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California Tax Law Questions & Answers
1 Answer | Asked in Tax Law for California on
Q: Say I gift $16k to my son. Can I also gift $16k to my sister, who gifts it to my son, tax-free in the same year?
James L. Arrasmith
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James L. Arrasmith PRO label
answered on Oct 4, 2022

You would use up part of your lifetime estate tax exemption, but the total amount is currently nearly $13,000,000, so unless you are very wealthy, you should not have to worry about it.

1 Answer | Asked in Tax Law, Banking and Collections for California on
Q: Can California FTB levy my parents bank account if I'm added to the account?

My mother just died and my father wants to add me to his bank account incase something happens to him so I'll be able to pay the bills and have access to his money once he dies. I owe the Cal FTB 25K and they have levied my bank account earlier this year and took around 1200 from previous... Read more »

Joel Gary Selik
Joel Gary Selik
answered on Oct 1, 2022

Yes they can. And while you might be able to get it back, it’s not worth it.

Simply get a power of attorney form from the bank and have your dad add you as a POD beneficiary on the account.

1 Answer | Asked in Tax Law and Real Estate Law for California on
Q: Does a change of ownership happens when you have trust property taxes?
James R. Dickinson
James R. Dickinson
answered on Sep 20, 2022

Speak with an estate planning and tax lawyer about the tax consequences of placing property in trust. [I litigate cases. Anything posted here must not be construed as legal advice, nor as grounds for forming an attorney-client relationship. You should seek an attorney for formal legal advice and... Read more »

2 Answers | Asked in Tax Law for California on
Q: What tax service should i use my first year with an LLC?
James L. Arrasmith
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James L. Arrasmith PRO label
answered on Sep 18, 2022

I would recommend a qualified tax professional if you want to have a lot of itemized deductions; else, TurboTax is a good option.

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1 Answer | Asked in Business Formation, Business Law and Tax Law for California on
Q: Can I register a for profit business at a property owned by non profit religious organization?
Julie King
Julie King
answered on Aug 30, 2022

I'm sorry to say, your question doesn't make sense. Businesses are registered with the state, not registered at a property. Perhaps you can try asking your question again, but give the lawyers more information about what you need. Sorry about that!

1 Answer | Asked in Estate Planning, Family Law and Tax Law for California on
Q: 2002 Trust was created. If surviving spouse disclaims "any" interest in deceased spouse property, ..............

..................trust can not be amended or revoked. When trust was created surviving spouse disclaimed/transmuted interest in deceased spouses inheritance 852 Family Code.

California Probate Code 278 – The disclaimer shall be in writing, shall be signed by the … The disclaimer shall... Read more »

Julie King
Julie King
answered on Aug 4, 2022

I'm sorry to say that a lawyer cannot answer this question without reading both the trust and the disclaimer. It's a bit like giving two lines of a book and asking a question about the whole book. Sorry about that!

2 Answers | Asked in Estate Planning and Tax Law for California on
Q: Changing the asset of a QPRT.

I placed my residence in Virginia into a QPRT two years ago splitting it between my two children. My son has since become disabled. I bought a house for me and my husband in California this month and am currently in the process of selling my house in Virginia under the QPRT. I want to buy another... Read more »

Julie King
Julie King
answered on Jun 20, 2022

Qualified Personal Residence Trusts (QPRTs) are irrevocable trusts, which means they are not easily changeable or dissolvable. Whether or not your QPRT can be modified will depend on the language in your particular document. There is something called "decanting" that might be used to... Read more »

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2 Answers | Asked in Bankruptcy, Tax Law and Business Law for California on
Q: Need help to dissolve S Corp due to pandemic- Can someone help?

Fitness company- Officers are myself and husband. Devastated by pandemic and not able to recover. There’s unfiled back taxes and a recent $110k judgement from a defaulted business loan with me only as the personal guarantor. I hired a firm several months ago to help negotiate a settlement but... Read more »

Harlene Miller
Harlene Miller
answered on Jun 16, 2022

There are many issues you mention that far exceed what can be discussed on this site. I urge you to consult with an experienced bankruptcy attorney with broad experience: including creditor representation in order to explain the impact of a potential bankruptcy on the creditors and how they might... Read more »

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1 Answer | Asked in Tax Law for California on
Q: Hi, IRS question,

Hi.

I am getting audited for 2018 for my short-term rental business in California ( LLC ) but all the receipts for the expenses have been stolen with other stuff in one of my apartments by guests during COVID and all the receipts I was gathering are gone. What should I do? How can I back... Read more »

Rogelio (Rod) B. Tuazon
Rogelio (Rod) B. Tuazon
answered on May 7, 2022

If you paid those expenses using credit/debit cards, you may be able to use your bank statements or credit card statements as proof. If you paid cash, do your best to document your cash payments and explain to the auditor why you are unable to produce the receipts.

3 Answers | Asked in Business Law, Contracts and Tax Law for California on
Q: If I am helping a friend lease a business space for HIS business, do I need to report anything to the IRS on my end?

My friend is starting up a business, he’s doing good and now needs a shop to work. He does not have the credit to lease a place. He asked me to help him lease in exchange for 10% of earnings. What would I have to report to the IRS or does his total earnings affect me in any way? I am aware I’m... Read more »

Rogelio (Rod) B. Tuazon
Rogelio (Rod) B. Tuazon
answered on May 6, 2022

Although not mandatory, I hope you have this agreement in writing. The 10% payment in exchange for co-signing a lease is considered in the broad definition of gross income. So, the short answer is yes, it must be reported to the IRS. Your friend may also have an obligation to issue you a 1099, so... Read more »

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1 Answer | Asked in Tax Law for California on
Q: I received a 1099-NEC. I’m filling out Schedule C for my federal tax returns. What do I do for my California state tax?

I also used worked from home so I’m filling out line 30.

Rogelio (Rod) B. Tuazon
Rogelio (Rod) B. Tuazon
answered on May 4, 2022

With the presumption that you live in California, the income and expenses you claimed in your Sch. C are generally allowed in California with some exceptions. In preparing your CA return, you start with your adjusted gross income (AGI) then you adjust for additions and subtractions. For instance,... Read more »

1 Answer | Asked in Tax Law for California on
Q: Is my rebate from Zillow 360 considered income for IRS purposes? I received a 1099-MISC for it.

To qualify for the rebate, I had to 1) Sell my current home to Zillow, 2) Purchase my new home through an approved Zillow real estate agent, and 3) Finance my new home through Zillow Home Loans. After all three requirements were met, I received a Rebate of 2% of my former home's selling... Read more »

Rogelio (Rod) B. Tuazon
Rogelio (Rod) B. Tuazon
answered on May 4, 2022

You are correct. Generally when a company pays a customer compensation in the form of a rebate as an inducement to use their services (sell/buy/loan), that payment is not considered income. Price adjustments and rebates are not considered in the broad definition of gross income.

1 Answer | Asked in Business Formation and Tax Law for California on
Q: Public purpose vs Charitable Purpose

On the filing of article incorporation of a NPO, two purposes available for ticking : Public purpose and Charitable purpose. What’s the difference? Also If Public purpose is checked can the organization still get 501(c)(3) tax exempt status ?

Matthew Morris
Matthew Morris
answered on Apr 28, 2022

A good question. It's not helpful that courts in California have frequently used the terms "public purpose" and "charitable purpose" interchangeably.

Taking your last question first: the IRS will not likely deny a 501(c)(3) determination if you check the box for...
Read more »

1 Answer | Asked in Tax Law for California on
Q: I owe California income tax. My wages are being garnished but they also levied my bank account. Can FTB do both?
David S. Greenberg
PREMIUM
David S. Greenberg
answered on Apr 22, 2022

Unfortunately, the California Revenue and Taxation Code allows the FTB to do this.

It's important to note that relief from the levies may very well be available.

It's best to immediately establish contact with an experienced tax attorney to help you with this.

1 Answer | Asked in Real Estate Law and Tax Law for California on
Q: I live in California, but have a house in Puerto Rice. Is there a withholding of 15% to the IRS for the sale of my house

I live in California, but have a house in Puerto Rice. Is there a withholding of 15% to the IRS for the sale of my house for $400k

David S. Greenberg
PREMIUM
David S. Greenberg
answered on Apr 21, 2022

The IRS only requires 15% of the sales price be withheld on the sale of United States real property interests by foreign persons.

2 Answers | Asked in Tax Law for California on
Q: I'm an independent contractor with no "earned" income in 2021 but had unemployment, can I still take Sch. C expenses?

Normally, I am self-employed (independent contractor) freelance exec. assistant and run my business from my apartment and use Schedule C to deduct expenses for that business. However, from Jan. to Sept 2021 I collected Pandemic Unemployment Assistance and did not have any earned income and my PUA... Read more »

Rogelio (Rod) B. Tuazon
Rogelio (Rod) B. Tuazon
answered on May 4, 2022

Just to clarify, it you looked for work unrelated to your business, the expenses may not qualify. However, if the expenses are related to maintaining your current business, they may qualify as expenses even if you didn't have earned income for that year.

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1 Answer | Asked in Tax Law for California on
Q: I had a tax issue and the issue has gone to IRS court . Can i do a settlement with the IRS instead of going to court.

I had a tax issue and the issue has gone to IRS court. Can I do a settlement with the IRS instead of going to court? The Tax Agent who has handled my case bailed out at the last moment. Is it advisable to go with an attorney who may charge up to 25k start and may go up? Where should I get good... Read more »

David S. Greenberg
PREMIUM
David S. Greenberg
answered on Apr 3, 2022

Yes, you most certainly settle your case. In fact, a very high percentage of Tax Court cases are settled.

1 Answer | Asked in Real Estate Law and Tax Law for California on
Q: We plan to sell our house in 2023, w/a capital tax gain of $1MM. Should I NOT work in 2022 to fall in the 0% tax rate?

I can afford to not work. But a past employer wants me to work for them. Ideally, i want my taxable income to be as low as possible when i sell our house, correct?

Jarrett Nila Buchanan
Jarrett Nila Buchanan
answered on Mar 29, 2022

If this home qualifies as your primary residence, you will qualify for a capital gain exclusion of $250k, if single, or $500k, if married. If this is an investment property, you may defer taxable gain by doing a 1031 exchange. There are also ways to change the characteristics of properties in... Read more »

3 Answers | Asked in Employment Law and Tax Law for California on
Q: Is there something I can do if my employer misclassified me as an independent contractor?

I have a question regarding taxes…my employer last year classified me as an independent contractor, however i was looking into CA state law and based on what I was reading, I should have been classified as an employee. The employer gave me a 1099 and now I owe around $3000 in taxes. Is there... Read more »

Maya L. Serkova
Maya L. Serkova
answered on Mar 11, 2022

In the employment law context, if you are actually an employee and not an IC, you have the protections of the California Labor Codes that you can adjudicate against your employer. Specifically, as an employee, you are entitled to overtime pay ( if you work more than 8 hours per day/ more than 40... Read more »

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3 Answers | Asked in Employment Law, Tax Law and Civil Rights for California on
Q: My boss threatened my job hours and flexibility. Is this legal?

After I confronted my boss about him illegally giving me a 1099 since I’m not a independent contractor nor self employed i demanded a w2 . He messaged me insisting I was and he said if I ask for a W-2 he said say good bye to my freedoms and basically my flexibility I’ve been given as... Read more »

Maya L. Serkova
Maya L. Serkova
answered on Mar 9, 2022

It is unlawful to retaliate against an employee who refuses to participate in illegal activity. It sounds like your employer is retaliating against you for refusing to go along with 1099 which you believe is improper in your case.

I suggest you consult with an employment law attorney who...
Read more »

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