TaxMamas TaxQuips

Today TaxMama hears from Cindy who tells us, “I was gifted stock over several years. Now I am getting ready to sell the stock. Is my cost basis the original cost for which the stock was purchased? Or is it the value of the stock at the time of the gift?”

Hi Cindy,

Excellent question.

Yes, you’re right, the basis is the original cost.

So, see if you can get that information from the person who gifted you the stock.

I know it’s tacky to tell someone what a gift costs, but…when it comes to investments, it’s a very generous gesture to include a certificate with the gift showing the date(s) of purchase and the basis for each batch of securities – just in case the generous donor is not accessible when you get ready to sell it.

And remember, you’ll find answers to lots of questions about the basis of assets and other tax information, free. Where? At TaxMama.com

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Today TaxMama hears from Sal in New York, who has a gripe. “How many years has the maximum capital loss deduction been set at $3,000? To me it seems like forever. Don’t you think $3,000 is stingy, unfair and unrealistic in today’s investment world? How was that amount arrived at? Why is no one speaking up about this when it’s so obviously out of date and adds complexity with carryovers? A more equitable ruling for people over 65, would be to permit net capital loss deductions, determined by ones life expectancy, similar to IRA distributions. “

Hi Sal,

Interesting point.

I just pulled out a 1980 IRS Package X (catalog of printable forms) and the Schedule D shows a limit of $3,000. So I don’t know how long this has been going on, but it’s been a long time.

Do you know that you can submit suggestions to the Taxpayers Advocate? Nina E. Olson makes recommendations to Congress about proposed law changes each year. It’s probably too late for this year’s report. But get the ball rolling and it could be included in next year’s report.

I did submit your suggestion, but consider submitting a note yourself. You can use this link.
http://www.irs.gov/app/samsnet/IssueQualification.jsp

And you can submit the idea to your legislators and the White House here: http://taxmama.com/Articles/calltoaction.html

Actually, if I’d been awake, I would have suggested that this be changed for everyone – not just seniors.

After all, back in 1980 and before, $3,000 was a heck of a lot of money. It was a 10% – 20% down payment on a home. Today, it’s the property tax. You’re right. It’s well past time to update that limit. Besides, these days, many people are sitting on large loss carryovers.

I invite everyone to submit a note to your own legislators – and even the Advocate’s office.

And remember, you’ll find answers to lots of questions about changing tax laws and other tax information, free. Where? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]

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TaxQuips

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Taxpayer Advocate site

Submit Systemic Problems and Suggestions

TaxMama's Call to Action

Links to contact information for Legislators and the White House

Today TaxMama hears from Charles in Louisiana, who tells us. “I have an Internet consultation business (LLC) and I use my Internet connection and mobile phone primarily (but not exclusively) for business. Should I be able to expense these?”

Hi Charles,

Phones, Internet connections, computers, cameras, autos – all of those are things that folks tend to use for both personal and business.

You should have no problem deducting the business use of all these things.

The question is, how do you determine what part of the expenses are for business and which are personal.

Essentially, when it comes to phones, on your home phone, the base phone fee is always personal.

On all the other phones, and the rest of the home phone, keep logs to keep track of business and personal use.

I’ve read tax cases where the courts backed IRS’s denial of deductions where the business-owner didn’t have records to show the business and personal use.

Go through the phone bills to review the calls and separate out the personal calls – and don’t deduct those.

For the Internet, if your family is using it too, either keep logs or prorate the costs among all the users in the family. If you have 4 people, split the cost 5 ways – 1 for each member of the family’s personal use (including your own) and 1 for the business use. I hope this helps?

And remember, you’ll find answers to lots of questions about business expenses and other tax information, free. Where? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]

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TaxQuips

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Today TaxMama hears from Bernie in New York, who’s quite frustrated. “My ex-wife and I are working on funding our child’s college education. How can I find out if her $18,000 W-2 is complete and honest? Her husband is showing her as his company’s secretary at this reduced income level. How can I get copies of her last three years’ W-2s to see if she’s telling the truth?”

Well Bernie,

There are only two ways to get copies of anyone’s tax records, documents or information.

1) Ask them to give it to you.

or

2) Get a court order and have the court subpoena the records from IRS.

That’s it. Period. There is no other way.

What’s if you wouldn’t believe any documents she gives you? Fill out a Form 4506-T to request transcripts of her W-2s for the last three years to be sent to you – and have her sign it and send it to IRS. That way, you’ll know the information is coming from IRS.

Now, your concern about her getting a nominal, reduced salary? If it’s her husband’s business, and that’s all he wants to pay her – and she’s willing to accept that – there’s nothing illegal about that. It may not be the most ethical way to go. And it’s a poor example to set your child. And it does tell your child that Mom is not willing to chip in for her legitimate share to put your child through college. And your child may remember that forever, somewhere in the back of her mind. Only to surface years later when it’s time to take care of Mom when she’s old and the resentments erupt… But it is legal.

And remember, you’ll find answers to lots of questions about getting copies of tax documents and other tax information, free. Where? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]

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TaxMama's TaxQuips

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Dear Family,

Are you invited to a wedding today?

You’re not! How can that be. So many people are trying to get married on the lucky 777 day that the Assocation for Wedding Professionals International has put up a map with venues that are still available. Perhaps those couples will hit the jackpot with this wedding day. We certainly wish them well.
777WeddingAssistance

TaxQuips generated some interesting personal notes from people about their reactions to helping someone get their life back on track. http://taxquips.com/index.php?cat=TaxQuips

In fact, it inspired Judy Vorfeld to write in her blog about stereotypes – and how wrong they can be.

Naturally, that reminded me of a rather special special summer, when I stereotyped two people at the same time.

Don’t you have stories you want Judy to publish, too? (I got lost in blogs and sites, reading about her husband. His family is fascinating, including barnstormers, Hawaii, cesspools and BB guns. I would have loved to have known him!

Aw well, back to the 21st Century and taxes. Sigh.

IRS News has good news and bad news. The good news is that IRS has developed a better Innocent Spouse form. The bad news is – the wonderful Free File Program doesn’t seem to be providing accurate tax returns. Well, you’ve heard the old adage – free is worth what you pay for it.

Speaking of paying, did you hear the one about the generous guy and his quarter? No? Well read today’s Money Funnies. You’ll be twisted up in knots, laughing.

Which leads me to a surprising bit of news. Did you know that Nordstroms owns a bank? I suppose it shouldn’t surprise you, considering how much they make in all their various enterprises. But, the good news for you is, they’re looking for a Controller/VP of Accounting. Read today’s Job
News from TaxMama’s Career Center.

And that does it for me. It’s late, and there’s still lots to do before I sleep. After all, our EA Class starts working on Part III of the exam tomorrow. (One of our students, Gary, just took the Part I exam and passed with glee!)

Oh yes, EA cards are still in the mail, for those of you who passed last year’s exam and are still waiting to hear. IRS is working as quickly as they can to do your background checks and get you approved.

Don’t tax yourself this weekend. Enjoy the summer!

Hugs from your favorite TaxNerd,

Eva Rosenberg, EA

Your TaxMama is watching…out for you.

www.TaxMama.com
www.TaxQuips.com
www.IRSExam.com
www.TaxNerd.net

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TaxQuips

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Ask TaxMama

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TaxQuips

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Assocation for Wedding Professionals International

Wedding Locations For 7-7-7