Q:

Subject: Willing to Pay some for answers to Tax questions–not yet a paying customer

Mr. Kerstetter,

M. R. … recommended you to me.  She is your client.  She is a long time friend of my family.  She takes care of most of my financial planning.  The attached one page document provides three questions and, I think, all the pertinent information needed to answer the questions.  I am asking first for an estimate of charges to answer my questions.  I think you could answer them with less than 15 minutes of your time spent on the whole thing.  Thank you for your assistance.

A:

I looked over your questions and, while you may have been able to prepare your own tax returns in the past, the property sales have too many tricky issues to deal with for you to handle them on your own.

I can’t bring you up to speed on the various rules and issues that will need to be considered on your tax return.  To attempt that would be irresponsible on my part in much the same way as a doctor trying to teach you how to perform a surgical operation on yourself would be.

You need to have a professional tax practitioner prepare your returns to ensure that the sales are properly reported, as well as the passive activity income and suspended losses.  There is a possibility that the gain from the sale of the 39 acres may be classified as passive, which would free up your suspended passive losses. A tax pro should be able determine this after reviewing you prior year tax returns.

In regard to the sale of your residence, the law was changed on that in 1997.  It is no longer a once in a lifetime exclusion of gain for people over a certain age but an exclusion that can be used multiple times by sellers of any age who meet certain tests.  A professional tax advisor will explain how that fits into your situation.

Good luck.  I’m sorry I couldn’t be of more help.

Kerry Kerstetter

Follow-Up:

Thank you.   I will find a local pro in my local area.