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Entries in law (3)

Wednesday
Jul182012

Divorce and Taxes, Featuring Tax Attorney Robert Wood

 

In divorce cases, there are simple rules applying to taxes.  Most people, however, get this wrong, even with professional help.  According to Attorney Robert Wood, one of the nation's premier experts on taxation, taxable damages, structured settlements and qualified settlement funds, the fundamental rule that causes most tax problems, is section 1041 of the internal revenue code: transfers between spouses during marriage or on cessation of marriage aren't taxed an unlimited amount of money.  There are also timing rules about how long after a marriage ends that the rules apply.

Robert Wood says, "the notion that something is a tax-free transfer doesn't mean that you don't have to plan for taxes in the future."  If a home is given to one spouse during the divorce settlement and the value of the home has increased, that spouse has to assume the tax liability of the home.

Alimony, or spousal support, is actually considered income to the spouse receiving the alimony and tax-deductible by the spouse paying the alimony.  Seems simple enough, right?  There are numerous IRS audits on both sides of a divorce finding that someone who is receiving alimony thinks it should be a property settlement and not income - and someone who is paying property settlement thinks it's like alimony and should be able to deduct it. 

Bottom line is when it comes to divorce, whether it's involving sizable amounts of money or not, the help of a professional is advised to help navigate through the tax rules.

Read Attorney Robert Wood's article on Forbes.com about this topic and for more information on Robert Wood, visit his website at www.woodporter.com.

Robert Wood is also a featured commentator on The Legal Broadcast Network and the Tax Law Channel.

 

 

 

Tuesday
Mar022010

Tax Lawyer Rob Wood on selling property

 

Tax law expert Rob Wood discusses his article  in the L.A. and S.F. Daily Journals on selling property.

"You may never sell your property, but if you do, odds are you'll have taxes to pay.  After all, the real estate market is supposedly coming back.  Usually, the longer you hold property, the bigger your gain.  The good news is that usually the gain will be capital, meaning a federal tax rate of only 15%.  But California's tax rates aren't as forgiving, so you'll pay up to a whopping 9.55% (in some cases, even 10.55%) to the Golden State.  That gives you two good reasons to consider whether you can eliminate or defer the tax even if you have a gain.

First, you'll need to distinguish between personal use property like your principal residence and investment or business property.  As we'll see, sometimes these rules can interact. "

 

Tuesday
Feb162010

Tax Lawyer Rob Wood Discusses Home Worker Employee Status

Rob Wood's article in Tax Notes covers the employee status of the "Home Worker"...sometimes referred to as a "Statutory Employee."