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Vacation Home Tax Deduction Explained – Paul Gaulkin CPA

water front vacation home

Special rules limit the amount of rental expense deductions that may be taken by an investor taxpayer on a residence that is rented out for part of a year and used for personal purposes during other parts of the year according to Code Section 280A. Number of Days in Use If a personal residence is rented out for less than 15 days during the year, any rental income received is excluded from gross income and no rental expense deductions are … Read more

Amount Realized for Gain or Loss Determination – Paul Gaulkin CPA

person holding for sale sign

The amount realized from the sale or disposition of property is the sum of any money received plus the fair market value of other property received in the transaction. This does not include any amount received from the purchaser as reimbursement for real property taxes which are treated as imposed on the purchaser. However, it does include amounts representing real property taxes which are treated as imposed on the seller, if they are paid by the purchaser. The amount realized … Read more

Definition of Section 1245 Property – Paul Gaulkin CPA

personal writing financial statements

When you think of Section 1245 property, you should really be thinking of Section 1231 property. Section 1245 is actually a subcategory of depreciable Section 1231 property. Section 1245 property is personal property which is subject to depreciation or amortization depending on the type of property. This definition includes property such as: 1. Property that is tangible and was used as an integral part of a specified business activity or activities. 2. Amortized property such as patents and leaseholds of … Read more

Adjusted Basis Calculation for Gain or loss on Property – Paul Gaulkin CPA

highlighter over capital gain defined

Before a taxpayer can figure out the gain or loss on the sale, exchange, or other disposition of property or figuring allowance depreciation, depletion, or amortization, a taxpayer must usually make certain adjustments to the cost of the property. Once these adjustments are made, the amount remaining is the adjusted basis. Below is a list of the specific items that can increase or decrease the basis of property for gain or loss calculations. Items that Increase Basis You can increase … Read more

Wrongful Levy Relief

Pig underwater

If your property is ever levied by the IRS, there may be relief if they determine that it was actually wrongfully taken from you. Usually the person that makes this determination is your Area Director within the IRS. The IRS is authorized by regulations to return property to a taxpayer in the exact same position as before the levy had occurred. This means that if the asset were to decrease in value because of the levy, the IRS would have … Read more

Minimizing Gain on Home through Basis Adjustment

The front of a home

When a taxpayer sells a house, they have the opportunity to take a capital gain exclusion up to a certain amount of the gain from selling the house. In the situation where the gain actually exceeds the exclusion amount, the taxpayer can add home improvements and expenditures to the basis to try to minimize the gain. It is extremely important that you keep all your documents that involve buying and improving a home. If in the future you decide to … Read more

Generation Skipping Transfer Tax Introduction


The Generation Skipping Transfer Tax or GST for short, is a tax that applies to properties that are transferred by gift or death to a recipient that is two or more generations behind that actual transferor. In most cases the recipient of the property will be in some form a family member of the transferor. The IRS however, does not require the recipient to be a family member as long as they are at least 37.5 years younger than the … Read more

Transferee Liability: IRS Can Take Property You Acquire

If the IRS files a tax lien against your property, the lien will actually stay attached to the property when you transfer it to a third party. This makes it possible for the IRS to actually repossess transferred property from whoever you transfer it to. However, if you transfer property after a tax liability has accrued but before the IRS files a lien, it may be too late for the IRS to repossess the property from the transferee. Who Can … Read more

What It Means When The IRS Levies Your Property

A levy is a way for the IRS to actually take possession of your property without going to court. After the IRS takes possession they will sell the property to pay off your outstanding tax liability. A tax levy can cover any type of property that can be repossessed and sold for cash. This includes your house, your car, jewelry and property of this nature. IRS Levy Can Effect Third Parties A levy can also be used to require a … Read more

Property Levy: The IRS Can Take Your House

The IRS has the ability to take your house from you for unpaid taxes. The IRS can use tax levy to take your house from you to cover the cost of the back taxes that you owe. In most cases they will sell your house and if the money used covers all of the back taxes, the left over money will be refunded to the taxpayer. How a Property Levy Will Affect You Understand that taking your house from you … Read more