Posts tagged "Taxplanning"

Connecticut Exempts All, or Almost All, Social Security Benefits from Income Taxes

Connecticut, and several other states, exempt some or all of federally taxable Social Security income. Connecticut allows taxpayers to exempt all of that income depending on filing status and federal adjusted gross income. A taxpayer can deduct 100% of her federally taxable Social Security benefits if she is:

U.S. Treasury Study Highlights Significant Tax Savings Achieved by Using Section 1031 Like-Kind Exchanges

The U.S. Treasury has just released a study highlighting the popularity and effectiveness of like-kind exchanges under Tax Code Section 1031. In tax year 2007 (the last year for which detailed numbers are available) taxpayers achieved slightly more than $82 billion of deferred gain due to such exchanges with more than $63 billion attributable to real estate. Under Code Section 1031, no gain is recognized currently if a taxpayer exchanges eligible property for a like-kind property. As most exchanges of real estate are difficult to arrange, most exchanges are deferred through the use of qualified intermediaries. The taxpayer sells his real estate to a third party through an intermediary who handles the sale closing and holds the net sale proceeds. Within 45 days after the sale, the taxpayer must identify the replacement property, and through the intermediary, acquire that property generally within 180 days of the sale. After the exchange, the taxpayer's cost basis in the new property becomes the basis of the old property given up. When the new property is subsequently sold, because of the cost basis adjustment, the capital gain is eventually taxed. While the tax benefits are significant, the rules and procedures are detailed and complex, requiring the assistance of a knowledgeable and experienced tax attorney.

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