asdfzxcv1999 said:I've got a question on CA state refund.

Two years ago I got a state refund check back and I ended paying state tax on that refund amount last year. And this year I probably gonna have to pay state tax again on last years state refund check. What gives? Why do we have to pay tax on a refund check since it was money the state borrowed from us and kept in bank earning interest for the entire year? This sucks.

Are you sure it's state tax you are paying, and not federal income tax? If you itemize deductions, you must include any state refund as taxable income on your 1040. You will only pay federal income taxes on that money, and not state income taxes. As another poster said, the amount of the state refund should be included as an adjustment on your Schedule CA for your California income tax return.

The reason your refund is subject to federal income taxes is because, when you itemize, you are allowed to deduct your state income taxes paid. So, when you get a refund from the state, it means you deducted more than what you actually were entitled to, and thus have to pay taxes on that refund to balance it out.

dhobi said:I am looking to take a mortgage out on a paid off primary home. The mortgage would be $350K, is that considered a refinance or HELOC? Will the interest on this loan be fully deductible or only interest on the first $100K. And of course, does it affect AMT? Found a lot of data on AMT on FW but there is some confusion about this so any insight is welcome. The first mortgage was $240K which was paid off 4 years ago.HELOC is Home Equaity Line of Credit, it's a type of loan. Refinace is the action of getting a loan.

Yes, interest on a loan for your primary residence is tax-deductable. (There is more to that though, see IRS.gov)

Everything can affect AMT. AMT basically set a maximum top limit for all combined tax credit/deduction for higher incomed folks. Another way to look at AMT is that it makes the tax system into a pseudo Flat-Tax system.

I googled and found the following:

http://moneycentral.msn.com/content/Taxes/Cutyourtaxes/P42247.asp

Yet another idea for folks is to do a "dry-run" on Turbotax and see what effect your intended action would affect your tax. This would be a good example for a dry-run since you mentioned this might trigger AMT.

lostdude said:Yes, interest on a loan for your primary residence is tax-deductable.Interest on a loan to PURCHASE your primary residence is tax-deductable. Interest deductions on a cash out refinance are generally going to be limited to the first $100k unless you are putting the money into the house.

Hi Guys,

Here is a quick tax question. My wife works for a private company (not publicly traded). She received some options in 2004 that got vested in 2005. Obviously, since its not a traded stock, she will not be exercising her options, but does this still have any tax implications?

Thanks for all your help in advance.

sorry for the double post.

deallover said:Question: Can the money invested in a franchise agreement (under joint LLC) but decided not to go ahead with the biz, be shown as a personal loss of $3000 per year till I recover all of it?

Three partners, each invested equal amount.
Can we all go ahead and show our individual investment as a loss (on personal return) since the biz is not going to be open?

thanks.


I'm assuming the LLC did not elect to be taxed as a corporation. Also, not quite sure if you are simply referring to the cost associated with trying to find/establish a franchise or whether you are referring to the entire cost of establishing the LLC.

Individuals are generally not allowed to deduct startup expenses. However, you can deduct these expenses depending on whether you guys were just investigating the idea of starting a franchise or whether you actually had decided on one & had at least begun negotiations (though it may even need to show progression beyond that). If the LLC will no longer operate, then I think your answer depends greatly on the answer to the sentence. If, however, the LLC can continue and you guys just startup another type of business/franchise, the LLC can deduct the costs of the failed venture which will be passed on to you. The key is that the LLC would have to continue with a profit motive.

Additionally, I'm not quite sure if the $3000 limit against ordinary income to which you alude even comes into play with an LLC member interest.

At least IMHO, you would benefit greatly from consulting with a local CPA who can get all the pertinent facts of your situation.

wdsaltman95 said:deallover said:Question: Can the money invested in a franchise agreement (under joint LLC) but decided not to go ahead with the biz, be shown as a personal loss of $3000 per year till I recover all of it?

Three partners, each invested equal amount.
Can we all go ahead and show our individual investment as a loss (on personal return) since the biz is not going to be open?

thanks.


I'm assuming the LLC did not elect to be taxed as a corporation. Also, not quite sure if you are simply referring to the cost associated with trying to find/establish a franchise or whether you are referring to the entire cost of establishing the LLC.

Individuals are generally not allowed to deduct startup expenses. However, you can deduct these expenses depending on whether you guys were just investigating the idea of starting a franchise or whether you actually had decided on one & had at least begun negotiations (though it may even need to show progression beyond that). If the LLC will no longer operate, then I think your answer depends greatly on the answer to the sentence. If, however, the LLC can continue and you guys just startup another type of business/franchise, the LLC can deduct the costs of the failed venture which will be passed on to you. The key is that the LLC would have to continue with a profit motive.

Additionally, I'm not quite sure if the $3000 limit against ordinary income to which you alude even comes into play with an LLC member interest.

At least IMHO, you would benefit greatly from consulting with a local CPA who can get all the pertinent facts of your situation.

Thanks for the reply.
I will talk to a local CPA about this.
We did buy a franchise license under LLC. Then decided not to open any store and let the franchise agreement expire. The money that we put in to buy the franchise agreement is what I am talking about (not the money involved in establishing the LLC itself). As of now we are not pursuing any other business opportunity under that LLC. So there is no profit motive for LLC right now.

dcwilbur said:While there are tax-advantaged methods for charitable giving, saving money on your taxes will never really be a justifiable cause. Donating a dollar to save twenty-five cents still costs you seventy-five cents out of pocket.

Never? What if you're "borderline" and you can put yourself into the lower bracket by some charitable donations?

From workingonit:


dcwilbur said:

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While there are tax-advantaged methods for charitable giving, saving money on your taxes will never really be a justifiable cause. Donating a dollar to save twenty-five cents still costs you seventy-five cents out of pocket.

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Never? What if you're "borderline" and you can put yourself into the lower bracket by some charitable donations?

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It is true that those in higher marginal tax brackets receive a greater tax benefit from a charitable deduction than those in lower marginal tax brackets. You reduce your taxes by charitable donations, you can even lower your marginal tax bracket by charitable donations. But the value of the charitable donation plus the income tax after the charitable deduction will always be greater than income tax without the charitable deduction. So charitable donations will never "save you money" considering the dollar value of the donation as money.

wdsaltman95 said:AznAirMax said:hmmm,. this might have been asked before on this forum but I have searched but can't find it.

Say if I have a small business on eBay, buying things like from FW for Free after rebate and then resale it. Would I count those item as $0 toward inventory or.. the actual price without counting the rebates?

Your basis would be zero.

So you do have to count the rebates into your final cost eventhough some of them might turn out to be bad? and that would mean inventory price of FAR product is only the tax amount that I paid?