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Financial Planning / Tax Strategies
|Subject: Re: Deducting state income tax||Date: 12/15/2006 6:45 PM|
|Author: TMFPMarti||Number: 90011 of 119695|
My grandfather originally bought the property way back when. He passed away in 1969 so my grandmother would have been the sole owner at that time. When she died, half went to my mother and then to us after she passed away. So no gifts were made and no generations were skipped. What we were using as the cost basis was the appraised value listed on my mother's inventory from the probate records filed with the county. Since there are 5 of us I would use (net gains - cost basis)/5 = my cap gains. Is that what you mean by split interest? I'm not sure what a step-up in cost basis would be.
It sounds to me like your calculation of the taxable gain is fine.
Back to your Schedule A question, yes the NC tax you pay in 2007 will be deductible on your 2007 Federal return. But.
Since you live in TX you'll use the sales tax deduction on Schedule A for 2006. I'm not sure whether that deduction has been extended through 2007 or not, but if it has, in 2007 you'll need to choose whether you'll deduct state and local income tax, IOW what you pay NC, or sales tax. You can't do both.
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