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I am considering selling my home of 25 years to retire. I rented it out from 2018 to 2023 and have used it as my primary residence since 2023. Before renting, I lived in the home from 1999 to 2018 and made $80k-$100k worth of improvements. Upon returning as our primary residence, we did another... View More 
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answered on Mar 17, 2025
You don't currently qualify for the full $500,000 Section 121 exclusion since you've only lived in the home for 18 months of the required 24 months (2 years) during the 5-year period before sale. The IRS doesn't typically pro-rate the exclusion based solely on duration of occupancy;... View More
My mother passed away in November 2023, and her will specified that her house would be split 50/50 between my sister and me. As she did not have a living trust, we went through the probate process and sold the house in September 2024. The probate process is not officially closed because the final... View More
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answered on Mar 16, 2025
If the estate sold the house then the sale is reported on the 2024 estate tax return.
If you and your sister sold the house then the sale is reported on your 2024 income tax return and her 2024 income tax return.
I plan to pay my overseas freelancers approximately $30,000 annually through Ria Money Transfer using my business debit card, without formal contracts or agreements in place. My LLC is registered in California, and the payments will be made monthly. The freelancers are working on building my real... View More
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answered on Mar 15, 2025
Paying overseas freelancers through Ria Money Transfer without formal contracts or tax advice can expose your LLC to certain risks. From a legal perspective, not having written agreements leaves you vulnerable, as it becomes challenging to enforce terms, deadlines, or resolve disputes if the work... View More
I plan to pay my overseas freelancers approximately $30,000 annually through Ria Money Transfer using my business debit card, without formal contracts or agreements in place. My business is registered in California, and the payments will be made monthly. The freelancers are working on building my... View More
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answered on Mar 15, 2025
Paying overseas freelancers via Ria Money Transfer itself isn't inherently problematic, but your described approach could lead to tax or legal concerns. Because your business is registered in California, you're required to accurately report all business expenditures and payments to... View More
I plan to pay my overseas freelancers by sending funds through Ria Money Transfer using my business debit card. The total annual payment will be around $30,000, and I don't have any formal contracts or agreements with the freelancers. I haven't sought any prior advice regarding... View More
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answered on Mar 15, 2025
Paying your overseas freelancers through Ria Money Transfer won't inherently cause legal or tax issues, but it may raise concerns if not handled properly. First, you need to clearly document all payments, including amounts, dates, and recipients, to ensure transparency if audited or reviewed.... View More
Does my ex have to continue paying alimony if he lost his job but has several million in stocks, savings, etc., while I make $16,000 per month? The divorce and alimony agreement were finalized in California.
answered on Mar 14, 2025
A court order is a court order and must be complied with until it is modified or otherwise replaced with a new court order. When someone who is subject to a support order loses their job, it is their burden to go to court to get relief; to get a new court order that reflects their current... View More
I own a small PEO in California and have a client with an LLC where some employees are also shareholders. The concern raised by the LLC's tax accountants is about these shareholder employees being classified as W-2 employees under the PEO arrangement. They recommended that shareholders cannot... View More
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answered on Mar 1, 2025
The tax treatment of LLC shareholder-employees depends on how the LLC is taxed. If the LLC has elected S-corporation tax treatment, shareholder-employees can and should be W-2 employees receiving reasonable compensation before taking distributions. However, if the LLC is taxed as a partnership (the... View More
I am on permanent disability and had previously left my job. My tax-sheltered annuity account has been brought to a zero balance. I am trying to understand the legal implications of this early withdrawal, especially related to exceptions for disability.
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answered on Mar 1, 2025
Early withdrawals from tax-sheltered annuities typically trigger a 10% federal penalty tax plus ordinary income tax on the distribution amount when taken before age 59½. However, the IRS provides important exceptions for individuals with permanent disability, which might apply to your situation.... View More
In a California limited partnership where the general partner holds a 93% interest and the limited partners hold a 7% interest, must an amendment from 1995 regarding unreimbursed general partner expenses be signed by all partners to be valid, if one partner disapproved and did not sign at that... View More
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answered on Feb 28, 2025
In California limited partnerships, the validity of amendments typically depends on the terms outlined in your original partnership agreement. If your agreement specifies that amendments require unanimous consent, then the 1995 amendment regarding unreimbursed general partner expenses would need... View More
My sons custodial account has done surprisingly well, generating 13,000$ from an initial 1,600$ through options. Can I withdraw the money from the custodial account to pay its capital gains taxes or do I need to use my own money to pay for the child (as money can only be used for the benefit of the... View More
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answered on Feb 28, 2025
You can withdraw funds directly from the custodial account to pay the capital gains taxes, provided those taxes result from income generated by the account itself. Since the custodial account belongs to your child, the IRS views taxes on its gains as a legitimate expense benefiting the minor.... View More
I recently transferred my half of a home to my former girlfriend through a quit claim deed and received $300,000. After accounting for the home buying down payment and improvements, my net profit was less than $250,000. The property was my primary residence for the last three years. How should I... View More
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answered on Feb 27, 2025
You'll likely qualify for the capital gains exclusion on your home sale since you lived there as your primary residence for at least two of the last five years. Since your profit is under $250,000 and you're a single filer, you may not owe any taxes on this transaction. The quit claim... View More
I live in Massachusetts but have my official work address, as shown on my W2, in California. I mostly work remotely from Massachusetts and occasionally travel to California for work. I don't have any other sources of income in either state. How should I handle my state taxes in this situation?
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answered on Feb 24, 2025
You'll need to file tax returns in both Massachusetts (as your resident state) and California (as a non-resident state). This dual-filing situation is common for remote workers with official work addresses in different states.
For your Massachusetts return, you'll report your... View More
I want to know if excludable Medicaid waiver payments can be treated as compensation for the purpose of making Roth IRA contributions, according to Section 116 of the SECURE Act of 2019, especially since IRS Publication 590-A does not mention these payments in the Roth IRA section.
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answered on Feb 23, 2025
Let me help clarify this important question about Medicaid waiver payments and Roth IRA contributions.
Yes, excludable Medicaid waiver payments can be treated as compensation for making Roth IRA contributions, thanks to Section 116 of the SECURE Act of 2019. While IRS Publication 590-A... View More
I have consistently claimed my 19-year-old child as a dependent in previous years without any issues. My child lives with me full-time in California, and I provide all financial support. My ex, who has no relationship with my child, claimed them as a dependent on his taxes this year. My child did... View More
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answered on Feb 20, 2025
Based on the information you've provided, you have the right to claim your 19-year-old child as a dependent. Since your child lives with you full-time, and you provide all financial support, you meet the key IRS requirements for claiming a qualifying child dependent.
When two parents... View More
I am inheriting money and would like to help my daughter by putting money towards her mortgage. However, my sister mentioned that someone in financial aid said I might not be able to gift my money away. Are there legal restrictions that could prevent me from using my inheritance to assist my... View More
answered on Feb 18, 2025
This is a tax question. Gifts of cash can trigger a gift tax and require the filing of a gift tax return according to the IRS website. One possibly end around may be for the inheritance to pass directly through to your daughter. I would consult with a tax adviser and the estate attorney regarding... View More
I'm the Successor Trustee and sole beneficiary of my parents' Living Trust, which includes only a property in California. The property is under contract and will close this week. The escrow company requires instructions for disbursing the sale proceeds. I've opened a Trust checking... View More
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answered on Feb 16, 2025
While you can legally transfer the proceeds directly to your brokerage account since you're both the trustee and sole beneficiary, it's generally safer to first move the funds through the Trust checking account. This creates a clear paper trail showing proper trust administration and... View More
I am trying to sell a parcel that I purchased in December 2021, but I'm facing issues with clearing the title. The title company I am using for the sale informed me that it cannot clear because the previous owner's LLC was inactive when I bought the property. The previous owner owes... View More
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answered on Feb 15, 2025
Outside of paying the taxes yourself to the IRS and receiving a partial release of their lien, you may wish to sell to someone else who will accept the title as is. Otherwise you may have to wait out the enforceable period for the tax lien, up to 13 years from the tax being assessed.
I own a rental property that was purchased 20 years ago and has been depreciated using straight-line depreciation. I've made several capital improvements, including a new roof, re-plumbing, and new paint. For ongoing tax planning, can the property's current higher market value be... View More
answered on Feb 16, 2025
You are allowed to use the original costs, plus improvements, which should be available from your tax professional. I hope this helps. Zaher Fallahi, Tax Attorney, CPA (Admitted in CA & D.C.).
Disclaimer: No solicitation is intended by answering general questions in this forum. This is... View More
I'm interested in buying a car right now. My parents live in Oregon, and I live in California. And I have a question: Is there a way to save money on taxes by buying a car in Oregon and registering it there on my parents house and then reregistering it in California where I live? Thank you!
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answered on Feb 7, 2025
While I understand the desire to save money on taxes, attempting to register a car at your parents' Oregon address while living in California would be considered tax evasion. California law requires residents to register their vehicles within 20 days of establishing residency or face... View More
When one party opts out of the LLC and wants to gift his interest in the property to the LLC, what are the tax implications for the gifting party and the receiving party.
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answered on Feb 7, 2025
Given the complexity of these transactions and their potential long-term implications, working with qualified tax and legal professionals would help ensure proper handling of all documentation and reporting requirements.
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