[an error occurred while processing this directive] [an error occurred while processing this directive][an error occurred while processing this directive] March 2002 [an error occurred while processing this directive] [an error occurred while processing this directive]   AOL as Business Expense
  Computing Stock Basis When Company Merges
  Taxation Involving the Transfer of Foreign Funds to U.S.
  Taxation of Foreign Co-Owner of Bank Account
  Reporting a Second Residence Loss
[an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] I am a writer and use our AOL for sending e-mail and Invoices to clients. Can I claim a deduction for a portion of our annual fees to AOL as pertaining to my (sole proprietor) business? [an error occurred while processing this directive] Fees for an interest service provider used in your business and subject to the listed property limitations discussed below, may be expensed (deducted in full in the year placed in service). "Business use" occurs when you engage in a profit-making trade or business. You should (1) maintain records systematically; (2) represent yourself as a business; (3) generate gross receipts; and (4) have an actual profit or a reasonable expectation of profit from your business activities. The "listed property" limitation prevents the deduction of your home computer and its software unless it is used "predominantly" (greater than 50 percent) for business during its first year of service. If the predominant-use test is met, you may expense that portion of the computer's cost allocated to business. For example, an $8,000 computer used 60 percent in a trade or business in its first year of service can be expensed up to $4,800. [an error occurred while processing this directive] Tax Prophet Articles on Taxation of Small Business [an error occurred while processing this directive][an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] We bought $30,000 worth of stock in a company in 1984. In 1994 the company reorganized and exchanged our shares, and we received 1188 shares. In 2001, the company had a merger, and we received cash proceeds of $29,700. Does the exchange affect my stock basis? [an error occurred while processing this directive] No, you have a long-term capital loss of $300 which is reported on Schedule D. The exchange of shares affected your basis in the shares received. The $30,000 purchase price is allocated ratably over the 1,188 shares received. Then when you sell those shares, your gain or loss is calculated according to the basis of your 1,188 shares. [an error occurred while processing this directive]The Tax Prophet's Tax Class on Stocks, Bonds and Financial Investments [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] I have approximately 15 million dollars in a foreign account and I want to transfer it to a bank in the U.S. Will I have to pay taxes immediately or do I wait and file at the end of the year? [an error occurred while processing this directive] This would depend on whether you've been declaring taxes on the earnings in your foreign account or whether you paid taxes on this money in the first place. You could be in violation of income tax law and anti-money laundering statutes if you have not declared the income and paid taxes on it. If you have paid taxes and filed the proper information forms and tax returns, then it doesn't manner if or when you transfer the money to the U.S. You are not taxed on transfers of money if you've already paid taxes on the money. [an error occurred while processing this directive] The Tax Prophet's Section on Foreign Taxpayers [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] I'm a Mexican, living in Mexico with a joint account at a U.S. Bank. What happens if one of the co-owners or both co-owners die? [an error occurred while processing this directive] It depends on whether the co-owner is a U.S. taxpayer (a U.S. resident for tax purposes or a U.S. citizen). If the co-owner is a U.S. taxpayer, then the asset will be part of the taxpayer's estate when he or she dies. The entire asset is part of the U.S. estate, unless the surviving joint tenant can prove he or she made contributions to the account in which case, the portion of contributions made by the decedent will be included in the estate. If the person is not a U.S. taxpayer, then there will be no estate tax. If there is no beneficiary (because both owners die), there will be a probate to determine who inherits the account. The beneficiary does not pay death taxes. [an error occurred while processing this directive]The Tax Prophet's Section on Foreign Taxpayers [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]How do I report a loss incurred by the sale of a second residence? [an error occurred while processing this directive] Losses on personal assets, such as a principal residence, second residence or vacation home are not deductible. If the property can be considered rental property, then you would deduct the loss on schedule D. [an error occurred while processing this directive] SEE ALSO TEXT5, e.g.: The Tax Prophet's Tax Class on Real Estate Taxation [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]