New Tax Savings for Car Buyers in 2009

The Consumer Reports money weblog reports that a new tax break has been announced by the IRS that will allow consumers who’ve purchased a new car between 2009 and 2010 to deduct their state and local sales taxes on next year’s tax return—presumably to give consumers more incentive to help out the struggling auto industry. Good news if you’re looking to buy a new car this year. Photo by TheTruthAbout…. [Consumer Reports]

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Making Hay

Today TaxMama hears from Dee in Virginia with a simple question. “I bought some ranch land that is actively producing hay. The mortgage is secured by the land. Can I deduct the mortgage interest from my income taxes?”

Dear Dee,

You betcha. Yes, you may deduct the mortgage interest. The questions are where to take the deduction, and how much of the deduction may you use.

There are three ways to take the deduction, depending on how involved you are in the operation.

If you are actively running the ranch, you would use Schedule F, Profit or Loss From Farming. That schedule has lines to deduct other routine farming and ranching costs. http://www.irs.gov/pub/irs-pdf/f1040sf.pdf

If you’re simply letting someone run the place and pay you, be sure to check Box E at the top of the page. That will limit the deduction for your losses.

If you are leasing the land out to someone who pays you rent (money), waters the land, and harvests the crop, you need to report the income and expenses on Schedule E.

If you are leasing the land out and they pay you by giving you a share of the crop, use Form 4835.

http://www.irs.gov/pub/irs-pdf/f4835.pdf

You’ll want to read more about the implications of farming and ranching. IRS Publication 225 is the Farmers Tax Guide. http://www.irs.gov/publications/p225/index.html

Since your mortgage and property taxes are apt to be more than you are receiving as rent or crop shares, it’s a good idea to learn about the limitations on your deductions. After the big scandals with tax shelters in the 1980s, the Tax Reform Act of 1986 introduced complicated limits. IRS Publication 925 covers the Passive Activity and At Risk Rules which will make you dizzy. http://ftp.irs.gov/publications/p925/index.html

You didn’t think something this simple could be this complicated, did you?

And remember, you can find answers to all kinds of questions about ranching and other tax issues, free. Where? Where else? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]

• Ask TaxMama :: Where taxes are fun and answers are free
• www.TaxQuips.com :: The number ONE free tax podcast online
• IRS Schedule F :: Profit and Loss from Farming
• IRS Form 4835 :: Profit and Loss from Farming when paid in crop or animal shares
• IRS Publication 225 :: Farmers Tax Guide
• IRS Publication 925 :: Passive Activity and At Risk Rules

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Checklist For Publication Of Notice Of Petition To Administer Estate

As part of the California probate process, notice of a person’s death and the probate of that person’s estate must be published 3 times before the court hearing and the first publication must be at least 15 days before the hearing date. California Probate Code Sections 19040 and 19041 have very specific publication requirements.

The notice must be published in a newspaper of general circulation in the city where the decedent resided at the time of death (or where the decedent left property if the decedent did not live in California). If no such newspaper exists or if the property is not in the city or if the decedent didn’t reside in a city, publication may be made in a newspaper of general circulation that is circulated in the area of the county in which the decedent lived.

Three publications must occur in a newspaper published once a week or more often, with 5 days between the first and last publication dates, not counting those dates.

An affidavit from the newspaper as proof of publication must be filed with the court before the petition for probate is scheduled for a hearing date.

The notice shall state substantially as follows:

NOTICE TO CREDITORS OF _____________

LOS ANGELES SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES

Notice is hereby given to the creditors and contingent creditors of the above-named decedent, that all persons having claims against the decedent are required to file them with the Superior Court, at _______, and mail a copy to _____, as trustee of the trust dated ____ wherein the decedent was the settlor, at _____, within the later of four months after ____ (the date of the first publication of notice to creditors) or, if notice is mailed or personally delivered to you, 60 days after the date this notice is mailed or personally delivered to you. A claim form may be obtained from the court clerk. For your protection, you are encouraged to file your claim by certified mail, with return receipt requested.

_____________________________________________
(name and address of trustee or attorney)

Probate your California estate with a qualified probate attorney. Contact attorney Mitchell A. Port at (310) 559-5259 for probate help.

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