One redeemable quality about humans is that we tend to be more willing to loan money than borrowing it. No one really likes to borrow money, but if a friend is in need, many of us help as much as our financial means allow. When this occurs, it is important to understand that there are income tax consequences for both lenders and borrowers when interest is earned, paid or forgiven on a loan. This blog will address the tax consequences of unpaid loans.
Real Estate Loss Deduction for Individuals
In the last ten years, too many taxpayers have sold real estate at a loss. How does this type of loss ultimately affect the amount of taxes owed to the IRS? First, to accurately determine the amount of a loss from disposition, compare the property’s sale price to its tax basis. The tax basis is generally the original purchase price, plus the cost of improvements (but not expenses deducted as repairs and maintenance) less depreciation.
Tax on Capital Gains and Losses, Explained
A capital gain occurs when you transfer or sell a piece of property for more than its acquisition cost. To be more succinct, it’s the profit realized on the sale of a non-inventory asset. Capital gains are realized from the sale of all types of property, both real and personal such as investments and other traditional non-investment types of personal property. In the United States, with certain exceptions, individuals and corporations pay income tax on the net total of all their capital gains.
You’ve filed your tax return, how long does the IRS have to audit you?
You’ve filed all of your tax returns, and because of your level of income you find yourself in the class of taxpayers whose return is more likely to trigger an IRS audit. So you wonder, how long does the IRS now have to audit you?
Due to disclosure requirements, the IRS makes contact with a taxpayer selected for an audit by telephone or mail only. When returns are filed, they are compared against norms for similar returns. These norms are developed from audits of a statistically valid random sample of returns, selected as part of the National Research Program conducted by the IRS to update return selection information.