Full service estate planning and tax attorneys for the North Carolina Sandhills.

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When do I need to consult a tax attorney?

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More often than you realize- business sales, real estate transactions, if you owe taxes to any government, when making large gifts, when your income increases or decreases drastically, or if you are otherwise just seeking to minimize your taxes.  Taxes over your lifetime take an enormous portion of your wealth.  We help minimize that bite.

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What is tax planning?

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It’s a year round process by which you attempt to reduce your tax burden through consideration of you budget, income, and expenses while considering your ultimate financial goals.  Since failure to plan is planning to fail, you need to attend to this effort – we can help you!

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How do I select a tax attorney?

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Selecting the right attorney is extremely important.  Consider experience, education, advanced degrees such as the CPA and LL.M. credentials (as well as Masters in Tax), and licensure/association affiliation.

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What is taxable income?

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Taxable income is gross income minus deductions, exemptions and allowable expenses.

What is the difference between ordinary income and capital gains?

Ordinary income is the income you generally receive from your employment and business activities.  In contrast, capital gains occur when assets held for investment are sold for profit (i.e. more than your cost, called “basis”).

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What is Basis?

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Basis is how much you invested in a property for tax purposes.  Adjusted basis is your original basis adjusted upwards or downwards based upon events, such as capital investments and depreciation respectively.  Substituted or carryover basis occurs when someone makes a gift to someone during their lifetime.  Inherited assets take on a new basis in the hands of the estate beneficiary (“stepped-up” if higher than the decedent’s basis, or “stepped down” if lower).

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If I sell my home will I own tax?

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No, if: (1) your gain is less than $250,000 (for single filers) or $500,000 (for married filed jointly filers); (2) you owned your home for a minimum of two years; and (3) you lived in your home as your main residence for at least two years.

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How are different entities taxed?

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C Corporations are taxed at the corporate level and then when the shareholders receive dividends they are taxed as well.  S Corporations do not pay taxes, only the shareholders do (whether they receive the income in cash or not).  LLCs are generally taxed as a partnership meaning that all income and losses pass through to the owners pro rata and in the same character. LLCs can choose by filing an Entity Classification Election (Form 8832) to be taxed as a C Corporation or S Corporation.  Care in making such an election requires the help of a competent tax planner!  The taxation of a Trust can occur in various ways depending on how it is structured.  Some trusts are taxed – fully or partially – at the trust level (which is very expensive).  Other trusts (or the same trust at different times) can avoid tax by distributing assets to the beneficiaries (who then must pay the tax).

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