Tax Deceased Estate

Question: Should we sell now or wait for it to be part of the estate?
My family has 18 acres of pasture land in Louisiana. My Dad who will be 80 this year and is in poor health is thinking of selling it. We have been renting it out a few weeks every year for a municipal event. It has been in my deceased mother’s family since before 1920 so the question is if we were to sell it now would we have to pay capital gains based on the price it sold for back before 1920 or should we wait and let it become part of the estate and pay estate taxes based on the appraised value or would it be the same? He doesn’t need the money; we just won’t be going back down there since my relatives have all passed away in the last 10 years.
Answer: If you sell it now, you will pay capital gains. If you wait until it’s in his estate and the estate sells it, you may not pay any estate tax at all, depending on the value of the estate as a whole — currently, an estate tax exemption applies to estates with a value of up to $2 million; and in 2009 this increases to $3.5 million; and then in 2010 the estate tax is “repealed” altogether. (See Smart Money link below.) I say “repealed” in quotes because in 2011, the law sunsets and estate tax rates go back to what they were when the law changed (I believe that was 2001). So if the estate is opened between now and 2010, you may not pay estate tax at all. And of course, Congress could extend the law between now and 2011. So, there is some uncertainty involved.
The above addresses federal taxes. You’d also have to check to see if your state levies an estate tax, some states do.
But one thought — with the uncertainty above, you might consider having your dad put the land in a trust. This could be used to avoid estate taxes AND avoid the probate process. The trust beneficiaries would receive the property at his death with a “step up in basis” — meaning if they turned around and sold it after he died, their gain would be based on the land’s value at the time of his death and NOT its value in 1920. (See paytaxeslater.com link below.) In fact, if your dad hasn’t already done so, he might consider this approach for all or most of his assets.
You should run this by an experienced estate and trust atty where you live, with some planning now you might save some taxes.
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Question: Can I deduct the amount I pay for utilities on a rental unit before reporting gross income?
I own a duplex and rent the other apartment out.
They have separate heating, hot water and electrical, but I include them in their rent, they come on a separate bill from utility companies.
When I report my gross income to IRS do I have to report the entire rent amount, or can I deduct what I pay for their utilities before that?
It would be advantages for me to be able to report a lower gross income rather then deduct it afterwards.
Any help would be appreciated.
Answer: You would subtract the utilities as expenses on Schedule E. Then after finishing Schedule E, whatever is income or loss will be transferred to your 1040 as part of gross income. So yes, the utilities are taken off before gross income is reported.
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Question: What is the % of father’s gross income they will take for child support?
Need to know.
Sorry, for Colorado and this is his first child but expecting another next month with a woman he’s not married to.Answer: Here’s a summary
http://www.helpyourselfdivorce.com/colorado-child-support.html
To learn his rights, join Dads House in Yahoo Groups
http://Dads-House.org/
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Question: Which of the following reduce an individuals adjusted gross income, Traditional IRA or Roth IRA, both or none?
I know or at least am certain the Traditional IRA correct but I am not sure if the Roth would be.
Thank you to everyone.Answer: only the traditional
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Adjusted Gross Income Ira
Question: If my adjusted gross income is less than $85,000 may I fund my 401(k) and my IRA to the max allowable?
401(k)-$15,500, plus $5,000 makeup for 2008, plus $6,000 contribution to IRA for 2008, which is $5,000 contribution, plus $1,000 makeup, for a total contribution of $26,500, plus an additional $6,000 for my non-working spouse into his IRA account
Answer: Yes, you can fund your 401(k) to the max. You may also fund your IRA to the max but it will not be deductible at your income level – but it is still allowable. But since it would not be deductible, it would probably be smarter to fund a Roth IRA which is allowed at your income level. And yes, you can max out both an IRA and a 401(k).
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