Answers for questions regarding third-quarter state, federal taxes

Commentary /// Kash in your pocket



State and federal tax matters can be vexing and problematic. The following are answers to some of the key issues facing taxpayers as the third quarter approaches.

Q: Can I deduct investment fees I pay this year?

A: No. The schedule A writeoff for these costs, IRA custodial fees paid directly by the account owner, and the rest of the popular miscellaneous deductions subject to the 2%-of-AGI threshold are now gone.

Q: My employer paid for my cross-country move. Is the amount taxable to me?

A: Generally, yes. It used to be that when you relocate for a new job, you could deduct moving costs, or if your employer reimbursed you, the payment was tax free. Well, not anymore, except for active-duty military personnel who move pursuant to military orders.

Q: Is the new opportunity zone program up and running yet?

A: In part. This program, which is included in the new tax law, lets taxpayer defer capital gains from the sale or exchange of business or personal property, including stocks, by investing the proceeds in opportunity funds to help low-income communities.

Those who opt to take advantage of this break have 180 days from the date of the sale to invest all or part of the gain proceeds in a so-called qualified opportunity fund.

Q: I inherited real estate from my father in September. If I sell it, will I owe any income tax?

A: Under the current tax rules, you benefit from a step up in basis. The basis for computing a taxable gain or loss from the sale is the value of property on date of death, not original purchase price. Your taxable gain will be limited to the difference between the sale price and the stepped up basis of the property.

Q: Our bookkeeper stole al- most $1,000 from our petty cash. Can we deduct the loss?

A: Yes. The 2017 federal Tax Cut and Jobs act did suspend deductions for personal losses but doesn’t touch the losses suffered by a business. Keep police records in case the IRS ever challenges the theft deduction

For answers to any tax related question, call Kash Chandani’s office at (805) 494-4334 or email kash@less4irs.com.

Kash Chandani is a certified public accountant and also a former agent with the Internal Revenue Service.