Search found 1152 matches

by MarkNYC
Thu Aug 17, 2017 4:44 pm
Forum: Investing - Help with Personal Investments
Topic: Tax question about selling my house
Replies: 17
Views: 1334

Re: Tax question about selling my house

I didn't deduct depreciation while I rented it out so I am hoping it won't be affected. Sorry, you will pay "recapture" tax. Recapture is calculated on depreciation that was "allowed or allowable," according to Internal Revenue Code section 1250(b)(3). This means it doesn't matter if you took the d...
by MarkNYC
Wed Aug 16, 2017 9:47 am
Forum: Personal Finance (Not Investing)
Topic: Accountant liable for penalties?
Replies: 23
Views: 1893

Re: Accountant liable for penalties?

Update: My sister talked to the accountant, and he advised sending in the payment to stop the interest clock from running, and he is going to write a letter to the state explaining the situation and asking for a refund for the penalties. Sending in the payment now to stop the interest, and then req...
by MarkNYC
Tue Aug 15, 2017 2:46 pm
Forum: Personal Finance (Not Investing)
Topic: Accountant liable for penalties?
Replies: 23
Views: 1893

Re: Accountant liable for penalties?

How can you hold the accountant liable? He already told you last February that he wouldn't have time to look at it for several months. Now that he's looked at it and run the numbers, there is more money due. We were fine with him filing the extension, where the problem is is that he did not tell us...
by MarkNYC
Tue Aug 15, 2017 12:35 pm
Forum: Personal Finance (Not Investing)
Topic: Accountant liable for penalties?
Replies: 23
Views: 1893

Re: Accountant liable for penalties?

Regarding the IRS, if an extension was properly prepared and filed, there should only be the 1/% per month late-payment penalty if less than 90% of the tax was paid, and interest. Interest cannot be abated. For the penalty, you can call or write the IRS requesting penalty abatement due to "reasonabl...
by MarkNYC
Sun Aug 13, 2017 8:01 pm
Forum: Personal Finance (Not Investing)
Topic: Tax benefits when jointly owning home and how to take title.
Replies: 2
Views: 379

Re: Tax benefits when jointly owning home and how to take title.

If all 3 of you are listed as co-owners, then each person is entitled to take a deduction for real estate tax and mortgage interest to the extent that each person actually made the payments. The percentage of ownership doesn't matter. You can deduct mortgage interest on a principal residence and one...
by MarkNYC
Mon Aug 07, 2017 2:12 pm
Forum: Personal Finance (Not Investing)
Topic: Roth, Taxes and Mistakes
Replies: 41
Views: 4025

Re: Roth, Taxes and Mistakes

Without defending the actions of the CPA, I'm going to put some blame on the IRS for allowing the OP and other taxpayers to get into this situation. Here's why: I have never heard of the IRS notifying a taxpayer of an excess Roth IRA contribution. If it ever happens, it's rare, even though the IRS h...
by MarkNYC
Thu Aug 03, 2017 6:59 pm
Forum: Personal Finance (Not Investing)
Topic: Question on Form 8960, NIIT
Replies: 2
Views: 198

Re: Question on Form 8960, NIIT

The capital gain from the sale of the mutual fund would be subject to NIIT. If you are a nonpassive shareholder in an S Corp, the ordinary income from the business activity would not be subject to net investment income tax, nor would gain from sale of property used in the business, or gain from sale...
by MarkNYC
Mon Jul 31, 2017 11:24 am
Forum: Personal Finance (Not Investing)
Topic: 1031 Exchange
Replies: 20
Views: 1186

Re: 1031 Exchange

This article supports the idea that it now takes 10 years, not 5 years, to convert a rental property into a primary residence for tax sheltering: https://www.forbes.com/2010/01/26/capital-gains-tax-1031-vacation-home-personal-finance-robert-wood.html The language in the article is misleading. There...
by MarkNYC
Mon Jul 31, 2017 9:17 am
Forum: Personal Finance (Not Investing)
Topic: 1031 Exchange
Replies: 20
Views: 1186

Re: 1031 Exchange

When applying the principal residence exclusion, any gain attributable to depreciation will not be eligible for the exclusion. In addition, any gain attributable to "nonqualified use" will not be eligible for the exclusion. "Nonqualified use" generally means any period after Jan 1, 2009 when the pro...
by MarkNYC
Wed Jul 26, 2017 7:58 am
Forum: Personal Finance (Not Investing)
Topic: Taxes on capital gains
Replies: 11
Views: 1183

Re: Taxes on capital gains

The original question was not specifically about federal income tax, but rather the amount of gains "where tax is not required to be paid", so the potential for state tax should not be overlooked. For example, if the only income is $48K long-term gains, a NY State resident would owe zero f...
by MarkNYC
Tue Jul 18, 2017 5:45 pm
Forum: Personal Finance (Not Investing)
Topic: Excess 401k Contribution / Correction 1099 Code P
Replies: 4
Views: 294

Re: Excess 401k Contribution / Correction 1099 Code P

The taxable earnings portion of the distribution, if any, should be shown in box 2a of the 1099-R.

The aggregate of all gross distribution amounts from non-IRA Forms 1099-R should be reported on line 16a.
by MarkNYC
Tue Jul 18, 2017 3:37 pm
Forum: Personal Finance (Not Investing)
Topic: Excess 401k Contribution / Correction 1099 Code P
Replies: 4
Views: 294

Re: Excess 401k Contribution / Correction 1099 Code P

I think you have it correct. The excess deferral (not the same as excess contribution) is always taxable in the year of deferral. The excess should be reported on the wage line 7 of your 2015 1040. Since the excess was distributed prior to 4/15 of the succeeding year, it is not taxable in the year d...
by MarkNYC
Thu Jul 13, 2017 6:55 pm
Forum: Personal Finance (Not Investing)
Topic: Selling Property With Two Houses / Capital Gains
Replies: 10
Views: 601

Re: Selling Property With Two Houses / Capital Gains

The "nonqualified use" provision of the principal residence exclusion law took effect Jan 1, 2009, brought about by too many taxpayers taking their long-term rental properties that had gone way up in value and moving in for 2 years then selling and excluding the entire gain, producing a ta...
by MarkNYC
Thu Jul 13, 2017 6:39 pm
Forum: Personal Finance (Not Investing)
Topic: Selling Property With Two Houses / Capital Gains
Replies: 10
Views: 601

Re: Selling Property With Two Houses / Capital Gains

Since there are two separate buildings, the transaction must be reported as two separate sales - sale of a rental property and sale of a principal residence. When calculating the gains, sales proceeds and basis must be allocated between the two properties under the same method used to determine dep...
by MarkNYC
Thu Jul 13, 2017 4:27 pm
Forum: Personal Finance (Not Investing)
Topic: Selling Property With Two Houses / Capital Gains
Replies: 10
Views: 601

Re: Selling Property With Two Houses / Capital Gains

Since there are two separate buildings, the transaction must be reported as two separate sales - sale of a rental property and sale of a principal residence. When calculating the gains, sales proceeds and basis must be allocated between the two properties under the same method used to determine depr...
by MarkNYC
Tue Jul 11, 2017 3:46 pm
Forum: Personal Finance (Not Investing)
Topic: Income tax preparation cost?
Replies: 32
Views: 2717

Re: Income tax preparation cost?

We had one W-2, a 1099 from my wife's pension, two 1099-INTs, my brokerage statement from TDAmeritrade ( I did some tax loss harvesting ), and three or four cash charitable contributions. That's about it. The only reason I didn't do it myself was because I had some long term cap gains that were exe...
by MarkNYC
Mon Jul 03, 2017 7:51 pm
Forum: Personal Finance (Not Investing)
Topic: Best way to dispute/correct IRS bill
Replies: 17
Views: 1496

Re: Best way to dispute/correct IRS bill

In this situation, I doubt that a phone call can resolve the matter, because I doubt the IRS phone representative can have the tax recalculated to properly take into account the qualified dividend portion of the unreported dividends. When dividends are left off the tax return, I think it's common fo...
by MarkNYC
Wed Jun 28, 2017 1:01 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Liability on Selling Former Residence (Now Rental)
Replies: 14
Views: 957

Re: Tax Liability on Selling Former Residence (Now Rental)

I'm going to disagree with Mule on this one, but I also don't agree with the sources provided by jimb. There are two issues. One is the effect depreciation has on adjusted basis. The other is how much of the gain upon sale attributable to depreciation is "recaptured" in calculating tax. Re...
by MarkNYC
Mon Jun 12, 2017 12:57 pm
Forum: Investing - Help with Personal Investments
Topic: How to fix several years of excess contributions to Roth IRA?
Replies: 26
Views: 2487

Re: How to fix several years of excess contributions to Roth IRA?

This situation is not so easy to fix. Let's assume excess Roth contributions of $5,500 per year for 7 years (2010-2016), for a total of $38.5K. Although I've never seen it done, I believe the proper corrective procedure would be as follows: First for 2016, prior to 10/15/17 the excess could either b...
by MarkNYC
Wed May 24, 2017 4:18 pm
Forum: Personal Finance (Not Investing)
Topic: Verifying IRS expectations on Inherited IRA
Replies: 20
Views: 1250

Re: Verifying IRS expectations on Inherited IRA

The IRA custodian must report annually to the IRS any IRA contributions and the account's year-end value, which is done on Form 5498. In addition, the IRA custodian must report other information to the IRA owner: (1) by Jan 31 of the following year, the account value as of the end of the year. (2) e...
by MarkNYC
Fri May 19, 2017 3:06 pm
Forum: Personal Finance (Not Investing)
Topic: IRS says I owe..I don't
Replies: 34
Views: 5550

Re: IRS says I owe..I don't

Based on what you wrote in the opening post, for both 2014 and 2015 the only non-blank lines of Form 8606 should be 1 6500. (Nondeductible contributions for year) 3 6500. (sum of lines 1 and 2) 5 6500. (line 3 minus line 4) 6 0. (traditional IRA value at end of year) 8 6500. (conversion to Roth IRA...
by MarkNYC
Thu May 18, 2017 12:50 pm
Forum: Personal Finance (Not Investing)
Topic: Ticklish Tax Puzzle
Replies: 4
Views: 922

Re: Ticklish Tax Puzzle

Did the taxpayer make an election on her 2015 tax return to "waive the carryback period"? (see carolinaman's post above). If not, then the 2015 NOL cannot be carried forward and deducted on the 2016 tax return. It must first be carried back to 2013, unless taxable income was zero for both ...
by MarkNYC
Wed May 03, 2017 9:46 pm
Forum: Personal Finance (Not Investing)
Topic: Tax on index options
Replies: 3
Views: 489

Re: Tax on index options

The net gain or loss from broad-based equity index options is taxed as a Sec 1256 contract, so that 60% of the gain/loss is taxed as long-term and 40% short term. The proceeds from the option sale will not show on the 1099B, but the annual net Sec 1256 gain or loss should show separately on the 1099...
by MarkNYC
Wed May 03, 2017 9:14 pm
Forum: Personal Finance (Not Investing)
Topic: Trusts taxes distributions
Replies: 22
Views: 2190

Re: Trusts taxes distributions

1. Assume a "non-grantor" trust has zero DNI and makes a purely discretionary distribution of $10,000 cash to a beneficiary. I assume that is not a taxable event and does not get listed on the tax return? 2. Again assume a $10,000 cash purely discretionary distribution. But (in this examp...
by MarkNYC
Sat Apr 29, 2017 4:25 pm
Forum: Personal Finance (Not Investing)
Topic: Forced to use carryover losses
Replies: 12
Views: 1268

Re: Forced to use carryover losses

I casually called them options, but they are technically restricted stock units. The tax treatment of Restricted Stock Units is not much different than nonqualified options. When Restricted Stock Units become "vested" (meaning you actually own them), the shares of stock are then issued to...
by MarkNYC
Sat Apr 29, 2017 2:16 pm
Forum: Personal Finance (Not Investing)
Topic: Forced to use carryover losses
Replies: 12
Views: 1268

Re: Forced to use carryover losses

I casually called them options, but they are technically restricted stock units. The tax treatment of Restricted Stock Units is not much different than nonqualified options. When Restricted Stock Units become "vested" (meaning you actually own them), the shares of stock are then issued to...
by MarkNYC
Sat Apr 29, 2017 8:53 am
Forum: Personal Finance (Not Investing)
Topic: Forced to use carryover losses
Replies: 12
Views: 1268

Re: Forced to use carryover losses

jdilla1107 wrote:This year my company is going through a sales process and I will get a significant amount of long term capital gain from exercising options.

Are you sure you will be realizing long-term capital gains? The exercise of company options usually generates ordinary income.
by MarkNYC
Wed Apr 26, 2017 10:58 am
Forum: Personal Finance (Not Investing)
Topic: IRS form 8606 Inherited IRA w/ basis
Replies: 5
Views: 584

Re: IRS form 8606 Inherited IRA w/ basis

You filed the form correctly. It should be in your name and SSN. It's possible that in some years a taxpayer might have to file two separate Forms 8606: one for various reasons for their own IRA, and one for an inherited IRA that has basis.
by MarkNYC
Sun Apr 23, 2017 3:45 pm
Forum: Personal Consumer Issues
Topic: Any golfers played Bandon Dunes on the Oregon coast?
Replies: 5
Views: 674

Re: Any golfers played Bandon Dunes on the Oregon coast?

My brothers and I went about 6 or 7 years ago. It is remote, but for serious golfers, it's fantastic. Great courses and a superbly-run facility. There is a good book about the origin of Bandon Dunes, called Dream Golf, which is worth reading beforehand. Bandon Dunes is an unforgettable golf experien...
by MarkNYC
Tue Apr 18, 2017 8:14 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes- okay to just drop in the mail today??
Replies: 29
Views: 3446

Re: Taxes- okay to just drop in the mail today??

A properly prepared extension avoids a 5% per month late filing penalty (which maxes out at 25%). But if the full amount isn't paid when due, there is a 1/2 of 1% per month late payment penalty ... The federal late payment penalty of 1/2 of 1% per month only applies if less than 90% of the total ta...
by MarkNYC
Sat Apr 15, 2017 11:05 am
Forum: Personal Finance (Not Investing)
Topic: Wrong 1099-R issued!
Replies: 16
Views: 1374

Re: Wrong 1099-R issued!

I finally got around to doing my taxes and I realized my financial institution issued a wrong 1099_R. I did a Roth conversion but it lists the $5,500 as a taxable early withdraw. Box 7 is a 2, instead of a G. How easy is it get them to fix this mistake by the deadline? The 1099-R is not incorrect. ...
by MarkNYC
Fri Mar 31, 2017 6:45 pm
Forum: Personal Finance (Not Investing)
Topic: Tax question: K-1 Form 1041 cash inheritance
Replies: 5
Views: 686

Re: Tax question: K-1 Form 1041 cash inheritance

There's a good chance that the $16,000 income on the K-1 represents IRA or pension/401K income that was paid to the trust as beneficiary of the retirement plan, which the trust passed out to you as beneficiary of the trust. IRA/pension income is not subject to the Net Investment Income tax, so the n...
by MarkNYC
Thu Mar 30, 2017 12:01 pm
Forum: Personal Finance (Not Investing)
Topic: Refund from IRS was $500 more than it should have been.
Replies: 9
Views: 1576

Re: Refund from IRS was $500 more than it should have been.

I did my taxes with TaxAct and electronically filed through them. My refund was to be $495 and yesterday I received $995 from the IRS deposited into my bank account. Should I call the IRS and tell them of their error or will they catch the mistake and remove the extra $500 from my bank account on t...
by MarkNYC
Thu Mar 23, 2017 8:00 pm
Forum: Personal Finance (Not Investing)
Topic: To file or not - irrevocable trust
Replies: 4
Views: 483

Re: To file or not - irrevocable trust

You are correct. You have to file if the trust has gross income of $600 or more, or if you have any taxable income. See Section 6012(a)(4). The statute says "any," but "no matter how small" means the same thing as "any." It seems to me that these specific filing instru...
by MarkNYC
Sat Mar 18, 2017 6:30 pm
Forum: Personal Finance (Not Investing)
Topic: Tax treatment of partnership K1 (form 1065) expenses
Replies: 2
Views: 370

Re: Tax treatment of partnership K1 (form 1065) expenses

Portfolio deductions are considered a miscellaneous itemized deduction. Miscellaneous itemized deductions that do not exceed 2% of adjusted gross income are not deductible, and they cannot be carried forward to any future year. They are lost.
by MarkNYC
Thu Mar 16, 2017 1:16 pm
Forum: Personal Finance (Not Investing)
Topic: Amend Return - MFJ to MFS
Replies: 37
Views: 2165

Re: Amend Return - MFJ to MFS

Since 2008 the 1040 instructions have also said "Do not file more than one original return for the same year". It's in the section "How to avoid common mistakes". Yes, the article I linked above from the Procedurally Taxing blog (written by Keith Fogg , a tax law professor who p...
by MarkNYC
Wed Mar 15, 2017 6:49 pm
Forum: Personal Finance (Not Investing)
Topic: Amend Return - MFJ to MFS
Replies: 37
Views: 2165

Re: Amend Return - MFJ to MFS

Filing a superseding tax return is currently permitted for certain types of tax returns, but I don't believe that Form 1040 is one of them. If anyone knows of a provision in the code, or regulations, or IRS filing instructions that currently allows filing a "superseding return" for Form 10...
by MarkNYC
Wed Mar 15, 2017 4:35 pm
Forum: Personal Finance (Not Investing)
Topic: Amend Return - MFJ to MFS
Replies: 37
Views: 2165

Re: Amend Return - MFJ to MFS

... However, you can't amend to change from joint to separate. Treas. Reg. § 1.6013-1(a)(1): m. "For any taxable year with respect to which a joint return has been filed, separate returns shall not be made by the spouses after the time for filing the return of either has expired ." (quote...
by MarkNYC
Sun Mar 12, 2017 8:37 pm
Forum: Personal Finance (Not Investing)
Topic: Taxation Across State Lines 1120S (New York / New Jersey)
Replies: 14
Views: 1046

Re: Taxation Across State Lines 1120S (New York / New Jersey)

Ah, I see. I didn't know that's how they calculated the NY portion. I thought it was just on the wages, but I suppose this does make sense. In that case the benefit really does disappear. The 529 would have been the only only reason I could tell to have NY based income if I didn't absolutely need i...
by MarkNYC
Sun Mar 12, 2017 8:32 pm
Forum: Investing - Help with Personal Investments
Topic: Tax time UTMA/TurboTax and how to file a child's UTMA 1099-DIV. What do I do?
Replies: 22
Views: 1030

Re: Tax time UTMA/TurboTax and how to file a child's UTMA 1099-DIV. What do I do?

We have a dependent child with a (very) low balance UTMA. We are in the 39% marginal bracket with an effective tax rate of 31%. I did our taxes using TurboTax and did not include the UTMA account (thinking that I should file the child's taxes separately since she only received $14.26 in ordinary di...
by MarkNYC
Sun Mar 12, 2017 7:11 pm
Forum: Personal Finance (Not Investing)
Topic: Taxation Across State Lines 1120S (New York / New Jersey)
Replies: 14
Views: 1046

Re: Taxation Across State Lines 1120S (New York / New Jersey)

I still have about 50K of regular wages that are being taxed at about 1.4% higher rate in NY State (4.13 vs 5.55% Effective)... Therefore if I do contribute to a NY 529 plan, I should be able to reduce my NY Taxable gross income by about 20%. A NY resident can deduct a NY 529 Plan contribution dire...
by MarkNYC
Sun Mar 12, 2017 6:46 pm
Forum: Personal Finance (Not Investing)
Topic: Taxation Across State Lines 1120S (New York / New Jersey)
Replies: 14
Views: 1046

Re: Taxation Across State Lines 1120S (New York / New Jersey)

I still have about 50K of regular wages that are being taxed at about 1.4% higher rate in NY State (4.13 vs 5.55% Effective)... Therefore if I do contribute to a NY 529 plan, I should be able to reduce my NY Taxable gross income by about 20%. A NY resident can deduct a NY 529 Plan contribution dire...
by MarkNYC
Sat Mar 11, 2017 2:00 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Question on Refund from the State
Replies: 16
Views: 1305

Re: Tax Question on Refund from the State

When the unexpected refund is a round number like $3,500, my first guess would be that the OP made a $3,500 state estimated tax payment or extension payment that was not listed on the tax return. In that situation, the federal return is not affected and the state tax refund is not taxable since the ...
by MarkNYC
Fri Mar 10, 2017 9:59 pm
Forum: Personal Finance (Not Investing)
Topic: Tax Question on Refund from the State
Replies: 16
Views: 1305

Re: Tax Question on Refund from the State

Thank you all. It's going to be taxable, and it looks like I'll declare it on my 2017 federal taxes. As an aside, it was the state the identified the issue. I knew that I overpaid but I figured that I would have to file an amended return. Are your sure it will be taxable? What was the specific erro...
by MarkNYC
Fri Mar 10, 2017 6:04 pm
Forum: Investing - Theory, News & General
Topic: When is tax due on IRA distribution?
Replies: 14
Views: 983

Re: When is tax due on IRA distribution?

How are you going to withhold at the end of the year if you aren't going to have any more income for the year? In December I figured that our scant withholding was insufficient to avoid penalties for underpayment. Solution: Take an IRA distribution of about $3000 and withhold 80% for federal and 20...
by MarkNYC
Fri Mar 10, 2017 11:55 am
Forum: Personal Finance (Not Investing)
Topic: Taxation of Irrevocable Trust Income
Replies: 44
Views: 2446

Re: Taxation of Irrevocable Trust Income

Thanks for giving me the opportunity to think about these things once again. I've been away from the trust business for a few years! Gill Is there a book available that discusses taxation of trusts that you can recommend for those who want to read about it? MarkNYC or bsteiner may be able to recomm...
by MarkNYC
Thu Mar 09, 2017 4:20 pm
Forum: Investing - Help with Personal Investments
Topic: House: Pay Cash then Mortgage (Delayed Financing) - worth it?
Replies: 22
Views: 2006

Re: House: Pay Cash then Mortgage (Delayed Financing) - worth it?

There is another issue to consider. If the purchase of a principal or second residence is all cash and a mortgage is taken out within 90 days, the loan qualifies as acquisition debt and the interest is deductible up to $1million of debt. If the loan is taken out more than 90 days after purchase, the...
by MarkNYC
Wed Mar 08, 2017 9:18 pm
Forum: Personal Finance (Not Investing)
Topic: Taxation of Irrevocable Trust Income
Replies: 44
Views: 2446

Re: Taxation of Irrevocable Trust Income

The Trust document DOES require net income to be paid. So I guess allowing $9000 to accumulate (and be taxed at the Trusts's lower tax rate) can't happen. I see that there's an election to actually distribute some of all of the income by the end of the first week of March following the tax year in ...
by MarkNYC
Tue Mar 07, 2017 3:14 pm
Forum: Personal Finance (Not Investing)
Topic: Bypass Trust - should capital gains be distributed?
Replies: 16
Views: 1116

Re: Bypass Trust - should capital gains be distributed?

Bruce, In this and similar situations, is it your view that discretionary distributions of principal automatically carry out any current-year capital gains to the beneficiary, or that capital gains are not included in Distributable Net Income (DNI), therefore the capital gains remain (taxable) in t...
by MarkNYC
Tue Mar 07, 2017 12:52 pm
Forum: Personal Finance (Not Investing)
Topic: Bypass Trust - should capital gains be distributed?
Replies: 16
Views: 1116

Re: Bypass Trust - should capital gains be distributed?

... What if assets are distributed in kind? Do they retain the same stepped-up cost basis from when the trust was formed? ... Generally yes, except the trust can elect to treat the distributions as sales, in which case the trust will have capital gain and the recipient will have a new basis equal t...