Search found 324 matches

by HouseStark
Sun Dec 29, 2013 10:59 am
Forum: Personal Investments
Topic: Lost records for cost basis of gifted Coca-Cola stock
Replies: 16
Views: 3592

Re: Lost records for cost basis of gifted Coca-Cola stock

The reinvested dividends would have increased the total cost basis over whatever period the reinvestment was occurring and that increase in basis can calculated with a high level of accuracy by using dividend information for each quarter of that period, by starting with the current number of shares and working backwards. You can construct a spreadsheet to do that on your own or, I believe there are online services designed to do exactly that, but I've never used one. If the best you can do for the original basis of the shares is a reasonable estimate, then that's what you'd use on your tax return. If, for example the shares were acquired at an unknown date in 1983, then you could look up the trading range of Coca-Cola for that year and use ...
by HouseStark
Fri Dec 27, 2013 10:11 am
Forum: Personal Investments
Topic: Fidelity Tax Free Bond question
Replies: 3
Views: 610

Re: Fidelity Tax Free Bond question

itsf8 wrote:Hello,
As it is long term, would anyone have thoughts about Fidelity Tax Free Bond (FTABX). It's in a Fido brokerage acount, and wondering if I should sell at a loss.
The answer depends on its current role in your portfolio and why you bought it in the first place. It's duration was probably hasn't changed that much, so there should have been some justification for adding a longer-term fund to your portfolio when you did. If you think it's a good time to move to a shorter duration bond fund, then that may be a move to make. Realizing the capital tax loss would be an added benefit, but it shouldn't be the driving factor in the decision.
by HouseStark
Fri Dec 27, 2013 10:02 am
Forum: Investing - Theory, News & General
Topic: [Why did my fund suddenly drop in value?]
Replies: 347
Views: 392403

Re: Why did VCVSX drop 8% today?

telcoguy wrote:Why is the SEC yield only 2.24% when the fund just paid a $1.18 on a $13 share?

Thanks for the education.
SEC yield includes interest and dividends of the fund's bond assets, but does not include capital gains distributions generated by the trading of those assets. Also, the published yield does not likely update immediately for a distribution that just occurred.
by HouseStark
Mon Dec 23, 2013 3:30 pm
Forum: Personal Finance (Not Investing)
Topic: Took 2k out of my Vanguard money market
Replies: 21
Views: 2895

Re: Took 2k out of my Vanguard money market

sscritic wrote:And so does H&R Block. I wish they would let you run it both ways and let you pick what works for you, like they do for married filing jointly or separately. It may have to do with the requirements for e-filing. The IRS might only accept whole dollar figures, but that is just a wild guess without looking at the e-file data format.
I don't know if the IRS only accepts whole dollar amounts, but I'm quite sure they only record whole amounts because that is how they report numbers on IRS transcripts and correspondence, such as a CP2000 underreporting notice. They "round" by simply dropping amounts after the decimal, that is, both $13.87 and $13.05 become $13 in their records.
by HouseStark
Mon Dec 23, 2013 3:15 pm
Forum: Personal Investments
Topic: transfer of shares tax consequences
Replies: 10
Views: 877

Re: transfer of shares tax consequences

I will be setting up a transfer of stock shares from a relative to myself. I was originally planning to sell them all immediately but then thought about tax consequences. The stock has been owned for years by my relative. What tax consequences would I face if I sold them immediately? Do I have to hold them for 1 year to be considered long term capital gains? Would the entire amount be considered a gain since they were transferred to me and I didn't purchase them? Thanks for the help. The general rule is that basis of an appreciated asset transfers with the gift of that asset. So if your relative had stock with a current fair market value of $10,000 with a basis of $2000 and transferred that stock to you, the shares would still have a basis...
by HouseStark
Mon Dec 23, 2013 2:45 pm
Forum: Personal Finance (Not Investing)
Topic: Don't have original will to close Roth IRA
Replies: 16
Views: 2379

Re: Don't have orgininal will to close Roth IRA

The first thing should be to find out the named beneficiaries of your brother's Roth IRA. The custodian of the IRA should be informed of your brother's passing and they can provide assistance in handling the disposition of the IRA assets. Unless there is no named beneficiary, in which case the estate will become the beneficiary, the Roth IRA will pass to the named beneficiaries. It is important to understand that this is not controlled by the will. It is controlled by the IRA beneficiary designation on file with the IRA custodian.

It is also important to understand that I am no attorney and am simply speaking from background knowledge.
by HouseStark
Mon Dec 23, 2013 2:19 pm
Forum: Personal Investments
Topic: HSA and tax questions, Form 8889
Replies: 2
Views: 1278

Re: HSA and tax questions, Form 8889

It appears you understand how HSA contributions made through payroll deduction via a "cafeteria plan" will lower both your taxable income and your income subject to FICA. You are correct that such HSA contributions work basically the same way your health insurance premiums paid through payroll deduction work by lowering taxable income and FICA income. Such HSA contributions are reportable on Form 8889 for purposes of determining the amount you are eligible to contribute and to determine whether any HSA contributions will be deductible on the 1040. If the HSA contributions were made through payroll deduction then they are not deductible on the 1040. If you are eligible to contribute more than that amount you could make direct contr...
by HouseStark
Fri Dec 13, 2013 1:46 pm
Forum: Personal Finance (Not Investing)
Topic: Question on Rental vs REIT
Replies: 2
Views: 455

Re: Question on Rental vs REIT

Depending upon your tax situation and the particulars of the property, owning rental property could produce an ongoing loss which is deductible against ordinary income. That cannot happen with owning a REIT. As pointed out, holding shares of a REIT is very similar to owning shares of a general type of mutual fund. One difference is that REITs pay only ordinary dividends, not qualified dividends. Some REITs may have limited liquidity, but most are much easier to get out of than a piece of real estate. Along with all the potential hassles, expense, lack of diversification and liquidity, and the potential liability of owning income real estate, I don't think it can be considered to be equivalent to owning shares of a REIT. That's not saying th...
by HouseStark
Fri Dec 13, 2013 12:58 pm
Forum: Personal Finance (Not Investing)
Topic: Rental Advice
Replies: 22
Views: 2079

Re: Rental Advice

tj wrote: I might as well throw this out there: On schedule E, would you put HOA fees under "Management fees" or as a separate expense under "Other" ? :)
I would put HOA fee/dues under "Other". They have to be paid whether a unit is owner-occupied or a rental, so they are not related to the management of the unit as a rental.
by HouseStark
Fri Dec 13, 2013 9:53 am
Forum: Personal Investments
Topic: Rollover IRA
Replies: 7
Views: 753

Re: Rollover IRA

Since we are over the income limit for Roth IRA contributions, wouldn't this still be considered a backdoor of sorts? What you call it isn't really that important, but the distinction I was making is that the backdoor aspect of the description comes from making Traditional IRA contributions in order to convert to a Roth for which direct contributions are ineligible. You'd talked about converting an existing IRA, not making new contributions. That's just a straight-forward conversion. If you make new contributions to the TIRA in order to convert, those would be backdoor Roth contributions. Also, using the backdoor approach, usually the new Traditional IRA contributions are non-deductible, so the TIRA has "contribution basis", so t...
by HouseStark
Thu Dec 12, 2013 1:34 pm
Forum: Personal Finance (Not Investing)
Topic: Rental Advice
Replies: 22
Views: 2079

Re: Rental Advice

I am probably about $17k away from getting rid of PMI. So not very close. At our current rate of savings, I could pay that down fairly quickly though. Maybe within 2-3 years. But at that point it would be a decision of whether to get rid of PMI on the rental or our primary residence. I didn't realize that principal wasn't deductible. I still need to do more research. I am actually an accountant, though I do not have a CPA and I work in the Not-For-Profit world (so I do not have an extensive tax knowledge base). I will check out the book reference above. Thanks for the suggestions! Payments of principal are not deductible whether they are for a mortgage on a rental property (deducted on Schedule E) or for a mortgage on a personal residence ...
by HouseStark
Thu Dec 12, 2013 9:25 am
Forum: Personal Finance (Not Investing)
Topic: Spousal IRA contributions
Replies: 16
Views: 3992

Re: Spousal IRA contributions

How does one establish a spousal IRA? I cannot deduct anything for doing so because of AGI, but would be interested in contributing just for tax deferred earnings and possible Roth conversion later after I change my SEP to an individual 401(k). You establish a spousal IRA the same way you would any IRA. First, however, get a spouse, if you don't have one already. Then the spouse, meaning the one without earned income, would go to an IRA provider, such as Vanguard or Fidelity, and complete the application and arrange for the contribution. There is no proof or certification required to show eligibility for a spousal IRA, just like no one has to demonstrate eligibility to open any IRA. That doesn't mean the requirements of having earned incom...
by HouseStark
Wed Dec 11, 2013 9:00 am
Forum: Personal Investments
Topic: Rollover IRA
Replies: 7
Views: 753

Re: Rollover IRA

DireWolf wrote:We are considering converting it to a backdoor Roth IRA, but I think we would take a tax haircut on it.
That would not be what is described as a backdoor Roth, since that is a way of making new contributions to a Traditional IRA and then converting to a Roth, when not permitted to make Roth contributions directly. The conversion to a Roth IRA you are discussing would just be a regular conversion, since the money is already sitting in the IRA.
by HouseStark
Wed Dec 11, 2013 8:54 am
Forum: Personal Investments
Topic: Rollover IRA
Replies: 7
Views: 753

Re: Rollover IRA

DireWolf wrote:My wife has a rollover IRA at Vanguard from her previous 401K. Can we continue to contribute to this IRA every year? If so, with what limitations?
There are no restrictions on contributions peculiar to a rollover IRA. She can make contributions to the IRA under the general limitations for Traditional IRAs. However, if she may want to roll this IRA into a new 401(k) in the future, employer plan rules permitting, then it would be advisable to not have any non-deductible contributions to the IRA, so that it is all pre-tax money.
by HouseStark
Fri Dec 06, 2013 7:45 pm
Forum: Personal Finance (Not Investing)
Topic: roth ira withdrawals and redeposits
Replies: 3
Views: 434

Re: roth ira withdrawals and redeposits

If you, or your spouse do not have earned income then you cannot make contributions to a Roth, or any other IRA. The only way you could put a distribution back into your Roth would be if it was considered to be a rollover and the contribution was made within the required 60 day window. Don't take a distribution from the Roth if you want it to go back in, is the bottom line.
by HouseStark
Fri Dec 06, 2013 11:03 am
Forum: Personal Investments
Topic: Did I just mess up our backdoor ROTHs?
Replies: 17
Views: 1180

Re: Did I just mess up our backdoor ROTHs?

The OP's question is not related to the wash sale rule, rather it's about whether Vanguard's limitations on sales and repurchases of a given fund within a certain timeframe will prevent immediate repurchase of a fund following its sale in a Traditional to Roth IRA conversion at Vanguard.
I don't know the answer to that question, or whether that would even be treated the same as an actual sale of the fund, but it seems that switching fund holdings between the spouses two IRAs as suggested would circumvent any restriction since those IRAs are separate accounts.
by HouseStark
Wed Dec 04, 2013 9:57 pm
Forum: Personal Finance (Not Investing)
Topic: Questions about Charitable Trust or Gift Annunity
Replies: 8
Views: 1026

Re: Questions about Charitable Trust or Gift Annunity

Yes, the gains would be LTCG. It sounds like a DAF is the way for me to go. A $50k DAF this year would save me about $25k in taxes and avoid up to another $4 or $5k in LTCG taxes. And it would give me a generous fund from which to dispense further contributions. What I do not understand yet is how those contributions are made? Do I control the sale of the stock? And the investment of assets after the sale? Then I can control the donations from the DAF to my favorite charities? Thanks for your advice on this. You should understand that YOUR deductible donation is made to the Donor Advised Fund. Once you make that donation the money (or assets) belong to the DAF. You don't control the sale of donated stock. You can direct donations to your c...
by HouseStark
Wed Dec 04, 2013 4:48 pm
Forum: Personal Finance (Not Investing)
Topic: capital gains: am I calculating this correctly?
Replies: 19
Views: 1487

Re: capital gains: am I calculating this correctly?

goodenoughinvestor wrote: 3. I would then transfer $29500 of the proceeds to my Roths and rebuy the fund. I would also rebuy the fund using the"leftover" $7375 shares in my taxable account to update the cost basis.
You seem to be getting a handle on the gains issue, but I don't understand this part: how do you "transfer" the $23000 to your Roth 401(k)? Are you talking about in 2013, or over the course of 2014? Is this for a self-employed solo 401(k)? Otherwise, how could you do the contribution of so much in 2013 when contributions usually take place via deferral of pay, not by lump-sum contribution like you can do for the Roth IRA.
by HouseStark
Wed Dec 04, 2013 10:14 am
Forum: Personal Finance (Not Investing)
Topic: Section 179 Vehicle Deduction + Mileage Deduction
Replies: 2
Views: 652

Re: Section 179 Vehicle Deduction + Mileage Deduction

I don't see why both the Sec 179 and the standard mileage deduction cannot be used when they will be used for two different vehicles. I agree both could not be used for the same vehicle, but this situation is for two separate vehicles. The entries in the worksheets and the return need to properly reflect that these are separate vehicles.
by HouseStark
Sat Nov 30, 2013 11:46 am
Forum: Personal Finance (Not Investing)
Topic: Help with EIN # clarification
Replies: 7
Views: 1164

Re: Help with EIN # clarification

What are the entities that have those EINs? Usually the business, which is the employer, would have an EIN. That is the EIN that would be used in your application for the 401k. What is the other EIN for? A 401k doesn't have its own EIN.
by HouseStark
Mon Nov 25, 2013 2:38 pm
Forum: Personal Finance (Not Investing)
Topic: AMT and dependant care credit
Replies: 13
Views: 2153

Re: AMT and dependant care credit

I agree you don't have to file either a W-2 or a 1099-MISC in order to claim the dependent care credit using form 2441. The requirement to file a 1099-MISC if you pay someone more than $600 for services is a separate rule that has nothing to do with the form 2441. If your babysitter receives a properly filed 1099-MISC from you, and possibly other clients in addition, then that self-employment income is being reported to the IRS also, and the IRS will be looking for it to be reported on a tax return for that person. The babysitter doesn't need a 1099 in order to file their tax return. It is the babysitter's responsibility to track the self-employment income that they receive and report it as gross self-employment income on their tax return. ...
by HouseStark
Mon Nov 25, 2013 11:57 am
Forum: Personal Finance (Not Investing)
Topic: AMT and dependant care credit
Replies: 13
Views: 2153

Re: AMT and dependant care credit

A 1099-MISC is provided to someone who is NOT considered an employee and you would not be responsible for withholding employee Social Security and Medicare or for paying employer's share of the same. See the instructions for form 1099-MISC. If a provider is considered a household employee, then you would be required to issue them a W-2, just like a regular employee, and be responsible for the Social Security and Medicare. You can pay those using Schedule H as part of your 1040 income tax return. See the instructions for Schedule H and for filing W-2s. Maybe someone else will contribute more helpful information, but I think it likely you would be safe going the 1099-MISC route unless you're planning on running for public office in the future.
by HouseStark
Mon Nov 25, 2013 10:07 am
Forum: Personal Finance (Not Investing)
Topic: AMT and dependant care credit
Replies: 13
Views: 2153

Re: AMT and dependant care credit

Assuming you meet all the requirements, you can claim the dependent care credit even if you are getting hit with AMT. Your calculation looks correct. Look at form 2441 and its instructions. You should be aware that you need to report the care provider's name, address and Social Security number (or EIN) to claim the credit.
by HouseStark
Mon Nov 25, 2013 9:55 am
Forum: Personal Investments
Topic: Capital gains distribution quesiton
Replies: 2
Views: 556

Re: Capital gains distribution question

Since some mutual funds hold few or no dividend paying stocks they may only have distributions of capital gains, which can be a way to carry out reallocation of a portfolio, as stated. Since, in a taxable account, the gains distribution will be included in overall capital gain income whether or not it is reinvested, so it could make sense to not reinvest it, but rather put it into a pool for reallocation or for pay out as portfolio income, depending upon what is needed for the overall portfolio.
by HouseStark
Sun Nov 17, 2013 2:54 pm
Forum: Personal Finance (Not Investing)
Topic: Land that won't sell: what would you do?
Replies: 85
Views: 13209

Re: Land that won't sell: what would you do?

Question: at what point would you call up your Realtor and lower the price? Any other ideas on what to do? Anybody else ever have real estate that failed to sell after nearly 4 years of being listed or has my mother set a record? I think we can all learn a lesson from this tale. Junk land remains junk land no matter how long you hold it, so don't buy junk land. My father should have invested in a Vanguard mutual fund. Just think how much $6K invested in Index 500 in 1976 would be worth today. And best of all, it doesn't take 8+ years to sell a mutual fund. Mutual funds also don't send you a property tax bill every December. I think that point would be when it is apparent that there is no interest at the current asking price, which sounds l...
by HouseStark
Wed Nov 13, 2013 7:57 pm
Forum: Personal Investments
Topic: Average Cost Basis
Replies: 12
Views: 1362

Re: Average Cost Basis

It is pretty straight-forward math, when shares of a fund are sold and basis is calculated using average cost basis, the basis per share of the shares before and after the sale does not change. The basis per share will only change when shares are purchased with a share price that is higher or lower than the basis per share before the purchase. If a Vanguard rep said otherwise, then that person is ill-trained or is just misquoting scripts that they don't actually understand.
by HouseStark
Mon Nov 11, 2013 3:55 pm
Forum: Personal Investments
Topic: Mechanics of a Roth Coversion
Replies: 5
Views: 753

Re: Mechanics of a Roth Coversion

You understand that a Roth conversion is not an all-or-nothing proposition? You can control the tax impact by converting only a portion of the IRA in any one year. Since we are nearing the end of 2013, part of the Roth conversion could be done before the end of 2013 and then another part (or the remainder) could be done in January 2014, thereby spreading the taxable income over two years. The desirability of this would depend upon the specifics of your situation. You may want to run some tax projections to see how it might affect you. For example, keeping taxable income within the 15% bracket might be desirable.
by HouseStark
Mon Nov 11, 2013 10:12 am
Forum: Personal Investments
Topic: Backdoor Roth and end of year capital gains distributions
Replies: 3
Views: 542

Re: Backdoor Roth and end of year capital gains distribution

mhc wrote:You do have until April 15, 2014 for 2013 contributions. There is no deadline for IRA to Roth conversion.
Yes, but conversions are reported in the calendar year in which they occur, so if you wait until after 12/31/2013 to make a 2013 IRA contribution, by 4/15/2014, and then convert that IRA balance to a Roth, the contribution can be for 2013 and the conversion will be reported for 2014. That may not have any consequences for a given situation, but you should be aware of it.
by HouseStark
Tue Oct 29, 2013 2:25 pm
Forum: Personal Finance (Not Investing)
Topic: FSA vs child tax credit
Replies: 7
Views: 1400

Re: FSA vs child tax credit

I'll expand on my post to say that the tax credit is based on up to $3000 in expenses for one child and up to $6000 for two or more children. The tax credit rate starts at 35% (of the $3k or $6k, or actual, whichever is lower) and then phases down to the 20% I mentioned earlier depending upon income. It doesn't phase out completely, just down to 20%. See the Form 2441 and instructions for the actual income amounts for the credit rates. It is a non-refundable credit, so there needs to be a pre-credit tax liability in order to benefit from the credit. And, since a dependent care FSA is limited to $5000, if there were more than $6000 in expenses for two or more kids, the $1000 difference could still be used for the tax credit, in combination w...
by HouseStark
Tue Oct 29, 2013 1:39 pm
Forum: Personal Finance (Not Investing)
Topic: FSA vs child tax credit
Replies: 7
Views: 1400

Re: FSA vs child tax credit

The maximum benefit on your federal return using the dependent care credit is likely a tax credit of $600. That's based on a 20% credit (at high income levels) for the maximum expenses of $3000 for one child. Using a dependent care FSA usually allows up to $5000 in pre-tax money to be used for child care expenses. Based on a 25% tax bracket the max FSA gives an income tax benefit of $1250 on the federal return, with possibly additional tax benefit on a state tax return at the state marginal rate. If the FICA is offered under a Sec 125 cafeteria plan, the FSA contribution is also not subject to FICA (Social Security & Medicare) withholding. That's at least some additional benefit even if the employee is going to exceed the Social Securit...
by HouseStark
Mon Oct 28, 2013 7:30 pm
Forum: Personal Finance (Not Investing)
Topic: Trust fund loss carryover
Replies: 3
Views: 537

Re: Trust fund loss carryover

A value of less than $10k seems to be quite small compared to the ongoing burden of maintaining a trust with such expenses as filing a tax return and account administration. Is there any avenue for the trust to be terminated so the loss can be passed through to you as beneficiary? I have no legal expertise, just an informed interest.
by HouseStark
Mon Oct 28, 2013 3:24 pm
Forum: Personal Investments
Topic: Domain names as part of investment strategy/AA?
Replies: 10
Views: 1024

Re: Domain names as part of investment strategy/AA?

The value of many domain names is likely to be highly variable in the future with the expansion of naming conventions. Whatever value those domains may have now could easily evaporate quickly. I don't see that it makes much sense to give them value as investment assets for planning purposes.
by HouseStark
Fri Oct 25, 2013 11:03 am
Forum: Personal Finance (Not Investing)
Topic: My options to reduce taxes on a large distribution
Replies: 15
Views: 1810

Re: My options to reduce taxes on a large distribution

If you are subject to a state income tax, you should examine the implication of paying the state taxes that you will incur from this additional income with an estimated tax payment before the end of 2013, instead of waiting until 2014. This would give you a higher Schedule A deduction for state taxes paid to lower your federal tax, UNLESS you will be subject to AMT, in which case that benefit is nullified and you may be better off making the payment in 2014, depending upon your AMT situation in that year.

You should do a tax projection soon to determine a course of action on that alternative.
by HouseStark
Fri Oct 25, 2013 8:54 am
Forum: Personal Finance (Not Investing)
Topic: Paying Quarterly Estimated Taxes
Replies: 31
Views: 3558

Re: Paying Quarterly Estimated Taxes

Is this your first year as a rental property owner? Have you determined that you will actually have net income from the rental? Just having gross rental income is not necessarily going to increase your taxable income. Of course your situation has its own specifics, but many rental properties end up having a net loss when depreciation is figured in, especially early in an ownership period. Yes it is my first year as a rental property owner (previously the property was my residence). The property is a condo and expenses include mortgage ($875/mo including insurance, property tax) and HOA fees ($225/mo) totaling $1100 and the rent is $1400, so the profit is miniscule $3600 but there. Of course I did not consider depreciation... I was hoping t...
by HouseStark
Wed Oct 23, 2013 4:51 pm
Forum: Personal Finance (Not Investing)
Topic: Introduction and Tax Question
Replies: 10
Views: 835

Re: Introduction and Tax Question

Before you undertake to increase your withholding or to pay any estimated taxes you may want to get a better idea of the actual additional tax liability resulting from your sales transactions. I'll point out that unless you've climbed into the top tax bracket (taxable income of single >$400k, or MFJ >$450k) the maximum long-term capital gains tax rate is still 15%, and just 0% for LT gains income still in the 10-15% tax brackets. Without additional information on the amount and nature of your gains and your other income, I can't say how that would work out for you. I suggest you try one of the tax planning tools out there, such as Taxcaster. Depending upon the complexity of your situation it doesn't require that much data to come up with an...
by HouseStark
Wed Oct 23, 2013 4:39 pm
Forum: Personal Finance (Not Investing)
Topic: Remove PMI or Invest Elsewhere?
Replies: 14
Views: 6467

Re: Remove PMI or Invest Elsewhere?

If you reduce principal by $30k, I get your monthly interest savings as $93.75 ($30k x .0375/12). That plus your PMI savings of $82 totals $175.75/mo or $2109 annually. The cost for the appraisal is known. The opportunity cost of the $30k in investable assets put toward the principal reduction is the unknown. Is the savings of $2100 on the $30k worth it? That's a return of around 7%. I'd say that could well be worth it, based on the risk incurred to achieve a return of 7% over the years. There is also the reduction of liquidity in your assets. You have to evaluate those factors for your particular situation. My earlier reply did not make clear that the interest savings would not be a reduction of your monthly mortgage payment, and so not a...
by HouseStark
Tue Oct 22, 2013 4:06 pm
Forum: Personal Finance (Not Investing)
Topic: Remove PMI or Invest Elsewhere?
Replies: 14
Views: 6467

Re: Remove PMI or Invest Elsewhere?

If you reduce principal by $30k, I get your monthly interest savings as $93.75 ($30k x .0375/12). That plus your PMI savings of $82 totals $175.75/mo or $2109 annually. The cost for the appraisal is known. The opportunity cost of the $30k in investable assets put toward the principal reduction is the unknown. Is the savings of $2100 on the $30k worth it? That's a return of around 7%. I'd say that could well be worth it, based on the risk incurred to achieve a return of 7% over the years. There is also the reduction of liquidity in your assets. You have to evaluate those factors for your particular situation.
by HouseStark
Tue Oct 22, 2013 3:55 pm
Forum: Personal Finance (Not Investing)
Topic: Paying Quarterly Estimated Taxes
Replies: 31
Views: 3558

Re: Paying Quarterly Estimated Taxes

Hi All, My wife and I are both employed and have paycheck withholding regularly. We also own a rental property and have really started investing heavily this year (mostly options trading) and do not have any withholding from these income streams. Is this your first year as a rental property owner? Have you determined that you will actually have net income from the rental? Just having gross rental income is not necessarily going to increase your taxable income. Of course your situation has its own specifics, but many rental properties end up having a net loss when depreciation is figured in, especially early in an ownership period. And as far as the options trading, is it really going to make a significant increase in your taxable income th...
by HouseStark
Thu Oct 17, 2013 2:15 pm
Forum: Personal Finance (Not Investing)
Topic: Franklin California Municipal Income Fund?
Replies: 12
Views: 1398

Re: Franklin California Municipal Income Fund?

At a quick glance I see Vanguard offers both Intermediate Term and Long Term CA Tax-exempt funds. That would appear to address the issue of buying into a fund with an upfront load. There will still be the risk of losing principal due to increasing interest rates, as can be seen from the year-to-date return figures. I have no direct experience with either fund.
by HouseStark
Wed Oct 16, 2013 10:51 am
Forum: Personal Finance (Not Investing)
Topic: 401k to IRA Rollover Deadline
Replies: 7
Views: 765

Re: 401k to IRA Rollover Deadline

Taxable income from a Roth conversion is going to be reportable in the calendar year of the conversion, so a rollover conversion in January 2014 would be 2014 income.
by HouseStark
Mon Oct 14, 2013 2:49 pm
Forum: Personal Finance (Not Investing)
Topic: Tax question - Sale of rental property
Replies: 4
Views: 587

Re: Tax question - Sale of rental property

Since you did not move to house #2 until 1/7/2011, I would say that you owned and occupied house #1 as your main home from 2003 until that move date, so the two out of last five years expiration would be on 1/7/2014, or ending date could be 1/6/2014, if that's the proper way of counting it. The purchase date of house #2 would not enter into it. Either way, if you sell before then the capital exemption should apply to that sale.
by HouseStark
Tue Oct 08, 2013 3:46 pm
Forum: Personal Finance (Not Investing)
Topic: 401k and Roth
Replies: 4
Views: 704

Re: 401k and Roth

htdrag11 wrote: As for Roth, since I've no earned income in 2013, I could sock away $6,500 in addition to the 401k.

Is that correct? Did I miss anything else? If I do not put into the 401k, am I stuck with the $6,500 Roth as the only option?
I'm perplexed. Did you state that correctly, that you have NO earned income in 2013? Without earned income you are not eligible for Roth or other IRA contributions, unless your spouse has earned income.
by HouseStark
Tue Oct 08, 2013 3:39 pm
Forum: Personal Finance (Not Investing)
Topic: A house appraisal
Replies: 13
Views: 2159

Re: A house appraisal

If you live in a neighborhood that has current active listings and recent closed sales you should be able to find much of that information by going to local realtors' sites which provide access to some of their MLS information. It's usually easy to get information on active listings and some sites allow searches of closed sales also, which is even better than the asking prices. These listings may not provide all the information you need to make a direct comparison, but you can access much of the information that an appraiser would use to come up with comparable sales. If you know your area well, you should have some idea about whether those other homes are in more or less highly valued areas compared to yours. I think I can come up with a m...
by HouseStark
Tue Oct 08, 2013 2:23 pm
Forum: Personal Investments
Topic: Traditional vs. Roth 401k (with pensions & SS)?
Replies: 9
Views: 1717

Re: Traditional vs. Roth 401k (with pensions & SS)?

I did mean the Roth 401k.
by HouseStark
Tue Oct 08, 2013 9:47 am
Forum: Personal Finance (Not Investing)
Topic: Condo Unit as an Investment Property
Replies: 8
Views: 1652

Re: Condo Unit as an Investment Property

Your stated value of $900k with a mortgage of $500k gives you $400k equity. A rental cash flow of $8400/yr is a cash return on equity of only 2.1%, which is not too impressive for rental property. Of course, that disregards possible value appreciation. Haven't SF property values already bounced back up? Property values would seem to be a fairly high risk factor, especially in the nearer term. Based on the fact that you can afford such a property, I assume your income is too high (gross over $150k) to take any possible rental net loss after factoring in depreciation. If the full $900k was depreciated, that's over $32k in non-cash depreciation expense per year (using straightline over 27.5 years). But if you can't claim a current rental loss ...
by HouseStark
Mon Oct 07, 2013 9:20 pm
Forum: Personal Investments
Topic: Traditional vs. Roth 401k (with pensions & SS)?
Replies: 9
Views: 1717

Re: Traditional vs. Roth 401k (with pensions & SS)?

As far as future savings, I would allocate a significant portion to the ROTH 401k [edited to correct omission] . I base this mainly on three factors of your situation. One is that you state once you are fully receiving pensions and Soc Sec, this will meet your retirement income needs. So, does it suit your goals to be putting more money into traditional 401k type accounts only to have that greater accumulation increase your post-70 RMDs when you don't need the distributions? Second, the tax savings from the marginal tax rates pre- and post-retirement may not be meaningful. Finally, based on your description it doesn't appear that you have many financial assets outside of your pre-tax retirement accounts. Having after-tax assets, such as Rot...
by HouseStark
Mon Oct 07, 2013 2:18 pm
Forum: Personal Finance (Not Investing)
Topic: How much do you spend on insurance products?
Replies: 2
Views: 555

Re: How much do you spend on insurance products?

That's pretty broad information on which to base comparisons. Age, health, type of vehicle coverage, value of home, are just a few of the many variables which go into insurance costs. I pay more for my auto, less for home and less for less life coverage, but that doesn't really have much meaning without the details. Isn't your question really whether you are getting good value for what you pay, rather than how much you pay compares to what other people pay. Those are different issues. Some people just have different needs too, say no need for life insurance.
by HouseStark
Sat Oct 05, 2013 12:57 pm
Forum: Personal Investments
Topic: Questions about backdoor roth if I have a rollover IRA
Replies: 3
Views: 604

Re: Questions about backdoor roth if I have a rollover IRA

If both you and your wife are eligible to make contributions to Tradition IRAs for purposes of doing a backdoor Roth, the rollover IRA will only be a factor for the spouse that has an existing TIRA, meaning you, according to your description. If your wife has no TIRA of her own, then her backdoor Roth would not result in any taxable income. Spouses IRAs are considered separately for determining whether there is any conversion taxable income. The tax form used to report the distribution and calculate any income, Form 8606, is an individual form, not a joint form, even if the spouses are filing a joint return. Each spouse would have transactions reported on an individual Form 8606. So you can consider whether the backdoor Roth should be done ...
by HouseStark
Wed Oct 02, 2013 1:57 pm
Forum: Personal Finance (Not Investing)
Topic: Question about taxes on irrevocable trust distribution
Replies: 9
Views: 3374

Re: Question about taxes on irrevocable trust distribution

prudent wrote: If I can give a reasonably accurate summation like I outlined above, I don't have to call the accountant to ask and have him bill the trust for the answer.
I guess this means you don't want me to bill you for my answer, then.

Anywhoo, your explanation sounds like a good one, and it certainly is a good idea to forewarn the first-time beneficiaries that they will be receiving a K-1 with reportable income and not to file their tax returns without it.
by HouseStark
Wed Oct 02, 2013 9:43 am
Forum: Personal Finance (Not Investing)
Topic: Question about taxes on irrevocable trust distribution
Replies: 9
Views: 3374

Re: Question about taxes on irrevocable trust distribution

I don't see your question as about the details of trust taxation, but rather about communicating the implications of the distribution to the beneficiaries, so the previous reply seems needlessly critical. Your basic explanation to the beneficiaries should help them understand the implications of the trust distribution to their tax situations. A key point for the beneficiaries to understand is the difference between the amount of principal being distributed and the amount of income being reported on the K-1. Also, you didn't describe prior history of the trust, but an understanding for the beneficiaries of how the trust could have retained income in the past and how the trust could have had income tax to pay on that income in the past, as op...