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Old 03-29-2012, 10:38 AM
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Inheritance and Taxes

Before I ask my question--I tried to find this answer but couldnt


Wife and I are legally seperated. We live in Georgia.

My wife recently inherited a diamond ring from her aunt who passed (she passed in 3rd/4th qtr of 2011 and the inheritance happenned shortly thereafter)

The ring was appraised for $22,000. She has decided to sell it. The best offer from a diamond buyer was $5000. She IS selling it to her aunts trust (located in other state) for $8000.

What are the tax implications?

(also-fyi-if there are any "one time" options, I dont think we would be interested because we are both under 35 and this is a small dollar amount)

The money is going to a medical surgery--which is $2500 total out of pocket and $2500 for a new bed--which we have not gotten EVER--since she will be in the bed recovering and we really need a new bed

I am sharing all the info upfront so we can get the best advice.

If anything else is needed, please let me know

Thanks in Advance!



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Old 03-29-2012, 12:30 PM
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“The ring was appraised for $22,000. She has decided to sell it. The best offer from a diamond buyer was $5000. She IS selling it to her aunts trust (located in other state) for $8000.What are the tax implications?”----->Her tax implications depends on the situation; capital gain tax is a tax that is assessed when an asset is sold. The passing of an asset, her diamond ring, by inheritance or an asset distributed from a trust does not constitute a sale; thus, the tax is not triggered. The tax is triggered ONLY when the property, inherited ring from a decedent or as a distribution from the trust, is sold. Assets owned by a decedent (or his revocable trust) get a new basis when the decedent dies, equal to the asset's value as of the date of death. If your spouse sells the asset for more than the basis, then the tax is payable on the sale price, minus the basis.If her selling price is lower than its adjusted basis, then she takes a capitlal oss,LTCL, I mean,inherited assets are treated as long term assets. If the FMV, for example, was $22K on the date of death, that would be your starting point. If you sold the property for $8K, the sale would result in a long term capital gain of $14K. Collectible losses are personal property, not possible to carry forward.It deepdns; as long as you have both a long-term gain and an overall gain from short-term plus long-term sources combined to offset your losses, then you need to report gains from collectibles in a manner similar to other capital gains. You need to report collectibles gain / loss on line 4 of the 28% rate gain worksheet; Line 18 in the Instructions for Schedule D (Form 1040). The IRS has unveiled a new tax form for reporting capital gains and losses from stocks, bonds, mutual funds and similar investments. Starting with the 2011 tax year, investment transactions will be reported on the new Form 8949. Youneed to report in Part II of Form 8949 on line 3 a collectibles gain or (loss). A collectiblesgain or (loss) is any long-term gain or de-ductible long-term loss from the sale orexchange of a collectible that is a capitalassets. It is reported on 1040 line 44.
Your spouse is not subject to inheritance tax. GA has an estate tax but does not have an inheritance tax. Inheritance tax in Georgia has been replaced by an estate tax. An inheritance tax is a tax on the beneficiaries when they receive the assets. Most beneficiaries, I guess, are not subject to estate/inheritance taxes(For example, as long as you receive an inheritance from someone who dies in 2010, the nobody pays the taxes.) because their inheritances, in most cases, are valued less than the threshold(The threshold is the amount of money that someone's estate must be worth in order for someone to have to pay inheritance tax). However,
“The money is going to a medical surgery--which is $2500 total out of pocket”--->I guess you can deduct $2.5K on your Sch A of 1040 as long as you itemize deduction son your return; you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 7.5% of your AGI (Form 1040, line 38).



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