[an error occurred while processing this directive] [an error occurred while processing this directive] July 2002 [an error occurred while processing this directive] [an error occurred while processing this directive]   Partial Sale of Residence
  Sale of Residence Used Partly for Business
  Tax Consequences of "high-yield" Internet Investment
  Paying Employee Bonus as Independent Contractor Fee
[an error occurred while processing this directive][an error occurred while processing this directive] [an error occurred while processing this directive] I'd like to sell part (25% to 50%) of the equity in my condo to a friend because I am having difficulty keeping up with the payments. Would he be able to claim a tax deduction for interest he would pay? [an error occurred while processing this directive] No. You will not comply with the requirements for the residency exclusion by selling only a part of your residence so the transaction will be taxable to you to the extent you have a gain on the sale. Your friend should be able to deduct the interest expense as an investment unless he lives there as his principal residence, in which case he could qualify for the mortgage interest deduction for the purchase of a first or second home. [an error occurred while processing this directive] The Tax Prophet's Tax Class on Sale of a Residence [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] My husband and I plan to incorporate our computer consulting business and set up a home-office. What are the tax implications when we sell our home? [an error occurred while processing this directive] Any depreciation taken on the residence will be recaptured at 25% federal (plus applicable state taxes) and the residency exclusion will not apply to that portion of your gain. For example, if you have a $500,000 gain on the sale of your home, you could exclude the entire amount under the residency exclusion. If, however, you depreciated your home $50,000, you must recapture the depreciation at 25% federal and pay $12,500 in taxes; the balance of your $450,000 gain will be excluded by the residency exemption. [an error occurred while processing this directive] The Tax Prophet's Tax Class on Sale of a Residence [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 am interested in taking part in a net-based high-yield-investment "game". The game offers an unbelievable 200% return after only 14 days. Will I need to pay US taxes on the profits? [an error occurred while processing this directive] Yes, if you are a U.S. resident or citizen. Regarding the so-called "investment," remember P.T. Barnum's famous remark, "There's a sucker born every minute!" Also, "A fool and his money are soon departed!" This sounds like an illegal pyramid scheme. There is simply no legitimate investment that would return such a whopping profit and if there was, there would no need to peddle it on the Internet. Check out all the scam watch websites before giving up any money. If you are a U.S. resident or citizen, then you are taxed on your world-wide income. If you are a foreign person, then you do not pay taxes on gains and profits. This so-called investment sounds like it is foreign source and if you are a foreign taxpayer, then you'd have no income tax obligations to the U.S. [an error occurred while processing this directive] The TAx Prophet's Section on Tax Scams [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 been doing two different jobs for the same company for four years now. The second job has always been paid as a bonus. Now the company wants to pay me with a W-9 (as an independent contractor). It this proper? [an error occurred while processing this directive] No. Your company is changing your status to an independent contractor for part of your pay and such a change is improper and could be illegal. Your company must understand the tax laws with respect to independent contractors verses employees. A company cannot convert an existing employee to an independent contractor if the worker continues to perform the same services. Also, You'll pay higher payroll taxes as an independent contractor. [an error occurred while processing this directive] The Tax Prophet's Tax Class on Independent Contractors vs. Employees [an error occurred while processing this directive] [an error occurred while processing this directive] [an error occurred while processing this directive]