Estate Tax-Federal Estate Tax

xero asked:


What is a tax proration error on a Real Estate Contract and how do I spot one?

Tony Luarca

Sambo asked:


I see where real estate taxes paid for 2008 can be added into your standard deduction up to $500. I live in Fl and under Fl law you get to take a discount for early payment. My mortgage company paid my 2008 taxes early to take the discount; they were paid in Oct. 2007. Can I still claim them on my 2008 return? Any help is greatly appreciated.

Len Yetter

Jason B asked:


Do real estate tax decutions fall in the year of payment or the year of billing on the Federal Tax Return. I purchased my house in 8/2006 but paid the 2006 taxes in April of 2007. I paid the 2007 taxes in January of 2008. On my 2007 tax return do I deduct the 2006 taxes which were paid in 2007 or the 2007 taxes which were paid in 2008?
So if I pay my 2008 taxes before the year ends. I will be able to deduct my 2007 taxes (paid on January 8, 2008) and my 2008 taxes (paid before December 31, 2008)?

Carmela Knavel

Falafel & Loofah Aficionado asked:


Let’s say I have a bunch of stock that I bought a long time ago, and it has appreciated nicely by the time I die.

Now let’s say I’m fortunate enough to, with the help of my wife, create a $7 million estate to pass on to my children. At a value of $7 million, our estate is barely large enough to be subject to the “death tax”.

The GOP has said that everything I own has already been taxed, and thus should not be subject to the estate tax. When did I pay capital gains on the increase in the value of my stock?

The GOP has pointed out that letting a tax cut expire is like a tax increase. Thus, the opposite must be true: not having to pay a tax that you previously were subject to, is exactly like a tax cut.

So, doesn’t current policy provide 99% of Americans (the portion to which the estate tax does not apply) with a tax cut when they die, by forgiving the capital gains taxes owed?
“In logic, no axiom proves that just because one thing is true that its opposite is true.”

I’m not saying that the opposite true. Think of it as a “negative tax”, and I’m still talking about A->B. I have just changed the value of A and B, but conceptually it should hold true.

Saying B->A is like “A tax increase is exactly like letting a tax cut expire”, which is not what I’m saying.
The poker analogy doesn’t work. I’m talking about buying something, and while you own it, the asset increases in value.
“The flaw in your logic is simple. It only applies to one source of income and presupposes that the bulk of your wealth was achieved through this one source which was never taxed. Sorry real life doesn’t work like that.”

The only point I’m making here is that not everything in an estate has already been taxed. There’s no flaw in that logic. Capital gains are not taxed upon death.
“inheritance tax is higher than the highest tax rate!”

I’m not saying it doesn’t need reform. All I’m saying is that the “everything is taxed already” argument against the estate tax is flawed.
“If the money changes hands, it becomes someone else’s income.”

My point is that in this particular case, what you say is not true. If my dad gives me a share of stock when he dies, that’s not income for me and I am not taxed upon receipt of it.

If he bought the stock at $3, and it went up to $100 by the time he died, and he passes it to me and I sell it for $102, I am taxed only on the $2 increase in capital gain!!

The $97 increase from when my dad had it is still untaxed.
Bear -
It’s GOP propaganda that the farmer with the $1 million estate would be subject to the estate tax.

You are only subject to this tax if your estate is greater than $3.5 million (individual) or $7 million (couple).

Brookings did a study of how many farms and small businesses were affected by the estate tax, and it turns out to be fewer than 80.

Alejandro Buehlman

trovalta_stinks_2 asked:


Typically, fewer than 2 percent of deaths result in estates sizeable enough to be subject to the estate tax. In 2006, for example, less than 1 percent resulted in taxable estates.

http://money.cnn.com/2007/11/13/pf/taxes/buffett_estate_tax/index.htm?section=money_topstories

Don’t tell me have all the multi-millionaire cons on the board today?

Also, that double taxation argument is weak. Money is taxed everytime it changes hand. I pay a sales tax when I buy a TV. When that Best Buy employee gets paid, that money gets taxed again. When that employee buys his Big Mac, that money gets taxed once again.
jay,

You are relating an estate tax to an income tax?

Jeffie Hibberd

dogbird11 asked:


I was told that you can purchase homes by buying someone’s delinquent real estate taxes. I read a little about it but it seems that there is no guarantee you will actually get the property. Has anyone ever done this and can you give me any tips or info?

Cynthia Motta

Mitchell O asked:


I have a plot of vacant land that was falsely sold as a result of identity theft. The title company is going to offer a cash settlement. At what rate will the cash I receive be taxed? Does it count as earned income? I had no intention of selling the property, in the first place, now I’m afraid of being taxed on the settlement. The property I owned was a gift from my parents for which I paid nothing.

Thanks.

Tatiana

All Hail Hypnotoad! asked:


Keep in mind, the tax is already scheduled to resume at about 1.5 million dollars for 2011, but presently 2010 is scheduled to be NO estate taxes…most analyses expect for it to be reinstated retroactively for 2010, even if not done until March 2010, waiting for a version to pass both House and Senate.

I find it ironic about Sarah Palin’s patently absurd “death panel” BS, and the present state of the Estate tax, rally is an incentive (potentially) for wackos to kill before end of 2010.

Patty Gala

Jackie S asked:


I can’t find a straight answer on this so please help if you know the law.

Taxpayer died Nov 2008. There is a personal representative assigned. If the PR and the surviving spouse file a joint return for the deceased, then there will be a Federal & State refund. The refund is from taxes withheld from the deceased since the surviving spouse had only Social Security income of which none was taxable and no tax was withheld.
Can the surviving spouse deposit the refund check , or is it part of the estate and has to be deposited in estate account and go through probate process? State of Oklahoma. Regarding personal income taxes, not the estate tax return.

Raymond

donnafreeman1975 asked:


My dad passed, living in NJ we have a $675k exemption limit rather than the Fed amount. We are desperate not to pay any death tax. We are also desperate to handle the finalizing of the estate without the costs of lawyers.

There is very little liquid funds, and they all transferred to his spouse via joint tenants, beneficiary designation or specifics of bequests through his Will. The problem comes in that he had two rental properties that were in his name only and they were not specifically bequeathed in his Will. The remainder of the estate is to go into the Revocable Trust that he had set up.

The intent of the trust was to hold $675k of value for the benefit of his kids with the income of the rentals to be used by his wife during the remainder of her lifetime. The trouble is that the appraised value of the two properties came in at a combined $800k.

How would we list these properties on Schedule M? How would we title the properties? If we split the title of one of the properties to show something like 60% “Name of Trust” and 40% “Name of spouse”, how does this 40% legally flow to the spouse since the Will says that the remainder of the estate goes into the trust? The Will gives the executix the power to make elections as necessary including QTIP and GST elections. Although I really could use some help understanding exactly when and how to use these options.

Can anyone help me?

Val Pardo