From: owner-persfin-digest@lists.xmission.com (persfin-digest) To: persfin-digest@lists.xmission.com Subject: persfin-digest V5 #137 Reply-To: persfin Sender: owner-persfin-digest@lists.xmission.com Errors-To: owner-persfin-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes persfin-digest Thursday, March 22 2001 Volume 05 : Number 137 In this issue of the Personal Finance Digest: Tax Liability for Deceased Mother-In-Law Re: Stock distribution in Roth IRA? Big Time Debt Problems The messages posted to the Persfin-Digest are opinions and are not intended to substitute for qualified professional advice. Subscribers should seek the services of qualified professionals for such advice. The publisher, Internet provider, and Digest contributors cannot be held responsible for any loss incurred as a result of the application of any of the information provided here. 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Subscribe: e-mail majordomo@xmission.com, text: subscribe persfin-digest Unsubscribe: e-mail majordomo@xmission.com, text: unsubscribe persfin-digest ---------------------------------------------------------------------- Date: Wed, 02 Aug 2000 11:08:14 -0400 From: Paul Slonaker Subject: Tax Liability for Deceased Mother-In-Law My mother-in-law died earlier this year, leaving my wife and her two sisters as beneficieries and co-executors. (My father-in-law had died in 1995.) She died in Florida, which was her primary residence (she spent about half of the year in New York). My questions have to do with her tax liability. For many years, starting well before my father-in-law's death in 1995, my in-laws did not even file a Federal tax return, having been advised by an accountant that their income was low enough. My MIL continued this practice after my FIL died. As far as I know, she did not file returns for either New York or Florida as well. But when I looked through her financial papers and found 1099 forms for 1999 and 1998, it seemed to me that her income was indeed high enough that she would have had to file - and would have owed taxes. To be precise, for 1999 she had interest and dividend income of about $10,400; after subtracting the standard deduction ($4300) and exemption ($2750), she would have owed about $500 at 15%. Her situation in 1998 was similar. My questions: 1. Is my analysis correct? This seems very straightforward, but I may be overlooking something. 2. What's the liability of the beneficiaries/executors? It seems to me that the estate is liable for any back taxes and penalties. If the estate doesn't pay them, are the beneficiaries/executors individually or jointly liable? 3. How far back are we liable? It seems to me that we could be liable for taxes owed by my MIL since my FIL's death, but (I hope) not before that. My BIL, who was the executor for my FIL's estate, claims that the lawyer who handled the estate did not file a Federal income tax return. (It's also possible that their/her tax situation changed sufficiently at his death that she owed taxes afterward but they would not have owed taxes before.) 4. Roughly speaking, how likely is it that this would ever come back to haunt us? My SIL's are all for ignoring this in hopes that we'll never be called on it. I think that that's irresponsible, but I think that they would only be convinced of this if they thought there could be major repercussions later. Thanks for your attention. - -- Paul Slonaker - - ------------------------------ Date: Wed, 02 Aug 2000 15:27:54 -0600 From: Jeff Salisbury Subject: Re: Stock distribution in Roth IRA? juanb@vnet.ibm.com wrote: > > I have a Roth IRA setup at E-Trade. Right now, I only have mutual > funds in it, but want to invest in a company. That company is > spinning off one of it's holdings as an IPO in a few months, and after > that will distribute the remaining shares of the company to the > shareholders. My question is how is that distribution handled in > a Roth IRA account? Is that considered a contribution or is it just > like a dividend/cap gain distribution? > > Thanks, > Juan > > - Hello Juan, Tax Free! Remember, you will never pay taxes again on any money in a Roth (assuming you abide by the distribution rules and assuming Congress doesn't change the rules). It doesn't matter how big it grows, it is all tax free as long as you abide by the rules... Jeff - - ------------------------------ Date: Thu, 22 Mar 2001 07:46:48 -0500 From: Jack Schnapper Subject: Big Time Debt Problems Due to circumstances that I am certain are familiar to some of you I have gotten myself (as well as my wife) very deep in debt. Of course we have the first mortgage and then the second mortgage that I took out to pay off all the plastic. Well, I didn't learn my lesson and got right back up there (actually much more) and my employment situation changed, greatly reducing our income. So here we sit owing an enormous amount of unsecured debt (plastic plus checking account overdraft line of credit). Recently I have been hearing from several of the credit card companies that they are very close to charging off our account as a bad debt. They then go on to tell me that they may still turn it over (or sell it) to a collection agency or attorney to try to collect whatever they can. I have been told that they could possibly file a lien against our house or even force us into bankruptcy. Our house has inflated quite a bit since we bought it 14 years ago and in our state (Maryland) only $7,500 in equity is protected. We have quite a bit more equity than that. We have considered refinancing but our credit scores are so bad that the best rate we can expect to get is @ 10% or more. Our existing first mortgage is a 15 year fixed rate loan (6.375%) with @ 7 years to go. Our second mortgage is for 30 years at @ 9.25%. If a credit card company writes off our account (and, from what I understand, deduct that amount from their income for tax purposes as a bad debt) can they still sell it to someone who will then harass and threaten us and possibly force us to either sell our house or to file for bankruptcy? I'd appreciate it if replies can be sent via email to jss@mailzone.com as well as posting them here for others to see. Thanks, Jack - - ------------------------------ End of persfin-digest V5 #137 ***************************** - To unsubscribe to persfin-digest, send an email to "majordomo@xmission.com" with "unsubscribe persfin-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.