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California Tax Law Questions & Answers
1 Answer | Asked in Employment Law and Tax Law for California on
Q: Can retroactively reclassifying IC to employees, ammend returns, pay EDD/IRS penalties counter a misclassification suit?

If a small business that is being sued for misclassifying employees as independent contractors, and the they choose to ammend payroll taxes, tax returns and retroactively reclassify these individuals, will it help in their position for the lawsuit? The plaintiffs were deceptive from the start and... Read more »

Neil Pedersen
Neil Pedersen answered on Feb 24, 2021

It is wise that you think proactively, but you should not do anything until you have retained your defense attorney who can then guide you through the best way to deal with the alleged liability. And you should not try to defend this case yourself. These kinds of cases can be bet-your-company... Read more »

1 Answer | Asked in Business Formation, Business Law, Tax Law and Trademark for California on
Q: i have my own business and i went as far as paying for my trademark do i have to pay taxes on my business still?

i have not have my wedsited just yet or business cards, i havent even hired no one and i just want to know if i have to files for the business and even if i got my ein number

Julie King
Julie King answered on Feb 21, 2021

If you are taking about income taxes, the answer will depend on whether you have any income. However, you must remember that there are MANY kinds of taxes. If your business is incorporated or a limited liability company, you must pay the minimum of $800 per year franchise tax. I assume you have a... Read more »

1 Answer | Asked in Estate Planning and Tax Law for California on
Q: Can I gift shares to my daughter for estate planning?

I just started a company (a Delaware C-corp). It is worth basically nothing at this point since it just got started. There are no investors so far, so I own most of the shares in the form of restricted stock that has been early-exercised. The shares will be vested over 4 years.

I have a... Read more »

Jeffrey Louis Gaffney
Jeffrey Louis Gaffney answered on Feb 9, 2021

One solution I have seen is to issue her non-voting shares. These will have 40% less value than a regular voting share because they have no control. That would allow you to give them to her at $25,000 per year without filing a gift tax return.

3 Answers | Asked in Tax Law and Probate for California on
Q: Is the property sale of a deceased child considered an inheritance and if so does it exempt them from some or all taxes?

A family friends son passed away. They are in probate to sell his home and pay off his debts, they are the only heirs. They live in CA as is the home being sold.

John B. Palley
John B. Palley answered on Feb 6, 2021

Hard to say for sure but typically most probate assets are received tax free. The exception are things like 401ks and retirement accounts. Happy to chat about the details if you contact me directly.

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1 Answer | Asked in Tax Law for California on
Q: My mother would like to transfer ownership of her $1.2 million dollar home to me. Will there be a gift tax? Who pays?

Are there exemptions?

Maurice Mandel II
Maurice Mandel II answered on Feb 6, 2021

There are a number of ways to do this, legally, to avoid capital gains tax, probate fees and other taxes. DO NOT HAVE HER SIGN A DEED UNTIL YOU CONSULT WITH AN ATTORNEY THAT SPECIALIZES IN ESTATE PLANNING FIRST.

Justia disclaimers below, incorporated herein.

1 Answer | Asked in Tax Law for California on
Q: Do I need to file a W9 if I did a favor for my dad at the business he owns and he gave me some money via a company check

In the beginning of 2020 my father asked me to help do some clean up in his new warehouse at the business he owns. I was not hired as an employee and did not fill out any tax paperwork I was just only there to help out and my dad always gives me a bit of money for it. At the end he had the company... Read more »

Maurice Mandel II
Maurice Mandel II answered on Feb 6, 2021

Do the W-9, or risk an audit by the IRS for failure to report income.

Justia disclaimers below, incorporated herein.

1 Answer | Asked in Real Estate Law and Tax Law for California on
Q: I have two mortgages on two properties in CA. One will soon be used as a rental. Is it better to consolidate the two?

I should refinance both properties now because I can save money with the low interest rates on mortgages. One lender suggested that I consolidate the two loans and pay-off the loan on my future rental property. But I wonder if I will benefit more (because of the tax benefits) if I maintain the loan... Read more »

Jonathan Purcell
Jonathan Purcell answered on Jan 27, 2021

I suggest you build a good spreadsheet and analyze and compare individual scenarios as they arise.

Jonathan Purcell is a California Attorney. This posting does not create any attorney-client relationship. The information presented here is general in nature and is not intended nor should be...
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1 Answer | Asked in Tax Law and Family Law for California on
Q: Thomas Fire settlement soon. Does that affect spousal support I get? Land is separate property inherited.

My siblings and I own the property inherited from our parents. It has always been separate property. It was burnt in the Thomas Fire and settlement is expected this year. Will the money from the settlement be considered income and thus cause a change in spousal support or as compensation and not... Read more »

Maurice Mandel II
Maurice Mandel II answered on Jan 25, 2021

I would think that money received in a fire insurance settlement is not income unless a portion of it was paid for lost income due to being displaced. You should consult a tax attorney for this, or a tax accountant.

Justia disclaimers below, incorporated herein.

2 Answers | Asked in Tax Law and Estate Planning for California on
Q: What is the exempting language under R&T code 11930 for transfer tax purposes?
Jeffrey Louis Gaffney
Jeffrey Louis Gaffney answered on Jan 21, 2021

I am not sure exactly what you are asking, but if when I transfer property into a living trust I write on the deed "Transfer to inter vivos trust per Cal Tax & Rev Code 11930". I put it near the transfer tax line.

Depending on the county, they may also want a Transfer Tax...
Read more »

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1 Answer | Asked in Child Support, Real Estate Law and Tax Law for California on
Q: Sale of Property - Title parties disagree

Sorry, I'm sure this is not an original question, but here it is.

My name is listed as one of two on the deed of a property. There are no banks nor outside liens against the property. Party Two physically lives on the property, while Party One (me) would like to live there. However,... Read more »

Gerald Barry Dorfman
Gerald Barry Dorfman answered on Jan 17, 2021

You can file a court action for "partition". The court will order the sale of the property (assuming physical division is not appropriate). Often, once such an action is filed (sometimes just after getting an attorney letter that filing is imminent) parties will work out a settlement... Read more »

1 Answer | Asked in Tax Law for California on
Q: What legal consequences will I be facing, come tax season, for using crowdfunded money to pay a friend for work?

I don’t have a business and will be using money gained from crowdfunding, to pay a friend to help me develop an animated feature. Will there be any differences if I were to make this animated feature available to the public free of charge or selling the feature when it is done? What legal... Read more »

Alexander Kugelman
Alexander Kugelman answered on Jan 12, 2021

Very likely the money received via crowdfunding will be taxable income to you. If you don't have an entity, then you would report it as a sole proprietorship income on a Schedule C. Keep in mind that you can claim ordinary and necessary business expenses to offset the income. For example,... Read more »

4 Answers | Asked in Estate Planning, Real Estate Law, Tax Law and Elder Law for California on
Q: An elderly neighbor offered to will me her home if I managed her care for the next few years. What are the issues here?

My elderly neighbor's husband just passed, and she finds herself overwhelmed by paperwork, by legal matters, and so forth. She is getting quite on in years and has no living family. She offered to will me her home if I would become power of attorney on her behalf and helped manage her affairs.... Read more »

Jeffrey Louis Gaffney
Jeffrey Louis Gaffney answered on Jan 5, 2021

The main issue is that it is not enforceable. Also, you are trying to take payment for something without calling it income.

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2 Answers | Asked in Tax Law and Consumer Law for California on
Q: Can a flower shop business whichv isn't registered, no permit, no resell license, and is now selling from from her house

This lady buys flowers from local markets or supermarkets and makes flower pieces for funerals and resales them for a higher price out of her house and she's got social media advertising her illegal flower shop. There's a local "Florist" who I purchased flowers pieces for my... Read more »

Yelena Gurevich
Yelena Gurevich answered on Dec 9, 2020

Her license or lack of license is separate and apart from whether or not your relatives can recover from her. If they paid for a product and didn't receive the product (assuming it was under $10,000) they can sue her in small claims to recover the money.

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1 Answer | Asked in Tax Law for California on
Q: Tax treatment for lump sum settlement payment from lawsuit

Back in December 2018, heavy rain created a flood and my apartment unit got completely submerged in water. Due to this, I’ve lost everything inside my unit including a Toyota Prius.

I’ve been driving Uber as a job full time for the past 6 years.

I purchased (financed 100% @ 23K)... Read more »

Maurice Mandel II
Maurice Mandel II answered on Dec 4, 2020

Unlikely they will itemize. You need to pay employment taxes on lost income, if any. You should allot a portion to lost income or IRS will come knocking. If you took tax deductions for casualty losses, and recover the $ for them that may also be taxable income. You should ask your attorney for... Read more »

2 Answers | Asked in Real Estate Law and Tax Law for California on
Q: Refinance residential loan application home purchase value question

I am in process of refinancing. In application, I put the home purchase value less by ~$700, this happened as I rounded the numbers (560k vs 560.7k). In fact all that was from memory. I requested the change, but the loan officer again missed it. Now the closing is scheduled and I am little... Read more »

Maurice Mandel II
Maurice Mandel II answered on Nov 17, 2020

If the lender says the $700 misquote is not a problem, then it isn't a problem. Your taxes don't change with a refi. Recording fees are per document. There is no taxable transfer. Chill, it isn't a problem.

Justia disclaimers below, incorporated herein.

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5 Answers | Asked in Bankruptcy and Tax Law for California on
Q: I need to file for bankruptcy and my husband is in a Nursing Home (I have his power of attorney) and I’m retired.

Yes I’m retired, can’t receive my unemployment and the IRS, Franchise Tax Board is coming after me.

I need to file for bankruptcy.

Timothy Denison
Timothy Denison answered on Nov 16, 2020

Contact your local bar association or legal aid society for a referral.

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3 Answers | Asked in Real Estate Law and Tax Law for California on
Q: Transfer home from grandma, to dad, to me without prop tax impact in CA?

Was planning on purchasing the home but wanted to figure this out first. Would it be possible for grandma to transfer deed to dad, then dad to me, all at the same time to avoid reassessment? Would I then be able to cash-out refi to pay grandma the amount I would have paid for the home?

The... Read more »

Maurice Mandel II
Maurice Mandel II answered on Nov 15, 2020

You really need to hire a Real Property attorney in your local area to assist you with this because of the complexity of what you want to do and if you mess it up, it could cost you thousands in taxes on capital gains and increased property taxes going forward for years to come. You have too many... Read more »

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1 Answer | Asked in Real Estate Law and Tax Law for California on
Q: Passing home from grandma to son, and then to grandchild without property tax reassessment in CA.

Was going to purchase the home, but now considering whether this is possible:

Grandma transfers to my dad, who then immediately (same day) transfers to me, and then I do cash-out refinance to pay grandma the amount I was going to pay her in the first place.

Are there rules around... Read more »

Maurice Mandel II
Maurice Mandel II answered on Nov 15, 2020

Yes, you are definitely missing, or not hearing the advice that you should not be trying to handle this yourself. You really need to hire a Real Property attorney in your local area to assist you with this because of the complexity of what you want to do and if you mess it up, it could cost you... Read more »

1 Answer | Asked in Tax Law for California on
Q: I plan to live abroad for some months. Can I use a commercial mailbox as my address in the US?

I am employed by a California company and can work remotely. I don't own a residence in the US. Should the commercial mailbox be in California so I continue paying California taxes? Is it okay to choose it to be elsewhere? I don't plan to return to California.

David S. Greenberg
David S. Greenberg answered on Nov 11, 2020

California can tax you on all of your California-source income even if you are not a resident of the state.

That being said, it's nonetheless best to cut all ties with California to the extent possible, i.e., do not maintain a commercial mailbox within California.

1 Answer | Asked in Real Estate Law and Tax Law for California on
Q: Can I rent a house (to purchase later) and keep my primary residence as rental property and take advantage of prop 19?

I live in my current primary residence, now 22 years. I moved my folks into memory care. I want to purchase their home but can't do so now due to capital gain issues. My thought is to move into their home and rent from estate, but I fear I lose my PROP 19 benefits by doing so. And, by them... Read more »

Maurice Mandel II
Maurice Mandel II answered on Nov 9, 2020

It sounds like you need to discuss matters with an elder law attorney. You may need to set up a conservatorship of the property for your parents, if you do that consider creating a trust to own the house until it can pass to you on their deaths. You can rent from the Trust which is a separate... Read more »

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