The Capital Gains Blog

Archive for August, 2007

Question: Tax issue over?

What does this mean? we paid off the IRS on some capital
gains we owed and didn’t know existed until our ex-partner
was audited.

Just got this letter from Dept. Of Treasury

We have reviewed and accepted the examination report
for year…

We do not plan to make any additional changes to your return unless we change a partnership, S-corp. trust or
estate tax in which you have interest.
Thanks Guys!

Answer: It means that they are done with your audit (or the partnership’s audit that you are part of).

The rest is the standard disclaimer that says you may still be affected if they audit any other taxable entities that you are part owner or beneficiary of.

Tax time brings some changes to Tax Center

As tax season approaches, the Offutt Tax Center staff is preparing for a busy tax season and wants its customers to be aware of some changes in its service offerings.

Question: When will Obama raise capital gains taxes?

I’m for increased capital gains taxes, but I’m thinking he cannot make increases retroactive and the earliest they will become effective will be for the 2010 tax year…is that right?

Answer: If Congress passes a change during 2009 and Obama signs it, it could be effective for 2009, for the taxes filed in 2010.

Strong Investment Gains Contribute to 21% Increase in Second Quarter EPS and 56% Increase in Six-Month EPS for CFNB

IRVINE, Calif.—-California First National Bancorp today announced net earnings of $3.1 million for the second quarter ended December 31, 2009, a 22% increase from net earnings of $2.5 million for the second quarter of fiscal 2009.

Question: Long Term Capital Gains and Home Loan payment?

If I repay a home loan taken more than 3 years ago with the money I get by selling an ancestral house will I still have to pay Long Term Capital Gains Tax on the money I repaid for Home Loan ?
Ex. I have a Home Loan of Rs 12 Lakhs taken in 2005. I sell an ancestral house today for 15 Lakhs and repay the Home Loan. Do I have to pay Long term capital gains tax on Rs 15 Lakhs or Rs 3 Lakhs.

Answer: Home loan has no connection with capital gains. Loan amount will not be considered to determin the capital gains tax.

If the property is ancestral, and if you sell the property now for 15 lakhs, then you have to pay Long Term Capital Gains tax.

The cost of the ancestral property (purchased by your ancestors before 1.4.81) will be the market rate of that property as on 1.4.81. Say if the property fair market value as on 1.4.81 is Rs.1 lakh. Now you have to index the cost as per index. 81-82 index is 100. This year the index to be announced. I am estimating it to be around 630.

Now calculation:
Your cost of property as per indexation:
1 lakh x Index now 630 Divided by Index (on 81-82) 100= 6.3 lakhs.
So the cost of the house became 6.3 lakhs
15 lakhs less 6.3 lakhs= 8.7 lakhs is your gain.

You have to pay Long Term Capital Gain Tax @20% on 8.7 lakhs. That will be around Rs.1.75 lakhs plus education cess Rs.5,220= Rs.1.79 lakhs.

Avoid the nanny tax pitfalls

Don’t be tripped up by the nanny tax. Be sure to follow the rules when it comes to household help.

Question: Question about Roth IRA?

For example(just assuming), today I contribute $3000 into my newly open roth IRA, and I use this $3000 to make $100,000 capital gain on penny stock during this year. Next year, can I invest all the $100,000 on stock market? If yes, I keep roll over the capital gain till I turn to 59 1/2 years old, and make the withdrawal, and the withdrawal is tax free. Maybe I will turn this $3000 into 5 millions dollars when I turn to 59 1/2 years old.(Everything is just assuming, need tax policy information for this kind of assuming situation)

Thank you very much!

Answer: In theory yes. However, you cannot day trade in your IRA. Your investment position can only be changed once every 12 months. That is why the rule is in place.

“Top Ten” Financial Strategies for 2010 Offered by the Financial Planning Association of San Francisco

SAN FRANCISCO—-It’s a new year, and what better way to start 2010 right than with ten smart strategies from the financial professionals of the San Francisco Financial Planning Association : Consider a Roth Conversion.

Enbridge Energy Partners Reports Strong 2009 Earnings and Declares Cash Distribution

HOUSTON, TX–(Marketwire – January 29, 2010) – Enbridge Energy Partners, L.P. ( NYSE : EEP ) (“Enbridge Partners” or “the Partnership”) today declared a cash distribution of $0.99 per unit payable February 12, 2010 to unitholders of record on February 5, 2010 (ex-dividend date is February 3, 2010). The Partnership’s key financial results for the fourth quarter and full year of 2009, compared to …