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Posts Tagged ‘death’

I am selling my house – Do I have to pay taxes on the sales price?

July 12th, 2012 Comments off
Asked to comment on the new constitution and speculate on the permanency of the newly formed United States of America, Benjamin Franklin stated that “In this world, nothing can be said to be certain, except death and taxes.”  Some 200 years later the certainty of taxation continues.


One tax imposed in the United States is the Income Tax.  The Internal Revenue Code defines “gross income” as “all income from whatever source derived.” It is not limited to earned income and includes profits earned from the sale of real property.


A seller’s income derived from the sale of real property is calculated by taking the gross amount received by the seller (in cash, trade, barter or otherwise) and deducting therefrom the cost of the real property.  This cost of the real property in tax terms is referred to as the “cost basis” and generally consists of the purchase price and the cost of any major capital improvements put into the property during the period of ownership.  For example, if a homeowner were to purchase his home for $20,000.00 and, during the term of his ownership, added a $10,000.00 extension, the cost basis in the property would be $30,000.00.  If the same homeowner were to sell this property for $100,000.00, he would have a gain or gross income of $70,000.00.


Under Section 121 of the Internal Revenue Code, some of the gain from the sale of one’s principal residence is excluded from gross income. In order to be eligible for the exclusion, a tax payer must have owned the property and used it as a principal residence for periods aggregating two years or more in the five year period prior to the date of sale.


For a single tax payer, the first $250,000.00 of gain is excluded from gross income.  In the case of married tax payers who file a joint return during the taxable year in which the sale occurred, $500,000.00 of gain is excluded from gross income.


In order to be eligible for the $500,000.00 exclusion, it is not necessary that both spouses own the property.  It is only required that one of the spouses own the property, however, the occupancy requirements must be met by both spouses.  It is also not necessary that both spouses be alive at the time of the sale, as there is a special rule for certain sales by surviving spouses. A surviving spouse will receive a $500,000.00 exclusion provided the sale occurs within two years of their spouses’ date of death and, provided that at the time of the spouses death, the parties would have been entitled to the $500,000.00 exclusion.


In general, the exclusion may only be used once every two years, but there are also exceptions to this rule if a sale is necessary “by reason of a change in place of employment, health or, to the extent provided in the regulations, unforeseen circumstances.”


Suppose you don’t have a house, but live in and own a Coop Apartment? The same rules apply. In the case of a cooperative, the ownership requirements apply to the titled holding of the stock and the use requirements apply to the occupancy of the apartment which the tax payer was entitled to occupy as a shareholder and owner of a proprietary lease.


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WHAT HAPPENS TO OUR FACEBOOK ACCOUNTS WHEN WE DIE?

May 7th, 2012 Comments off

Recently, an aunt of mine was clearing out some personal items and came across a letter my grandfather had written to his mother-in-law (my great-grandmother) soon after my grandparents’ honeymoon in 1924.  It was a beautiful letter- the kind that people years ago were skilled at writing, a skill not often displayed these days in e-mail, texts and on social media. Lets face it, the art of letter writing has been lost in our digital age.  Traditionally, people have always hung on to such letters or cards for posterity- keepsakes to remember and pass on to a child or grandchild.  Is this also being lost in our digital age?

As recently reported by NPR, consider the plight of a mother in Portland, Oregon, who continued to use her son’s Facebook account to read postings on his wall after his accidental death.  Her son’s wall contained photos and postings from personal friends, many of which she had never seen before. However, when Facebook learned of the son’s death, it changed the password and closed the page.  Thus began a long legal battle by Karen Williams to regain access and obtain years worth of her son’s life on Facebook.

Now, lawmakers in many states are considering legislation that would require social networks like Facebook to grant loved ones access to the accounts of family members who have died.  In Oklahoma, a recent 2010 law grants the administrator of an estate the power to act on behalf of a deceased individual and access social media accounts.  These laws beg larger questions for the individual estate plan.  Whereas in the past, people have always properly considered the disposition of tangible personal property in their Wills, shouldn’t they now also be being given consideration to their “on line” property- the treasure trove of photos, messages and postings that accompanied them through life?

My grandfather died in 1963- 6 years before I was born.  I only know him from family stories… but his letter gave me great insight into his character.  I smile at the notion of how much more my great grandchildren will know of me.

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UMmmm . . . SUM Auto Insurance Policies are Better Than Others

April 24th, 2012 Comments off

One of the least understood and, therefore, overlooked options for automobile insurance is the one that provides uninsured and underinsured liability coverage.  It is listed on the policy declarations page under the heading “UM/SUM.”

Uninsured Motorist coverage “UM” is mandated by New York State.  It protects the driver and passengers of a vehicle who are injured by uninsured negligent drivers.  Each car insured in New York State must have, at minimum, the basic “$25K/$50K” coverage.  That is, a maximum of $25,000.00 per injured person and a maximum of $50,000.00 to be divided among all injured persons.

Confused?  Here’s how it works.  If a thrice-convicted drunk driver forgets to pay his auto insurance premium and kills a forty-year-old father of four by rear ending him into a concrete divider, the man’s wife can recover $25,000.00 from his own insurance company under his basic UM coverage.

However, if one of his children is also in the car suffers a head injury and is permanently brain damaged, he too can recover $25,000.00.

But if a second child is in the backseat and sustains bilateral comminuted “tib/fib” fractures, his wife and the two children will split $50,000.00.  And not a dime more.

“Wow,” you might wonder, “how can this family be financially protected from such an unfathomable tragedy?”  That’s where “Supplemental Underinsured Motorist” coverage helps.  If Dad has a $300K/$500K liability policy with DoRight Insurance Company, he can purchase SUM coverage up to the same amount as his liability coverage.  Then if the driver has no insurance or a policy with lower liability coverage, his own insurance company will indemnify him for the difference between the two policies.  So, if Dad was alone in the car, his wife could recover $275,000.00 from DoRight.  And if two or more people were in the vehicle, they will split $450,000.00 between them.

Purchasing UM/SUM coverage for the same limits as your liability insurance makes sense.  It’s the only way to protect yourself against uninsured and underinsured drivers.  And who wouldn’t want to protect himself and his loved ones as much as he protects a stranger?  Besides UM/SUM coverage is cheaper than a ten-dollar whore at a French seaport and UM/SUM claims are not “charged against” the owner’s policy.

So . . . why doesn’t every owner buy the maximum coverage?  There are several reasons:

(1)        IGNORANCE.  Many people just don’t understand how automobile insurance works.

(2)        STUPIDITY.  Some drivers ignore the advice of well-informed and well-intentioned insurance brokers (most are in this category) who recommend that they purchase the maximum UM/SUM.

(3)        AVARICE.  A few sleazy insurance brokers know that there is little profit to be made selling UM/SUM coverage and try to lure customers by selling policies with the cheapest premiums.

(4)        SLOTH.  A few other brokers are too lazy to bother scrutinizing the policy or explaining to the customer how SUM works and why it is so important.

Don’t fall victim to one of these sins.  Examine your insurance policy.  If you have the maximum UM/SUM coverage, pat yourself on the back, praise your insurance broker or thank your lucky stars. If you don’t have the coverage, wake up, get smart and find a good broker.

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Medical Malpractice: A Fatal Liposuction Procedure

January 4th, 2011 Comments off
Medical Malpractice Liposuction

Medical Malpractice Liposuction

In Bellevue, Washington, a wrongful death lawsuit was filed last week, claiming both medical malpractice and consumer law violations. These were in response to a liposuction procedure that claimed the life of a 28-year-old woman in May of 2009.

The lawsuit names both Bellevue clinic as well as the doctor who performed the fatal procedure, as defendants. This filling comes only a month after the Washington State accused the doctor of “unprofessional conduct”.

To read more about this, click here.

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