Unanswered Tax Questions

Generally, life insurance proceeds paid to a beneficiary are not subject to federal or California state income tax. Therefore, the $100,000 payoff would typically be tax-free to the beneficiaries. If one person makes a qualified disclaimer of their share, that share passes to the other beneficiaries as if the disclaiming person never received it. For income tax purposes, the additional amount received by the remaining beneficiaries due to the disclaimer would also generally be income tax-free, just like their original share of the life insurance proceeds. This means they would not be taxed on the extra amount, and it simply adds to their tax-free receipt.

Assuming you are a single filer for the 2023 tax year: 1. Your gross pension income is $54,000. 2. Subtracting the standard deduction for a single filer ($13,850), your taxable income from the pension is $40,150. 3. For 2023, the 0% long-term capital gains bracket for single filers applies to taxable income up to $44,625. 4. Since your other taxable income ($40,150) uses up part of this bracket, the remaining amount that can be taxed at 0% is $44,625 - $40,150 = $4,475. Therefore, you can have $4,475 in long-term capital gains from the sale of stock and still be in the 0% capital gains bracket.

An Individual Taxpayer Identification Number (ITIN) is issued by the IRS to individuals who need a U.S. taxpayer identification number but do not have, and are not eligible to obtain, a Social Security number. For an LLC, if a U.S. taxpayer identification number is required, it typically obtains an Employer Identification Number (EIN). An EIN is used by businesses to identify themselves to the IRS for tax purposes. Therefore, an LLC would not apply for an ITIN. The process, timeline, and costs you're inquiring about for an ITIN are not applicable to an LLC. The requirements and application for an EIN differ significantly from those for an ITIN.

For managing an IRS installment plan, critical strategies include making every payment on time to avoid default. It's also essential to file all future tax returns on schedule and pay any new tax liabilities in full by the due date, whether through withholding or estimated payments. Falling behind on current taxes can cause your installment plan to default. Keep meticulous records of all payments made. If you face financial hardship regarding your tax obligations, several options exist. An **Offer in Compromise (OIC)** allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than they originally owed, provided they meet specific criteria demonstrating an inability to pay the full amount. Alternatively, you could request that your account be placed in **Currently Not Collectible (CNC)** status. This means the IRS temporarily suspends collection efforts if you can prove you cannot afford to pay your taxes and meet basic living expenses. Interest and penalties continue to accrue, and the IRS may review your financial situation periodically. You might also explore adjusting the terms of your existing installment agreement if your financial situation has worsened, or investigate **penalty abatement** if your hardship contributed to the penalties.

Moving an investment account to another financial institution generally does not trigger taxes, provided it's a direct transfer of assets (in-kind) between custodians. In this scenario, you aren't selling anything, so there's no capital gain or loss realized. Your original cost basis and holding period simply carry over to the new institution. However, if you choose to sell assets within your existing account before transferring the cash to the new institution, any realized gains from those sales would be taxable. Similarly, if you take a distribution of cash from a retirement account (like an IRA) and don't complete a proper rollover, that distribution could be taxable. The key is whether the underlying investments are sold or simply transferred.

The purchase of property for business operations in 2025 is a significant event. However, the $200,000 cost itself does not directly reduce your tax liability dollar-for-dollar in the year of purchase. For tax purposes, the property's cost is generally recovered over time. The portion attributable to land is not depreciable. Any buildings or improvements on the property will be depreciated over their useful life, providing an annual deduction against income. Your overall tax liability depends on many factors, including your LLC's net income (revenue minus all allowable expenses, including depreciation), the specific classification of your LLC for federal tax purposes (e.g., disregarded entity, partnership, S-corp), and other potential deductions or credits. State-specific taxes in Connecticut also play a role. Without a comprehensive review of your business's full financial picture, including all income and expenses, and understanding your entity's tax election, it

Your approach to separating 1099 contract income and W-2 employee income for tax purposes is appropriate. Payments for 1099 work, routed to a business account and reported as

Interest paid on a reverse mortgage is generally not deductible until the loan is fully repaid. This means that even if you've paid off a significant portion, including accrued interest, the interest is typically not considered "paid" for tax deduction purposes until the entire loan is satisfied. When the entire reverse mortgage is eventually paid off (e.g., upon the sale of the home or settlement of the estate), the interest paid at that time may be deductible as qualified home mortgage interest, subject to the usual limitations. There isn't a specific carryover provision for qualified home mortgage interest. If the interest becomes deductible upon full repayment, it is deductible in the year the loan is fully satisfied and the interest is actually paid.

Interest paid on a reverse mortgage is generally not deductible. For mortgage interest to qualify as a deduction, the loan proceeds must have been used to buy, build, or substantially improve your home. Reverse

As a nonresident alien, your gift of cash, whether from a U.S. bank account or wired, is generally not subject to U.S. gift tax. Cash is considered intangible property and is