Q: My father died in 1998, and we decided to pay off the estate tax using the installment method. Now that estate tax is being repealed, will we still have to pay installments after 2009? R.V., Plymouth, Mass.
Small Business Tax
Section 179 vehicles should be a key part of your small business tax deduction strategies. Can Section 179 property fit in with your business tax strategies?
Let Business Management Daily help you get each and every rental property depreciation credit and business tax deduction you’re entitled to.
Q: I use my cell phone a lot for charitable activities. In fact, that's the reason I bought it. Can I deduct the phone costs as a charitable donation? N.B., Kansas City, Mo.
Calendar-year 2003 is over, and you can't do anything to change it. But the book isn't closed on tax year 2003.
Q: My husband and I have lived in our home for 32 years. We bought it for about $80,000, and now it's worth more than $500,000. My husband died last year, and I'm planning to sell the home. I read about the $250,000 home-sale tax exclusion for single people and $500,000 for married people. Am I limited to $250,000? A.T., Rockaway, N.J.
The March 15 deadline for filing a 2003 corporation tax return is approaching quickly. (See tax calendar, page 5.) Rather than slapping together your tax paperwork at the last minute, punt. You can earn a six-month extension by filing Form 7004, Application for Automatic Extension of Time To File Corporate Income Tax Return, and paying what you estimate you owe.
Q: I'm wondering about the repercussions of the break in the relationship between gift and estate taxes. If I make a $1 million gift in 2004 and pay no gift tax by using up my gift-tax exemption, will I still have an unreduced estate-tax exemption of $2 million in 2008? L.S., New York, N.Y.
You can file Form 4506, but it could take up to 60 days to receive a photocopy and cost you $39. Better option: Call the IRS to order a transcript that lists line items from your original return (only 1040s) for up to three previous years.
With the stock market heating up, you may have borrowed cash in 2003 for investment purposes or to buy stock on margin.
Of course, you'll want to maximize the write-off for your investment interest. But usually your investment interest deduction is capped at the amount of your total investment income.
Q: In a recent item in your newsletter, you said that sole proprietors, partners and LLC members can use the per-diem method for reimbursing meals and incidental expenses on business travel. (See 11/3/03 issue.) Shouldn't that list also include S corporation shareholder/employees? P.D., CPA, Englewood, Colo.
Q: My elderly father lives in Spain and plans to give large financial gifts to our family this year. Are there any special IRS requirements we must meet? T.D., Vero Beach, Fla.