Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I need a tax lawyers advice: I made $35,000 this year in

I need a tax lawyers...
I need a tax lawyers advice:

I made $35,000 this year in standard income. I file head of household with 1 dependent. I earned about $8.000 in mortgage credits. I am receiving $650,000 in long-term capital gains of a business asset that I have. The $650,000 is the amount that I will receive personally. Would you please breakdown my 2013 tax liabilities given this information?
Show More
Show Less
Ask Your Own Tax Question
Answered in 13 minutes by:
11/11/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,699
Experience: Taxes, Immigration, Labor Relations
Verified

Lev :

Hi and welcome to our site!
I assume $35,000 in wages and $8.000 in mortgage interest deduction.
Assuming head of household filing status with ONE dependent child.
With additional $650,000 in long-term capital gains - following are estimations
-- Adjusted Gross income (AGI) $685000


-- Greater of itemized or std. deduction - $8950
-- Taxable Income - $676050
Your estimated tax liability is $145177
including regular tax $97387 and alternative minimum tax (AMT) - $29360 and Net Investment Tax $18430.

Customer:

Im not quite sure I understand

Lev :

Most likely - you will be able to itemize - and your deduction will be more than $8950 - but we do not have enough information for that estimation.
Specifically - you may deduct TX sales tax - your in come level $1820.

Lev :

Please be sure to ask for clarification.

Customer:

let me be clearer. i am selling a c corp that i am 100% shareholder of. $650,000 is being paid directly to me and not the c corp as it is considered the sale of personal goodwill. i am not necessarily selling a physical asset

Lev :

If you are selling shared of C-corporation - you will realize a capital gain.
The gain will be calculated as (selling price) MINUS (basis)
If you owned shares more than a year - the gain will be treated as long term capital gain.
You are selling shares of the corporation.

Customer:

i was under the assumption that long term capital gains tax would apply to the $650,000 which means that the minimum and maximum of this amount ranges from 0 - 20%. additionally, what about the 3.8 percent of medicare tax?

Lev :

Your assumptions are correct.
However because your total income is above $250k - the long term capital gain is taxed at 20% rate plus 3.8% additional tax plus AMT.

Customer:

but isn't it put into brackets? for example, the first $48k is 0%, from 48-425 is 15%, and then the final $225 is at 20%?

Lev :

Your estimated tax liability is $145177 including
-- regular tax $97387
-- alternative minimum tax (AMT) - $29360
-- Net Investment Tax $18430 - so-called "Medicare tax"

Lev :

but isn't it put into brackets? for example, the first $48k is 0%, from 48-425 is 15%, and then the final $225 is at 20%?
Yes - the long term capital gain is taxed at your actual tax rates - but not more than 20%

Customer:

so wouldnt my tax liability be the following at worst case:

Customer:

first $48,600 - $0 Tax due

Customer:

Amounts between $48,601 - $425,000: $56,400

Customer:

Amounts between $425,001 - $650: $45,000

Customer:

Medicare 3.8% only applies over $225,000 - so therefore that liability would be only: $16,250

Customer:

my assumed total liability (without taking deductions into account) would be $0 + 45,000 + $56,400 + 16,250 == $117,650

Lev :

Your estimated Taxable Income - $676050 (after deductions as above)
Tax rates will be - see page 3 - http://www.irs.gov/pub/irs-drop/rp-13-15.pdf
TABLE 2 - Section 1(b) – Heads of Households
-- first $48,600 will be taxed $6,652.50
-- the rest will be taxed at 20% as long term capital gain ($676050 - $48,600) * 20% = $125,490
Total $132142
That would be regular income tax liability.

Lev :

You will add 3.8% Net Investment Tax on $650,000 of capital gains = $24700
and the rest will be AMT - total will be about $145,000.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,699
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,699
30,699 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
An S Corporation & its 2 shareholders are selling the assets
An S Corporation & its 2 shareholders are selling the assets of the Corporation. The Corporation provides corporate credit card processing services and its primary assets are the contracts with its cu… read more
Carter McBride
Carter McBride
LLM
262 satisfied customers
Am I able to take a deduction as head of household if I have
Am I able to take a deduction as head of household if I have a daughter that is 15, lives with me for more than half the year, but I am not claiming her as a dependent because her dad and I alternate … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
My withholding exceeds my tax liability for each of the the
My withholding exceeds my tax liability for each of the the first three quarters of 2017. However, in December 2017 I received a taxable gift of $78,000 from which nothing was withheld. I know this mu… read more
abci168
abci168
Principal
27 satisfied customers
Under the new tax plan if my federal adjusted gross income
Under the new tax plan if my federal adjusted gross income is $77,230.00 how much are my federal taxes? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,804 satisfied customers
This is an income tax question. I am thinking of Deducting
This is an income tax question. I am thinking of Deducting next years giving to church this year with pending changes to tax law. As I recall, higher income levels reduce schedule allowable deductions… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I made 40,000 this year But i was head of household for half
I made 40,000 this year But i was head of household for half the year and the second half of the year I was just renting Filed as single I've paid 9k in taxes is that about right? … read more
Carter McBride
Carter McBride
LLM
262 satisfied customers
From a tax liability perspective, what are the differences
From a tax liability perspective, what are the differences between filing taxes from a trust versus a personal income tax filing ?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Assuming a Medicare tax rate of 1.45% and monthly gross
Assuming a Medicare tax rate of 1.45% and monthly gross wages of $2,500, the amount recorded in Medicare Tax Payable for one quarter for the employee's payroll deduction is… read more
taxmanrog
taxmanrog
Master\u0027s Degree
776 satisfied customers
I'm working to understand capital gains tax for California
I'm working to understand capital gains tax for California property purchased 4 years ago. It's a primary residence, purchased 4 years ago for $385k with $285k principle outstanding. Expected sale price of $630k … read more
abci168
abci168
Principal
27 satisfied customers
I'm canadian who want to understand capital gains tax rate.
Hi, i'm canadian who want to understand capital gains tax rate.I have a rental house that i bought at 500K. I sold it after 9 yrs at 1100K. With the money, i bought a new house (will be my primary res… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,804 satisfied customers
What are the taxes rates 2016 for term gains in irrevocable
what are the taxes rates 2016 for long term gains in irrevocable trusts … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,083 satisfied customers
Form 886-A Deductible Home Mortgage Interest Taxpayer has
Form 886-A Deductible Home Mortgage Interest Taxpayer has $1,000,000 in Grandfathered debt. Line 9 Form 886-A - is this line amount after deducting the garandfathered debt… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Figure out how much is my tax liability + my capital gains +
Figure out how much is my tax liability + my capital gains + depreciation recapture tax … read more
Lev
Lev
Tax Advisor
30,699 satisfied customers
We have $400,000 in capital gains for the sale of our
We have $400,000 in capital gains for the sale of our California home of … read more
Lev
Lev
Tax Advisor
30,699 satisfied customers
Estate capital gains tax rate for 61, single, unable to
estate capital gains tax rate for 61, single, unable to work, is claimed as a dependent form sister,only income collects $500 month stipend from gov., which pays for health insurance and meds. is gett… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Can i file head of household on my 2016 tax return if my
Can i file head of household on my 2016 tax return if my husband and I were going through a divorce proceeding but he passed away before the divorce was finalized in mid 2016?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,804 satisfied customers
Sell of property tax liability. Ca. Bought home 25 yrs ago
bought home 400,000 selling 2.5 mil. Invested 500,000 owe 800,000… read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,338 satisfied customers
Second opinion] Has the tax rate in Peru on capital gains
Second opinion] Has the tax rate in Peru on capital gains for non residents recently been changed? I heard it is now 5% and no longer 30%.… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x