Spidell has posted a copy of the California 2006 income tax rates for individuals.

Understanding the New Tax Rules

Why Reselling a Time Share Can Be Anything but a Vacation – Another reminder of why timeshares are the absolute worst way to invest in real estate.

New Rollover Option for Inherited Accounts – From Gail Buckner

A provision in the most recently enacted tax law tightens up on the condition of used items donated to charity for which a deduction may be claimed.

From QuickFinder’s summary of the new law:

Charitable Donations of Clothing And Household Items. For contributions after the August 17, 2006, no deduction is allowed for contributions of clothing or household goods unless the items are in good used condition or better. This rule does not apply to donations of a single item valued at $500 or more, if a qualified appraisal is included with the return. (Note: The new law does not define “good used condition”.)

From F.R. Duplantier:

USED
For Bill Clinton, it just isn’t fair
That donations be in good repair:
What to do with worn socks,
Dirty hankies and jocks,
And his raggedy old underwear?

Joe Kristan also covered this a few weeks back.

Q:

Subject: Car

 

I have just purchased a 2006 Toyota Prius and am now told there is a tax credit. I have purchased through my company. Do you know about this. Please advise. Thanks.

A:

The Toyota Prius is one of the alternative fuel vehicles that qualify for the special Federal tax credit.

Texas writer Kay Bell has been posting a lot about this in her blog, such as at:

http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2006/08/time_running_ou.html

http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/2006/07/pace_accelerati.html

http://www.bankrate.com/brm/news/auto/fuel-efficient/20060809a1.asp

I’m surprised the Toyota dealer didn’t have info on this as well since it is one of the big selling points for the Prius.

Kerry

Q:

Subject: Capital gains on sale of residence for surviving spouse?

Two questions:

I have read that a surviving spouse can retain the $500,000 capital gain exclusion on the sale of their primary residence if the house is sold in the same year of death.  Is it not within one year of death?  If not, a spouse could die in late December, making it practically impossible to qualify for the $500,000 exclusion.  I am aware of the stepped-up basis that will occur for the deceased spouse’s portion of the home, but with substantial appreciation in some states, that extra $250,000 in exclusion can make a big difference for some taxpayers.

I exercised ISO’s in January of this year, which will trigger AMT.  I might sale those shares before year-end, triggering a disqualifying disposition but eliminating tax preference on the ISO exercise.  Do I need to make estimated tax payments on the possible AMT tax that might occur if I do not do a disqualifying disposition?

Thanks,

A:

The maximum exclusion under Section 121 is $250,000 per person.  This means that in order to claim a $500,000 exclusion, there have to be two names on the 1040.  This is the case for the year a spouse dies, but not for the subsequent year.  If the surviving spouse does remarry and file a joint return for the year after the first spouse died, that new spouse won’t be able to claim the $250,000 exclusion for the half of the home that was owned by the deceased spouse.

As you hopefully know, the preceding discussion is only important with people living in non-community property states, where only half of the accumulated gain on the residence is wiped out at death.  In community property states, all of the gain is erased.

In regard to estimated tax requirements, you should be working with your professional tax advisor to make sure you have paid in at least enough by 1/15/07 to avoid any penalty.  If your 2005 AGI was low enough, this usually means that you only have to pay in as much as your 2005 taxes were, even if your 2006 taxes turn out to be much higher.  There is no benefit to paying in more than the minimum to avoid the penalty, as long as you pay the rest by 4/16/07.

If you want to check out the rules yourself, get Form 2210 and its instructions.

Good luck.  I hope this helps.

Kerry Kerstetter

Follow-Up:

Thanks!

 

Companies May Convert To ‘Cash Balance’ Pension Plans

Three Red Flags to Consider When Screening New Tenants – I would add asking about the potential tenant’s favorite movies.  If Pacific Heights is near the top, definitely stay away from that person.  We’re still scared to death to have any tenants after our experiences with a psycho who used that movie as his game plan against us 16 years ago.

Both are usually celebrated on April 15.

Courtesy of Worth1000

Who’s Blocking the Taxpayer Accountability Bill?

Same-sex couples hail pension overhaul

IRS Enlists Help in Collecting Delinquent Taxes