I inherited money from my Uncle Max this year.  Is it taxable?

The Principle amount of an inheritance is not taxable unless it is in the form of a retirement plan distribution.  There may be some taxable income generated during the estate administration, which will be passed through to the Beneficiaries on a K-1.

Do I have to pay tax on the gain from the sale of my house?

Probably not. First we need to understand how much gain there was on the sale. Your gain is calculated as the net sales price minus your basis. Generally, your basis is how much you invested in your house.

How do I Transfer the Property Tax Basis in my home to my Children or Grandchildren?

In order to encourage continuing family ownership of property, California voters passed Propositions 58 & 193; in general, this EXCLUDES transfers of real property between parents and children (and children to parents) from being reassessed at it’s current value at the time of the transfer. The new owner’s taxes are calculated on the established Prop. 13 existing value, instead of the current market value when the property is acquired. 

$1 million limit (taxable value) on transfers of non-principal residence property

• No dollar limitation on the original owner’s principal residence

• Transfers by sale, gift or inheritance qualify for the exclusion.    

• Transfer between parents and children as individuals, from grandparents to grandchildren as individuals, between joint tenants, from trust to individuals, or from individuals to trusts may qualify for the exclusion.  Generally, transfers between legal entities (i.e. corporations, partnerships) that are owned by parents or children do not qualify

The claim for this benefit must be filed within a certain timeframe – consult the County directly for those requirements. 

How do I transfer my Property Tax Basis from my current home to a new home?

If you live in Santa Barbara County and are over 55 years old, Proposition 60 allows you to transfer the property tax ‘base year value’ from your current home to a ‘replacement property’ (a newly purchased home) as long as the value of the new home is equal or less than the value of the home you sold, i.e. downsizing.  The replacement property needs to be purchased within 2 years and both properties must be used as your principal residence.

If I sell my home and a portion of it has been used as an office-in-home, do the gain exclusion rules apply which in most cases would allow $250,000 (single filers)/$500,000 (joint filers) of the gain on the sales of a primary principal residence to be excluded from taxable income?

If the office-in-home is in the same dwelling unit as the residential portion of the home, then no allocation of the gain is required between the residential and nonresidential portions. The gain exclusion rules will apply to the entire residence. However, any prior depreciation deducted on the business portion will be subject to recapture and taxable at the time of the sales.

How do I start my own business?

Here are two helpful resources:
Starting a Business at SBMoney.org
Download our PDF "Starting a Business Checklist"

Do I need to keep track of the basis in my home even with the gain exclusion rules?

Yes, since the future appreciation in the value of your home is unknown, you need to keep records on (1) the original purchase price, (2) basis adjustments like deferred gains from the old section 1034 and depreciation from rental use or home office use, and (4) capital improvements such as building an addition to your home, replacing an entire roof or paving your driveway.

My mother wants to give me some money this year.  How is that taxed?

Gifts are not taxed to the beneficiary.  If your mother gives you more than the exclusion limit ($12,000 from each donor to each donee), he or she will have to file a Gift Tax return, which will not generally create a current year tax, but will impact the Lifetime Exclusion for estate planning purposes.

What’s the current mileage rate for business, charitable and medical miles driven?

I will be turning age 70 soon and I need to know when I am required to take distributions from my IRA. I would rather not if I don’t have to.

Distributions on traditional IRAs must be made no later than April 1st  following the calendar year in which the owner reaches age 70 ½. For example, if you reached 70 ½ on September 15, 2007, your required minimum distribution for 2007 must be received by April 1, 2008. Because of the tax impact, it is recommended that you receive the 2007 required minimum distribution by December 31, 2007. You will have taxable income in 2008 for both 2007 distributions and 2006 distributions if you receive the 2007 distribution between January 1, 2008 and April 1, 2008. Your required minimum distribution for 2008 must be received by December 31, 2008. In each subsequent year, you must receive the required minimum distribution by December 31. A penalty may be imposed if the required minimum distribution is not taken.

Required minimum distribution requirements that apply to traditional IRAs do not apply to Roth IRAs. Therefore, when you reach 70 ½, you are not required to take a Roth IRA distribution.

How do I know how much I must receive as a required minimum distribution on a traditional IRA?

Generally the Custodian of the IRA will notify you of your account balance and the required minimum distribution amount. A Uniform Lifetime Table is used to determine the distribution period for lifetime distributions. Call your accountant if you need to have the required minimum distribution calculated.

If I have more than one traditional IRA, must I take the required minimum distributions from each IRA?

No, you can combine your required minimum distribution amounts and take them from any combination of your traditional IRA accounts as long as you receive the total amount of all required minimum distributions.

Most of my companies have continued to send me checks to my old company name- SB Express HomeMade Tamales @ Your Door/ Rosa A., and I am assuming they are that its' all going to end up under my SSI number, rather than my incorporation/ Federal tax id number.  Is this going to be OK?

You should always provide a W-9 form to the companies that you expect 1099’s from. This is usually requested by them, but if you have a history with them, they would not know that you have made changes to your entity. This way they will have your new ID #.