client who is an LLC and has two members, both are general partners. Each ... A: This is correct based on the way that the LLC is currently structured. That is, that both members ...
Gift Taxes	10/21/2009
Q: there. I helped my mother sell her house, buy a new one and move into it this year. To do this, I ... A: The expenses that you incurred to help your mom are personal in nature and are not deductible. One ...
S_corp deduction	10/21/2009
Q: 100% S-corp shareholder/CEO owns building out of which business is run. Property is residential, but ... A: To take a deduction for interest and property taxes the taxpayer must be on title to the property ...
Taxes not taken out of paycheck	10/20/2009
Q: I just moved and started a new job a couple of weeks ago at the end of a pay period. I got my check ... A: It sounds like your check was done correctly. You just did not have enough pay on this check to get ...
Interest in partnership	10/20/2009
Q: My husband was a partner in a business and he passed away.His interest in business was transferred ... A: At the date of your husbands death, his interest in the partnership must be evaluated. You can also ...
Use of Company assigned vehicle	10/19/2009
Q: I was issued a company vehicle to use for service and technical support. It is a van that has a ... A: Your personal use of the vehicle is a taxable benefit that you receive. Your commute for example is ...
Inheritance Gift	10/19/2009
Q: My grandfather wants to give me and by brother $60,000 each before his death (he is 82). He is ... A: The recipient of a gift does not pay any gift taxes. Since you are receiving cash, there is no ...
$8000 Tax Credit	10/16/2009
Q: My husband and I are in the process of purchasing a home. I am a US citizen and he is a permanent ... A: The $8000 credit is the New Home Buyer Credit. To receive the credit you must be a new home buyer ...
estate tax	10/16/2009
Q: My wife and I are planning to move from Canada to the US. We are both retired. My wife is a US ... A: The United States taxes it's citizens on a world wide basis. The estate for your wife will include ...
Federal Employment Tax	10/16/2009
Q: I am the owner and sole employee of a Subchapter-S Corporation. Am I responsible for paying ... A: Technically no. The profits that are distributed to an owner of an S-Corporation are not subject to ...
stock cost basis in light of disclaimer	10/15/2009
Q: My mom died 2/01/04. My dad disclaimed her half of the estate in 4/04. I inherited it. In 2008, ... A: When you say disclaimed, I will assume your dad made a proper qualified disclaimer. If your parents ...
Tax deadline	10/15/2009
Q: I worked for my current employer part of the year in 2008 and received a W-2. I also had a ... A: Gary, For Federal tax purposes you will need to file Form 1040 and the required schedules. As you ...

All Questions in This Category

Dan Lively, Esq., LLM (Tax), CPA

Top Expert on this page

Expertise

I can answer questions regarding personal, corporate, partnership, estate and gift taxes. These questions can relate to problems, compliance, or planning. I am well versed in IRS audit and collection procedures and can respond to questions you may have in this area as well. I have a strong background in tax. I am a Tax Attorney, and Certified as a Taxation Specialist by the State Bar of California. I also have an LLM (Master of Laws in Taxation), and I am a Certified Public Accountant.

Experience

I am an attorney in the state of CA that is certified as a tax specialist by the State Bar of California Board of Legal Specialization. I am also a Certified Public Accountant, and have an LL.M in Taxation. Further, I am an adjunct professor of taxation at Whittier College of Law.

Organizations
Orange County Bar Association American Bar Association Orange Coast Estate Planning Counsel American Association of Attorney/CPA's California Bar Association

Publications
Apartment Journal Taxing Advice California CPA Journal

Education/Credentials
LL.M (Taxation) - Chapman University College of Law JD (Law) - Western State University College of Law BS (Accounting) - California State University, Northridge

Awards and Honors
• American Jurisprudence Award – Federal Taxation • American Jurisprudence Award – Wills • American Jurisprudence Award – Estate Taxation • Cal Jur Award – Partnership Tax • Cal Jur Award – Corporate Tax • Cal Jur Award – Tax Procedure

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