Questions about divorce and rental properties were among the calls fielded Wednesday night during the second of three free Tax Call-In programs.
The final call-in will be this morning from 9 a.m. to noon. Call 330-996-3688.
The program, co-sponsored by the Beacon Journal and the Ohio Society of CPAs, also included a live tax chat on Tuesday. The full transcript of that chat and all tax stories by the Beacon Journal this week, including the special Tax Section, can be found at www.ohio.com/taxes.
Wednesday night, six volunteers from Akron firm BCG & Co. were on hand to answer questions.
CPA Dustin Sheppard spoke to a caller who got a divorce in 2012 who wanted to know how to file.
Sheppard said whatever your status is as of Dec. 31, 2012, is how you will file. So even if your divorce was finalized on Dec. 31, you would file separate, he said.
Regarding claiming the children as deductions, if the divorce is not finalized, the two parties will have to work out those details, often through a lawyer, Sheppard said. If the divorce has been finalized, the parties must follow the divorce decree. Generally, the custodial parent will be entitled to the dependency exemption however that parent may release the dependency exemption to the noncustodial parent by filing Form 8332.
Sheppard also said however one party in a pending divorce files with the IRS is how the other will have to file — for instance, if one party files as married filing separately, the other must do the same. There are exceptions if the spouses live apart during the last six months of the year and you should consult with a tax preparer.
CPA Todd Easton took a call from a reader who rolled over an IRA. His previous employer didn’t allow him to roll it over directly, but he was still able to roll it to a new account.
Easton told him to mark it as a rollover, as long as he qualified, and to make sure he had documentation. He would mark the rollover right on his 1040 on Line 15b. It would not be subject to tax.
A caller phoned Tim Spencer to ask what form to file for the loss from Fair Finance, the Akron company that went into bankruptcy after FBI raids in November 2009 permanently closed its offices.
Last June, the two co-owners and a former executive were convicted on various charges of defrauding more than 5,300 Ohio investors out of more than $218 million in uninsured investment certificates from Fair Finance.
As a refresher, in Sunday’s Beacon Journal tax coverage, CPA Doug Klein of SS&G said: “While every investor’s case is different, and warrants a careful review of their own unique facts, with the indictment and convictions now behind us, there is little question that the special rules in Revenue Procedure 2011-58 and Revenue Procedure 2009-20 should be part of any investor’s decision-making for 2012 tax returns. The year of loss deduction, the rules the taxpayer elects to use for such loss, as well as the actual amount of loss will require special attention to these rulings and the regular theft loss rules.
“Anybody who elects to use the special rules will be required to make a reduction in the total deduction, as well as provide the IRS with an estimate of their recoveries — so there’s some math to do. If folks recover money in a future year, they may have to amend any loss claims or report income to the extent of the excess recovery over their estimated loss in these rules,” he said.
Spencer told the reader to file Form 4684 with the IRS.
CPA Maria Liossis took a call from a woman who was trying to do some advance planning regarding her parent’s revokable trust and the tax implications after their death.
Liossis said it is wise to review trust documents with an attorney to know what reporting requirements there are once the parent passes away. It is also important for parents who have trusts to let their adult children know about them, she said.
Kristian Doty took a call from a taxpayer who had recently sold a rental property. The caller wanted to know if another rental property was purchased, would that offset the gain?
Doty said no because the gain is considered the difference between the original purchase price of the rental home and the sales price. A purchase of a new rental home would be another transaction.