Sunday, July 24, 2005
I have a friend who has not filed tax returns for a lot of years. All of his income comes ''under the table''. I want to help him get out of this situation. He wants to, but says at this point he will end up in jail. What is the best course to follow?
Your friend should IMMEDIATELY contact a Tax Attorney. Because of the potential for criminal liability, your friend needs an attorney and not an accountant. Your friend would have attorney-client priviledge.
Tell your friend not to speak with the IRS.
Please see my website at http://www.taxesq.com
20 years ago I received a portion of recreational land as a gift from a relative. Now I am ready to sell. The property has greatly appreciated. What are the tax implications? How do I compute cost basis?
Reply: Because you received a gift, your basis in the property for tax purposes is a "carryover" basis from the grantor. Essentially, whatever the grantor paid for the property, any improvements, and any gift taxes paid would increase your basis. Since it is land only, there would not have been depreciation. You would be subject to Capital Gains Tax rates and possibly the Alternative Minimum Tax.