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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA |
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Volume 2, Issue #72, July 21, 2000 Please, if you like this publication, invite at least a half a dozen friends to subscribe ... Give them our Subscription Page ( Ask Taxmama) Ask TaxMama is sent to you for FREE every Friday (And subscribers get it earlier than websurfers.) ------------------------------------------------ Dear Family, This piece of wisdom came to me all the way from Israel. [A fine is a tax for doing wrong. A tax is a fine for doing well.] They've been at it longer than we have! You'll notice that I put a new 'subscribe' page up on the site, Subscribe to Taxmama - I am so proud every time I create another page. Another page you'll like is the Investment Secrets page Investment Secrets from Bottom Line/Personal You'll find new tips from Bottom Line/Personal there every week. Or, better yet, you can get your own copy of Bottom Line/Personal. Another bit of personal news, I have been honored to be the Mistress of Ceremonies at next weekend's Affiliate Force 2000 seminars. If you're in the Los Angeles area, please come and join us. In fact, coming to this seminar would be a great way to write off part (or all) of a vacation to Sunny Southern California <g>. (shhh, don't tell IRS ... :-) There is lots of action in Congress on tax bills this week. Looks like President Clinton will be doing some vetoing ... See IRS NEWS below for links to more information I'm not that impressed with the marriage penalty bill. It doesn't address most of the other tax areas where married couples are shortchanged. Why Congress Wants You To Live In Sin I'd love to the IRA bill passed. We need all the encouragement we can get in order to convince Americans to save money! But that estate tax bill ... it's really misleading. Only a very small portion of the population pays estate taxes now. It's not a really major part of the budget. However, the way this new bill is written, according to attorney, Bruce Drooks, it would eliminate the step-up in basis that affected all us - favorably. What does this mean? It means two BIG changes for the little guy (most of us):
Please encourage President Clinton to veto. Regardless of his political reasons. Best wishes, Eva Rosenberg, EA Your TaxMama is watching ... out for you. <NOTE TO TAX PROFESSIONALS - Join a weekly discussion list just for tax professionals, please read and sign up at our Submission Guidelines page> Fixed Income ----------------------------- Dear TaxMama: I am 59 ½ years old. I have a non-qualified fixed annuity now earning 5.5% a year. If I use the Section 1035 (exchange) to go with another company, do I have to reinvest all the money-- -- or just the money that has accrued untaxed?? Thank you, Jerlyn C <TaxMama Replies> Dear Jerlyn, Knowing nothing about this area, I asked attorney Bruce Drooks for the answer. His reply: E-mail Bruce Drooks If the fixed annuities rolled over there is no tax If some money is kept, it is first considered income (profits) and taxes at ordinary income rates, after all income is received, then principal is taken not taxed. i.e. put in $50,000 now worth $60,000 the first $10,000 is considered income the rest principal. If you annuitize (less than 1% of annuity contracts are annuitized) then you receive a percent that is taxable and recover of capital. in the above example 1/6 of all money is taxable and 5/6 is considered return of capital. -- Thanks Bruce! Your TaxMama New Business at home ------------------------------ More from ... I am starting a new business in my home. How do I apply for a federal tax I.D. # ? Thank you, Jerlyn C <TaxMama Replies> Hi Jerlyn, This, I can handle! Use Form SS-4 If you read the instructions, you'll see how you can call or fax it in to get the number more quickly. Best wishes, TaxMama ---------- advertisement ----------- Bottom Line/Personal - the semi-monthly newsletter that brings you bargains, investment tips, travel ideas, and other ideas to make your money grow - and make it stretch and stretch Because We Care -------------------------- Please remember to protest Governor Gray Davis' sneak attack on the "Americans With Disabilities Act" You may use the well- worded letter to Governor Davis located at Send a Letter to Governor Gray Davis ------ AccountingWEB will be celebrating its one-year anniversary. By encouraging the accounting community to join us in the fight against Diabetes, a disease affecting over 15 million Americans and a leading killer among many segments of our population. You are encouraged to join our campaign to help fight Diabetes. Stock Options ----------------------------- Dear TaxMama, I have been granted stock options in my company. The company was recently acquired and I will be leaving and exercising my options with a same day sale. How is this treated for taxes? Will the gains be taxed as ordinary income or capital gains? If capital gains, at what rate? Cori D <TaxMama Replies> Hi Cori, Have a conversation with your payroll department and ask them if they are treating those options as part of your wages. Typically, what happens is, Under these circumstances, your basis (tax cost) will be: Your option costs + The amount added to your wages. In other words, you will have either paid for the whole amount of stock, or you will have paid taxes (ordinary income, as wages) on the profit already. Scenario two: If your payroll department does not add the profit to your wages, you will have either a short-term or a long-term capital gain on the stock sale. This will depend on how long you've owned the options. This is one of those issues that is different in each and every instance. Sit down with a tax pro who understands the handling of these transactions - not all do. (This is definitely not MY strong suit, but I know people who do know how to handle it.) Best wishes, Eva MONEY FUNNIES ----------------------- Submitted by Arizona tax pro Joyce Ragels, EA Charitable Contributions The bartender was washing his glasses, and an elderly Irishman came in and, with great difficulty, hoisted his bad leg over the barstool, pulled himself up painfully, and asked for a sip of Irish whiskey. The Irishman looked down the bar and said, "Is that Jesus down there?" The bartender nodded, and the Irishman told him to give Jesus an Irish whiskey also. The next patron was an ailing Italian with a hunched back and slowness of movement. He shuffled up to the barstool and asked for a glass of Chianti. He also looked down the bar and asked if that was Jesus sitting down there. The bartender nodded, and the Italian said to give Him a glass of Chianti, also. The third patron, a redneck, swaggered into the bar and hollered, "Barkeep, set me up a cold one. Hey, is that God's Boy down there?" The barkeep nodded, and the redneck told him to give Jesus a cold one, too. As Jesus got up to leave, he walked over to the Irishman and touched him and said, "For your kindness, you are healed!" The Irishman felt the strength come back to his leg, and he got up and danced a jig out the door. Jesus touched the Italian and said, "For your kindness, you are healed!" The Italian felt his back straighten, and he raised his hands above his head and did a flip out the door. Jesus walked toward the redneck, and the redneck jumped back and exclaimed, "Don't touch me! I'm collecting disability!" IRS NEWS -------------- > From AccountingWeb.com Round-up of Tax Legislation: Marriage Penalty Retirement Plan Contributions Estate Tax W-2 Disclosure Tooting Her Own Horn --------------------- TaxMama's goal is to help you break the code that is the U.S. Income Tax System. We will gladly entertain your questions. Please feel free to submit them to Now`s Your Chance to Ask TaxMama There's no guarantee that we'll have room for all your questions, so we'll try to address those issues that will help the most people. Some of your questions may have already been answered in the past year or so. There are a wealth of articles already in place at The Directory of TaxMama's Articles After flirting outrageously at the Abraham-Netrageous Summit, TaxMama joined forces with Dr. Website to create Outrageous Flirt a safe, fun and friendly way to communicate with those you love - even your own spouse! Drop by for Valentine's Day Outrageous Flirt - all year round! After spending years looking for the perfect gift idea, I found it. And I've just opened a new website to introduce it to you: PhotoMasterPieces If you are looking for a clever and inexpensive way to decorate your home or office - what a great treat for Valentine's Day! If you are thinking about using a car donation, last year, my favorite Los Angeles Times business reporter, Liz Pulliam, wrote an article about donating your car to charity. It is linked from my article written this time last year, To Give Or To Get, That Is The Question! or - read it directly at Car Donations Not Charitable at Tax Time TaxMama On the WWW --------------------- You can find weekly tax tips at: Robert Sullivan's Small Business Advisor Visit Deb Nyberg's Women in Business - Cyberspace Field of Dreams, BizWomen And for all you ExPats out there ... there's Iain William's site for overseas investing. Overseas Investing Critical Dates: For more deadlines Tax Calendar ____________________________________________________ If you are interested in TaxMama's Weekly Tax Tips on your site ... please read about our Syndication Option --- Click here for our Legalese & Disclaimer --- Got questions, click on our Ask Questions Form This publication is ONLY sent via voluntary subscription. If you wish to subscribe/unsubscribe at any time - click here to Subscribe - click here to Unsubscribe. |
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