Question on tax treatment of capital gains in the final year
Question on tax treatment of capital gains in the final year of a trust.A marital deduction trust was created in 1998 upon the decease of a husband. The trust invested in a diversified stock portfolio and has remitted all dividend income generated over the years to the income beneficiary, the surviving widow. Per the trust document, capital gains and/or principal may be remitted as well if needed by the widow , but over the life of the trust this was never necessary or done.Each year, capital gains and losses from transactions in the trust were offset, or loss carryforwards used, to zero out the trust's capital gains and losses on the trust's tax return. Income was reported on K1 to the income beneficiary who paid income taxes on it.The income beneficiary passed away this year (2016), the stock portfolio was entirely liquidated, generating net capital gains, and the trust assets (all cash now) will be distributed to the designated heirs/beneficiaries. (There are two children and four grandchildren.)Questions:1. Must the trust itself pay the taxes on the final-year capital gains generated?2. I believe it is not permitted to remit net capital gains to the beneficiaries in this case. True?3. Instead may we remit gross gains and losses to the beneficiaries, some of whom have a lower tax rate? (I believe so)4. Do we have discretion on which approach to use? If both ways are permitted, does the IRS look on the latter approach, with its lower tax result, as particularly aggressive, a red audit flag, etc.?Background:I'm no expert but the online commentary on the Regs do suggest that the trust may remit the gross capital gains, reporting on a K1, pro rata to the remainder beneficiaries, and also remit the gross losses in the form of loss carryforwards that each beneficiary can apply against their share of gains, all of this on their personal tax returns in the same year, 2016. I get this from online commentaries on §1.643(a)-3(b) and §1.642(h)-1.(It is assumed that the ordinary income (dividends) generated by the trust after the widow's death will be distributed to the remainder beneficiaries, who will pay income tax on it.)
Sr Financial & Tax Consultant
My adjusted gross income is 62,000.00. How much should I
My adjusted gross income is 62,000.00. How much should I have taken out of my check so I don't have to pay at the end of the year? I have no deductions so it is a straight 1040. Can you tell me approximately how much I should be paying?
JD, MBA, CFP, CRPS
My father passed away and left a collection of collectible
My father passed away and left a collection of collectible banknotes. His estate was worth less than 200,000 so I assumed that the collectibles would be tax free because the estate is not worth enough for estate tax. I have been selling the banknotes on ebay and giving a portion of the proceeds to each of my brother and 2 sisters. I have grossed more than $20,000 now and Paypal is going to submit a 1099 form to the IRS. Do I have to pay ordinary income taxes on this money? If so do I pay on my portion only and basically report my siblings to the IRS?
Sr Financial & Tax Consultant
Do I have to pay taxes on an inherited piece of property if
Do I have to pay taxes on an inherited piece of property if I am not selling it?JA: The Accountant will know how to help. Please tell me more, so we can help you best.Customer: My father passed away last year and his estate has just been released from Probate - they valued the real estate total which is comprised of several properties, my property is valued at 100,00.JA: Is there anything else the Accountant should be aware of?Customer: I'm trying to determine what taxes if any would be do if 2 of the 3 properties were sold at FMV
My wife and I are buying a house from my parents for $91k.
My wife and I are buying a house from my parents for $91k. They currently have a loan on the property for $72K that has not been paid off. They will be giving us a gift of equity to cover the down payment of $18,800, which will bring us back to what is left unpaid on their loan. Would capital gain apply since our loan amount would pay off their loan amount? They do not apply for the use test, as this is not their primary residence and they only come down a couple months a year. The home we are seeking to buy is under homestead exemption even though this is not their primary residence. Also, they file jointly in another state and hold state identification in another state. The property we are planning to purchase is in FL.
Vocational, Technical or Trade School
Retired. 62 years old. Withdrew $100000 from its to live.
Retired. 62 years old. Withdrew $100000 from its to live. Expected taxes is 15%= $15000. Now withdraw that amount so income now $115000, so new tax at 15%= $17500. Now income is $117500. Is this math in general correct?
I am a US citizen who lived in Japan for 15 years through
I am a US citizen who lived in Japan for 15 years through August 2014. I moved with the same company back to the United States in August 2014. My retirement plan that I accumulated during my time in Japan was consolidated into an account managed and housed by Fidelity in the UK. I have not been making contributions since that time, neither has my company - the amount simply rises and falls in step with my portfolio. I am nowthinking of taking some of the money out of that retirement account (again, it is overseas in the UK) and bringing it to the US to put towards a down payment on a house. I was wondering how much that money would be taxed in that instance.