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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 966
Experience:  Certified Public Accountant
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I recently sold all my mother's stocks and her house and am

Customer Question

I recently sold all my mother's stocks and her house and am using the proceeds from those sales to finance her care in an assisted living facility. This pot of money is about $200K and is all she has. The money belongs to my mother, but I am managing it as she is unable to do so. I have POA. What kind of bank account should I set up for her for the purpose of paying for her assisted living? What is her tax burden likely to be for the year? Her only income is SS and a small pension that amount to ~ $1400 per month. her assisted living care is about $4000/month.
Submitted: 3 months ago.
Category: Tax
Expert:  Mark Taylor replied 3 months ago.

Hi, my name is Mark. I will be happy to help you with your questions. Please give me a moment I am working on a response for you.

Expert:  Mark Taylor replied 3 months ago.

You mentioned that you sold stock. Do you know how much of a gain you had on the sale of the stock? Are both bank accounts in your Mother's name? Are they joint accounts?

Customer: replied 3 months ago.
Small bank account is in mother's and my name. Large bank account is in my name only. Don't know how much of a gain she realized on the stocks, but I suppose I can figure that out.
Expert:  Mark Taylor replied 3 months ago.

The risk associated with the account being in your name is ***** ***** would be subject to your creditors if something happened (accident, debts, a divorce). Do you have any estimate of the amount of gain. Do you know how much of the $4,000 monthly payment is applied to medical care? If you consider her medical expenses along with the small pension and Social Security income of $1,400 monthly, and the gains from stock transactions the amount of taxes will be minimal. As long as your mother's taxable income is below $37,650 the capital gains will not be taxed. I did a quick estimate assuming a capital gain amount of $35,000 and the pension of $1,400 and medical expenses of $12,000. The federal tax liability came to just under $700.

Customer: replied 3 months ago.
Will I be taxedon the large account since it is in my name only?
Expert:  Mark Taylor replied 3 months ago.

You would be taxed on any earnings in the account. So if the account earns interest it would be reported to your social security number.

Customer: replied 3 months ago.
Wouldn't the IRS view the money deposited in that account as income which I would have to report even though I am using it for my mother's care?
Expert:  Mark Taylor replied 3 months ago.

No, you would be able to show that the money came from your mother's home and the stock sales. The IRS would not consider this to be income.

Customer: replied 3 months ago.
Ok, thanks.
Expert:  Mark Taylor replied 3 months ago.

It was my pleasure. Please let me know if you have any other questions.

Expert:  Mark Taylor replied 3 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

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