Wednesday, February 28, 2007

The Rules - They Keep on Changing

Just when I think things are finally settling down and there won't be any more changes for a while, they change again. It truly is a process of constant evolution.

Don't get me wrong, change is often good, but it goes to show you that you can't rely on the information given to you by someone who is not monitoring these updates on a daily basis.

What was true 4 months ago was not true 3 months ago and not what was true 2 months ago is not true today. And there were about 20 revisions in between.

Today's change involves the way recaptured depreciation is reported when doing an installment sale through a foundation. I have gone back and revised my last post to reflect this change.

The recaptured depreciation on sale of real estate is now due at time of sale (or on the next tax filing). However, the good news is, that the upfront tax deduction has been increased, so a good portion is canceled out between this deduction and the amount forever forgiven by the charitable bargain sale.

Paying less (total) upfront also increases the net amount to you in each payment you receive throughout your contract from the installment sale portion.

It all gets a bit complicated, but is clearly spelled out in the proposals for each individual case.

This change was incorporated in cooperation with the IRS as a final step in keeping with established tax law.

I'll keep you posted. Don't be surprised if over the next month or three the evolution continues to unfold and more changes arise. I won't be. Keeps me on my toes!

Paula Straub

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