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FAQ: Sale of Property

Question:

 What is the basis of property received as a gift?

Answer:

To figure the basis of property you receive as a gift, you must know 3 amounts:

  • The adjusted basis to the donor just before it was given to you.
  • The fair market value (FMV) at the time it was given to you.
  • The amount of any gift tax paid.

If the FMV of the property at the time of the gift is less than the donor’s adjusted basis, your basis depends on whether you have again or loss when you dispose of the property.

  • Your basis for figuring a gain is the same as the donor’s adjusted basis, plus or minus any required adjustments to basis while you held the property.
  • Your basis for figuring a loss is the FMV of the property when you received the gift, plus or minus any required adjustments to basis while you held the property.

NOTE:  If you use the donor’s adjusted basis for figuring a gain and get a loss, and then use the FMV for figuring a loss and get a gain, you have neither a gain nor loss on the sale or disposition of the property.

If the FMV is equal to or greater than the donor’s adjusted basis, your basis is the donor’s adjusted basis at the time you received the gift. If you received a gift after 1976, increase your basis by the part of the gift tax paid on it that is due to the net increase in value of the gift.  Also, for figuring gain or loss, you must increase or decrease your basis by any required adjustments to basis while you held the property.

Question:

 I sold my principal residence this year. What form do I need to file?

Answer:

You may qualify to exclude from your income all or part of any gain from the sale of your main home if during the 5-year period ending on the date of the sale you meet the ownership and use tests described below and in Publication 523Selling Your Home.

  • You owned the property for at least 2 years; the 2- year period need not be continuous (the ownership test).
  • You must have lived in the property as your principal residence for at least 2 years; the 2- year period need not be continuous (the use test).
  • During the 2-year period ending on the date of sale, you did not exclude gain from the sale of another principal residence.

If you owned and lived in the property as your principal residence for less than 2 years, you may still be able to claim a reduced exclusion.

NOTE:  If you (or your spouse) were on qualified official extended duty as a member of  the U.S. Armed Services or U.S. Foreign Service, as an employee of the intelligence community, or as an employee or volunteer of the Peace Corps, you may elect to suspend the five-year test period for up to 10 years. You may use this provision for only one property at a time.  Qualified official extended duty is any extended duty while serving at a duty station at least 50 miles from the property or while residing under Government orders in Government quarters.  Extended duty is any period of active duty following a call or order to duty,  if the duty lasts for more than 90 days or for an indefinite period.

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Upcoming Tax Deadlines | January 2013

January

Thu3Deposit payroll tax for payments on Dec 26-28 if the semiweekly deposit rule applies.
Fri4Deposit payroll tax for payments on Dec 29 – Jan 1 if the semiweekly deposit rule applies.
Wed9Deposit payroll tax for payments on Jan 2-4 if the semiweekly deposit rule applies.
Thu10Employers: Employees are required to report to you tips of $20 or more earned during Dec 2012
Fri11Deposit payroll tax for payments on Jan 5-8 if the semiweekly deposit rule applies.
Tue15Individuals: Pay the final installment of your 2012 estimated tax. Use Form 1040-ES.
Tue15Farmers and fishermen: Pay your estimated tax for 2012. Use Form 1040-ES.
Tue15Employers: Deposit payroll tax for Dec 2012 if the monthly deposit rule applies.
Wed16Deposit payroll tax for payments on Jan 9-11 if the semiweekly deposit rule applies.
Fri18Deposit payroll tax for payments on Jan 12-15 if the semiweekly deposit rule applies.
Thu24Deposit payroll tax for payments on Jan 16-18 if the semiweekly deposit rule applies.
Fri25Deposit payroll tax for payments on Jan 19-22 if the semiweekly deposit rule applies.
Wed30Deposit payroll tax for payments on Jan 23-25 if the semiweekly deposit rule applies.
Thu31File Form 720 for the fourth quarter of 2012.
Thu31
Furnish Forms 1098, 1099 and W-2G to recipients for certain payments during 2012. Furnish   Form W-2 to employees who worked for you during 2012.
Thu31File Form 730 and pay the tax on wagers accepted during Dec 2012.
Thu31Deposit any FUTA tax owed through Dec 2012.
Thu31File Form 2290 and pay the tax for vehicles first used in Dec 2012.
Thu31Files Forms 940, 941, 943, 944 and/or 945 if you did not deposit all taxes when due.
Thu31  File your tax return if you did not pay your last installment of esimated tax by January 15th

 

February

Fri1Deposit payroll tax for payments on Jan 26-29 if the semiweekly deposit rule applies.
Wed6Deposit payroll tax for payments on Jan 30 – Feb 1 if the semiweekly deposit rule applies.
Fri8Deposit payroll tax for payments on Feb 2-5 if the semiweekly deposit rule applies.
Mon11Employers: Employees are required to report to you tips of $20 or more earned during Jan.
Mon11File Forms 940, 941, 943, 944 and/or 945 if you timely deposited all required payments.
Wed13Deposit payroll tax for payments on Feb 6-8 if the semiweekly deposit rule applies.
Fri15File a new Form W-4 if you claimed exemption from income tax withholding in 2012.
Fri15Furnish Forms 1099-B, 1099-S and certain Forms 1099-MISC to recipients.
Fri15Deposit payroll tax for Jan if the monthly deposit rule applies.
Fri15Deposit payroll tax for payments on Feb 9-12 if the semiweekly deposit rule applies.
Sat16Begin withholding on employees who claimed exemption from withholding in 2012 but did not file a W-4 to continue withholding exemption in 2013.
Thu21Deposit payroll tax for payments on Feb 13-15 if the semiweekly deposit rule applies.
Fri22Deposit payroll tax for payments on Feb 16-19 if the semiweekly deposit rule applies.
Wed27Deposit payroll tax for payments on Feb 20-22 if the semiweekly deposit rule applies.
Thu28  File information returns, including Forms 1098, 1099 and W-2G for payments made during 2012.
Thu28File Form W-3 with Copy A of all Forms W-2 issued for 2012.
Thu28File Form 8027 if you are a large food or beverage establishment.
Thu28File Form 730 and pay the tax on wagers accepted during January.
Thu28File Form 2290 and pay the tax for vehicles first used in January.

March

Fri1Deposit payroll tax for payments on Feb 23-26 if the semiweekly deposit rule applies.
Fri1Farmers and Fisherman: File Form 1040 and pay any tax due. However, you have until Apr 15 to file if you paid your 2012 estimated tax payments by Jan 15, 2013.
Wed6Deposit payroll tax for payments on Feb 27 – Mar 1 if the semiweekly deposit rule applies.
Fri8Deposit payroll tax for payments on Mar 2-5 if the semiweekly deposit rule applies.
Mon11Employers: Employees are required to report to you tips of $20 or more earned during February.
Wed13  Deposit payroll tax for payments on Mar 6-8 if the semiweekly deposit rule applies.
Fri15Corporations: File Form 1120 for calendar year and pay any tax due. For automatic 6-month extension, file Form 7004 and deposit estimated tax.
Fri15Employers: Deposit payroll tax for Feb. if the monthly deposit rule applies.
Fri15S Corporations: File Form 1120S for calendar year and pay any tax due. Furnish a copy of Sch. K-1 to each shareholder. File Form 2553 to elect S Corporation status beginning with calendar year 2013.
Fri15Electing Large Partnerships: Furnish Sch. K-1 (Form 1065-B) to each partner.
Fri15Deposit payroll tax for payments on Mar 9-12if the semiweekly deposit rule applies.
Wed20Deposit payroll tax for payments on Mar 13-15 if the semiweekly deposit rule applies.
Fri22Deposit payroll tax for payments on Mar 16-19 if the semiweekly deposit rule applies.
Wed27Deposit payroll tax for payments on Mar 20-22 if the semiweekly deposit rule applies.
Fri29Deposit payroll tax for payments on Mar 23-26 if the semiweekly deposit rule applies.
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Upcoming Tax Deadlines | January 2012

January

FriDeposit payroll tax for payments on Jan 1-3 if the semiweekly deposit rule applies.
Tue10 
Employers: Employees are required to report to you tips of $20 or more earned during Dec 2011
Wed 11  Deposit payroll tax for payments on Jan 4-6 if the semiweekly deposit rule applies.
Fri13Deposit payroll tax for payments on Jan 7-10 if the semiweekly deposit rule applies.
Tue17Individuals: Pay the final installment of your 2011 estimated tax. Use Form 1040-ES.
Tue17Farmers and fishermen: Pay your estimated tax for 2011. Use Form 1040-ES.
Tue17Employers: Deposit payroll tax for Dec 2011 if the monthly deposit rule applies.
Thu19Deposit payroll tax for payments on Jan 11-13 if the semiweekly deposit rule applies.
Fri20Deposit payroll tax for payments on Jan 14-17 if the semiweekly deposit rule applies.
Wed25Deposit payroll tax for payments on Jan 18-20 if the semiweekly deposit rule applies.
Fri27Deposit payroll tax for payments on Jan 21-24 if the semiweekly deposit rule applies.
Tue31File Form 720 for the fourth quarter of 2011.
Tue31Furnish Forms 1098, 1099 and W-2G to recipients for certain payments during 2011. Furnish Form W-2 to employees who worked for you during 2011.
Tue31File Form 730 and pay the tax on wagers accepted during Dec 2011.
Tue31Deposit any FUTA tax owed through Dec 2011.
Tue31File Form 2290 and pay the tax for vehicles first used in Dec 2011.
Tue31Files Forms 940, 941, 943, 944 and/or 945 if you did not deposit all taxes when due.
Tue31File your tax return if you did not pay your last installment of esimated tax by January 17th

February

Wed1Deposit payroll tax for payments on Jan 25-27 if the semiweekly deposit rule applies.
Fri3Deposit payroll tax for payments on Jan 28-31 if the semiweekly deposit rule applies.
Wed  8Deposit payroll tax for payments on Feb 1-3 if the semiweekly deposit rule applies.
Fri10 Deposit payroll tax for payments on Feb 4-7 if the semiweekly deposit rule applies.
Fri10Employers: Employees are required to report to you tips of $20 or more earned during Jan.
Fri10File 2011 Forms 940, 941, 943, 944 and/or 945 if you timely deposited all required payments.
Wed15File a new Form W-4 if you claimed exemption from income tax withholding in 2011.
Wed15Furnish Forms 1099-B, 1099-S and certain Forms 1099-MISC to recipients.
Wed15Deposit payroll tax for Jan if the monthly deposit rule applies.
Wed15Deposit payroll tax for payments on Feb 8-10 if the semiweekly deposit rule applies.
Thu16Begin withholding on employees who claimed exemption from withholding in 2011 but did not file a W-4 to continue withholding exemption in 2011.
Fri17Deposit payroll tax for payments on Feb 11-14 if the semiweekly deposit rule applies.
Thu23Deposit payroll tax for payments on Feb 15-17 if the semiweekly deposit rule applies.
Fri24Deposit payroll tax for payments on Feb 18-21 if the semiweekly deposit rule applies.
Tue28File information returns, including Forms 1098, 1099 and W-2G for payments made during 2011.
Wed29File Form W-3 with Copy A of all Forms W-2 issued for 2011.
Wed29File Form 8027 if you are a large food or beverage establishment.
Wed29File Form 730 and pay the tax on wagers accepted during January.
Wed29File Form 2290 and pay the tax for vehicles first used in January.
Wed29Deposit payroll tax for payments on Feb 22-24 if the semiweekly deposit rule applies.


March

Thu1
 Farmers and fishermen: File 2011Form 1040 and pay any tax due. However, you have until Apr 17 to file if you paid your 2011 estimated tax payments by Jan 15, 2012.
Fri2 Deposit payroll tax for payments on Feb 25-28 if the semiweekly deposit rule applies.
Wed7 Deposit payroll tax for payments on Feb 29 – Mar 2 if the semiweekly deposit rule applies.
Fri9 Deposit payroll tax for payments on Mar 3-6 if the semiweekly deposit rule applies.
Mon12
 Employers: Employees are required to report to you tips of $20 or more earned during February.
Wed14 Deposit payroll tax for payments on Mar 7-9 if the semiweekly deposit rule applies.
Thu15
 Corporations: File Form 1120 for 2011 calendar year and pay any tax due. For automatic 6-month extension, file Form 7004 and deposit estimated tax.
Thu15 Employers: Deposit payroll tax for Feb. if the monthly deposit rule applies.
Thu15

 S Corporations: File Form 1120S for 2011 calendar year and pay any tax due. Furnish a copy of Sch. K-1 to each shareholder. File Form 2553 to elect S Corporation status beginning with calendar year 2012.
Thu15 Electing Large Partnerships: Furnish Sch. K-1 (Form 1065-B) to each partner.
Fri16Deposit payroll tax for payments on Mar 10-13 if the semiweekly deposit rule applies.
Wed21Deposit payroll tax for payments on Mar 14-16 if the semiweekly deposit rule applies.
Fri23Deposit payroll tax for payments on Mar 17-20 if the semiweekly deposit rule applies.
Wed28Deposit payroll tax for payments on Mar 21-23 if the semiweekly deposit rule applies.
Fri30Deposit payroll tax for payments on Mar 24-27 if the semiweekly deposit rule applies.
Sat31File Form 2290 and pay the tax for vehicles first used in February.
Sat31File Form 730 and pay the tax on wagers accepted during February.
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