Week 4 You Decide Cpa in Nearlakes City (102011) Essay

Capital gain or loss that happens to a dwelling that is a taxpayer’s main residence is

Portia owes Bon $500 on their roof repair contract, but refuses to pay. To collect, Bon files a me­chanic’s lien. Under a mechanic’s lien, security for the debt is repre­sented by

f) Yes, Jane can depreciate the vehicle and her jewelry making machine. The equipment can be depreciated with MACRS or

In summary, John and Jane would not be able to use 1031 tax exchange to purchase the new more expensive home. Due to the gain of buying an expensive house, it would not be considered “like-kind”. The additional money that is paid to acquire this

In 2013 Marianne sold land, building and equipment with a combined basis of $150,000 to an unrelated third party and in return received an installment note of $80,000 per year for five years. Of the $250,000 gain on sale, $150,000 was classified as Section 1245 gain and the remaining $100,000 was Section 1231 gain. In 2013, Marianne had a capital loss carryover of $60,000, $50,000 of which she used to offset her Section 1231 gain; she recognized no Section 1245 gain. The following year she recognized $40,000 of 1245 gain and $10,000 of Section 1231 gain which she promptly offset with the last $10,000 of the capital loss carryover. In 2015, she recognized $50,000 Section 1245 gain and no Section 1231 gain.

John and Jane own and rent out a duplex in Atlanta. They are getting older now and are planning to retire and to move to Miami. John and Jane would like to sell the Atlanta Duplex and purchase a small commercial building next to the lovely condo they bought on the beach. The main issue is John and Jane can only afford to buy this building if they are able to capture all of the existing equity in their Atlanta duplex. To avoid (defer) a taxable event when they sell their duplex John and Jane can utilize Section 1031 of the IRC. There are, however, a few hoops that John and Jane must jump through to qualify.

18) Barbara sells a house with an FMV of $170,000 to her daughter for $120,000. From this transaction, Barbara is deemed to have made a gift (before the annual exclusion) of

Generally, a realized gain from sale of personal residence can be excluded from gross income under Exclusion 121. The amount realized is the selling price of the property less any disposition costs. The adjusted basis is then determined and the amount is subtracted from the realized sum. This will give you the amount of loss or gain from the sale of the property. Since the couple occupied the sold home for at least 2 of the last 5 years they fulfill the requirements for exclusion 121 treatment. The exclusion amount for the couple if filing jointly is $500.000 and the calculation would be as follows:

b. Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using

2(b) Jane has inquired about the 1031 tax exchange if they could use that plus some of John’s money from the case to purchase a more expensive house.

1(a). As a result of a recent court settlement for a client John earned $300,000 for his law practice LLC. He wants to minimize his tax liability and understand how the IRS will treat this money earned. He lease’s office space for $3,500 per month. He wants to know the advantages in leasing office space versus purchasing the building.

Petitioner married Marianna Packard on November 22, 2008, and they have separate residences until purchasing the house for $203,500 in Tarpon Springs, Florida on December 1, 2009. Mrs. Packard owned and resided in a residence in Clearwater, Florida from April 1, 2004 to November 17, 2009. Petitioner rented a dwelling in Tarpon Springs, Florida, and he does not own the residence during the three years before December 1, 2009. Petitioner and Mrs. Packard

“When you rent, you write your monthly check and that money is gone forever. But when you own your home, you can deduct the cost of your mortgage loan interest from federal income taxes, and usually from your state taxes” (Home Buyers Guide, p4). Buying a home can be alarming, if you are not prepared, whether for the first time or even for the fifth time. If you take time before going into the process to gain the knowledge needed, one might see that

Dramatically decrease monthly mortgage payment and provide homeowners extra income to live each month. For example, a $575,000 mortgage at 6% interest rate is about $3,500 per month. The same loan at a 2% interest rate is approximately $2,100 per month.

Homeowner can deduct on their federal and state income taxes the amount of mortgage interest and real estate taxes they pay each year. For example, by itemizing deductions on the tax return, a married couple filing jointly can deduct $21,000 from his taxable income. A renting married couple may not have a lot of deductions, so they might choose the standard deduction, which is $10,300. Home receives an additional $10,700 in tax deduction than the renting couple. Assuming both couples each earn $100,000 per year. The renting couple would have to pay income tax on $89,700. The owning couple would pay tax on $79,000 difference of $10,000 owners can put in their pocket. Everyone wants to cut back on what they pay in taxes and home ownership not only decreases taxes, but builds equity.