March 5, 1995
Q: In the case of a divorce when you're over age 55, if I buy out my ex-husband's share of my house, do I have to pay gift or other taxes on the amount? If not, how do I account for this money?M. Hart, PasadenaA: You won't owe any gift or other taxes on the money used to buy out your ex-husband's interest in your home. Instead, the money would be treated as an additional purchase price or, put another way, would increase your "cost basis" in your home.For example, if you originally paid $50,000 for your house, and years later you paid your ex-husband another $25,000 for his share, your total cost basis for the house would be $75,000.
April 1, 1998
Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q: I'm going to give my son a gift of less than $10,000 in stock for a wedding present in October. What is the cost basis for that gift? Second, if they then immediately sell it, say five days later, what would be their tax consequences in the '98 tax year?A: Generally, the cost basis would be what you paid for the stock. For example, if you bought the stock for $5,000 and on the date of the gift, the stock has a fair-market value of $9,000, your cost basis would be $5,000.
May 29, 2007
Taxes and estate issues are tricky. Not surprisingly, last week's column on the tax consequences of putting children's names on the deed of a parent's house raised questions from readers. Here are the answers: Raphael of Baltimore sold a house he inherited from his father and gave $28,000, the majority of the proceeds, to his son and daughter-in-law. "Am I liable for any taxes on the sale of the house?" he asks in an e-mail. "And if I gifted the bulk of the money that I received in the sale, can I deduct it on my income taxes?"
March 6, 1999
Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. See below for how to submit a question.When calculating capital gains, do stock splits have to be compensated for when doing the arithmetic? If so, how is it done, i.e., what is the procedure?Stock splits are not taxable transactions. When a split occurs, a taxpayer retains his/her original cost basis for the new number of shares. For example, suppose you bought 100 shares of XYZ Co. at $10 per share, or $1,000.
February 17, 2008
Editor's note: Every Sunday through the end of tax season, The Sun will run an edited transcript of Baltimoresun.com's weekly tax advice column featuring experts from the Sparks accounting firm SC&H Group answering reader questions. Submit questions at www.baltimoresun.com/taxtalk I sold shares of stock last year that I bought through payroll deduction during a three-year period. I know the individual purchase prices but I need to know the best way to come up with the "cost basis." Can you help?
March 17, 1996
Now that tax time is approaching, here are answers to a few questions If I sell shares in a fund or exchange them from one mutual fund to another, do I need to report my gain or loss on my income taxes?Yes, unless the transactions occurred in a tax-sheltered retirement plan or a variable annuity. An exchange of assets from one fund to another is the same as a sale and purchase for tax purposes.Will my fund sponsor provide information about my own gains and losses?Maybe. Although shareholders are ultimately responsible for calculations of their own fund transactions, a growing number of mutual-fund families do report on cost basis (including reinvestment)