Windy City Media Group Frontpage News

THE VOICE OF CHICAGO'S GAY, LESBIAN, BI, TRANS AND QUEER COMMUNITY SINCE 1985

home search facebook twitter join
Gay News Sponsor Windy City Times 2021-09-01
DOWNLOAD ISSUE
Donate

Sponsor
Sponsor

  WINDY CITY TIMES

A unique yearly tax deduction for certain unmarried couples
Exclusive to the online edition of Windy City Times
by Thomas H. Franklin
2010-01-27

This article shared 2704 times since Wed Jan 27, 2010
facebook twitter google +1 reddit email


If you and your domestic partner each have your own investments and you have enough income such as wages or self employment income that could be offset by these losses, then this technique may generate a tax savings ranging between $660 to 2,280 depending upon your tax rates and whether you qualify. I will also explain how the wealthier member of the family can help start this strategy through gifting seed money to the less wealthy member.

We all know that the stock market fluctuates up and down. In the down time, would not it be nice to sell the losers to generate a tax loss and then reacquire the stocks at the lower price? The cost would be nominal for such a technique: the cost of the stock broker commissions and any transaction taxes of $30 or so. The tax savings for the above loss could be high ( ranging from $330 to 1,140 per year, depending upon your tax rates ) .

Well, Congress caught wind of this technique and imposed significant restrictions on implementing this technique solo or through family and other related parties. Now, if you sell your stock and acquired that same stock within 30 days before or after the sale, you are denied the deduction for the loss. Even if you sold the stock and a "related party" reacquired the stock, you would be denied a loss. The same loss would be denied if the related party sold the stock and you reacquired it. A "related party" includes ( but is not limited to ) your legally married spouse, a son or daughter, an adopted child, a parent, a sibling or your IRA. It also could include a trust, partnership or corporation of which you hold an interest.

Could not two domestic partners each utilize this technique? In certain circumstances, they certainly can! You can sell your loser stock and your partner could reacquire that stock while your partner sells his or her loser stock and you reacquire his or her loser stock. There is no change in the investment holdings of the overall family except for the nominal transaction fees and taxes. Now your family's combined tax savings ranges between $660 to 2,280 per year depending upon your tax rates. Hence, every year, such a technique could be adopted and form an annual annuity of sorts.

Note that the losses are not unlimited: Only a net $3,000 of capital loss is allowed to offset ordinary income such as wages, rental income, taxable retirement income, dividends, interest income and self-employment income. I say "net" because if you had any capital gains ( e.g., gains generally from other stock sales ) , you could sell extra loss stock to offset those capital gains.

Now perhaps you are the bigger breadwinner and your partner does not have enough assets to invest to implement this technique. You can gift your partner money, up to $13,000 in 2010 without having to file a gift tax return. Please note that if you give your partner a new car for Christmas or your estate planner has been utilizing a gifting strategy, you may already have used up some or all of the $13,000.

It bears repeating that some estate techniques that form legal relationships between you and your partner may prevent you from utilizing this technique. For instance, the creation of a grantor-beneficiary relationship ( e.g. formation of a trust ) could deny use of this technique. That does not mean the estate planning tactic was bad since such legal entities can protect property rights between you and your partner that you would be entitled had you been allowed to legally marry ( recall one of my prior articles ) .

Nevertheless, such limitations re-emphasize the need for a holistic tax return preparer who understands estate, gift and income tax planning consequences. As always, you should seek professional guidance to have someone carefully examine all relationships between you and your domestic partner before endeavoring on this or any course of action.

Thomas H. Franklin holds a CPA and a Masters of Science in Taxation degree from Northern Illinois University. His practice specializes in advising same sex and other unmarried couples on tax and other financial matters. As required under Circular 230, this written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. PLEASE SEEK A TAX PROFESSIONAL'S ASSISTANCE BEFORE ENGAGING IN ANY TAX PLANNING. You can look on his Web site, www.thomashfranklin.com . His e-mail is thomashfranklin@gmail.com and he welcomes all comments.


This article shared 2704 times since Wed Jan 27, 2010
facebook twitter google +1 reddit email

  ARTICLES YOU MIGHT LIKE

Gay News

Mayor Lightfoot: $20M+ in grants will support business, nonprofit recovery 2021-10-22
--From a press release - CHICAGO — Mayor Lori E. Lightfoot and the City of Chicago Department of Business Affairs and Consumer Protection (BACP) announced today a $20M Chi Biz Strong Grant Program for small business and nonprofit relief and a ...


Gay News

Local business gives historic Edgewater storefront new life with holiday pop-up 2021-10-21
--From a press release - Oct. 20, 2021 - Chicago, IL - The iconic former Granville Pictures storefront at 6200 Broadway in Edgewater is getting a second life with a holiday pop-up from local business City Grange. For nearly 90 years ...


Gay News

Wizard World Comic Con returns to Chicago 2021-10-17
- After being canceled last year because of the COVID pandemic, Wizard World Comic Con Chicago returned to Rosemont's Donald E. Stephens Convention Center on Oct. 15-17—and thousands of people attended. People ranging from attendees to vendors ...


Gay News

LGBT Chamber of Commerce to build 1,000 school supply kits for underserved kids 2021-10-15
--From a press release - CHICAGO — Back 2 School Illinois (B2SI), the state's largest free school supply program, in partnership with the LGBT Chamber of Commerce of Illinois, will host a build-A-kit event at the Center on Halsted on Monday, ...


Gay News

Chicago Plumbing Code allows all-gender multiple occupancy restrooms 2021-10-15
--From a Community Restroom Access Project (CRAP) press release - CHICAGO — The Community Restroom Access Project (CRAP) applauds passage Thursday by the Chicago City Council of the plumbing code modernization ordinance that will allow businesses and building owners to ...


Gay News

Dozens of celebrities, companies set to take part in Spirit Day on Oct. 21 2021-10-15
--From a press release - New York, NY, Thursday, October 14, 2021 - Today, GLAAD, the world's largest lesbian, gay, bisexual, transgender, and queer (LGBTQ) media advocacy organization, announced a preliminary list of celebrities, shows ...


Gay News

Andersonville celebrates Halloween with 'Halloween on Catalpa' Oct. 30 2021-10-15
--From a press release - CHICAGO (October 14, 2021) — Families are in for a special treat this year as Andersonville once again hosts its socially-distanced "Halloween on Catalpa" event and celebrates the return of ...


Gay News

Rosa Escareno named interim head of Chicago Park District 2021-10-13
- Former Chicago Department of Business Affairs and Consumer Protection (BACP) Commissioner Rosa Escareno has been named the interim general superintendent and CEO of the Chicago Park District. In an Oct. 13 statement, Chicago Mayor Lori Lightfoot ...


Gay News

Black Incubator and Accelerator (BIA) program to offer support for Black-led organizations 2021-10-12
- A new program—Black Incubator and Accelerator (BIA)—is offering funding and resources to Black-led organizations that primarily serve Black communities on the South and West Sides. BIA is new this year and run by University of Chicago ...


Gay News

TRAVEL Conde Nast again recognizes Chicago as top big city 2021-10-05
- Mayor Lori E. Lightfoot, Choose Chicago and World Business Chicago announced Conde Nast Traveler recognized Chicago as the #1 Best Big City in the U.S. for the fifth consecutive year in a row in the results ...


Gay News

BUSINESS Black council, HRCF release first-ever 'Black in Fashion' index 2021-10-04
- The Human Rights Campaign (HRC) Foundation and The Black in Fashion Council, an organization that promotes and advances Black representation in the fashion and beauty industry, released their inaugural Black in Fashion Index report, which measures ...


Gay News

GLAAD launches video series spotlighting Black LGBTQ+ small-business owners 2021-10-04
- GLAAD has launched "Changemakers," a four-part video series spotlighting Black LGBTQ+ small-business owners and their impact within their local communities before and throughout the COVID-19 pandemic. The series, presented by ...


Gay News

Chicago Reader celebrates 50th anniversary 2021-09-28
--From a press release - The Chicago Reader, a fearless, innovative, and nationally respected media voice in Chicago since 1971, is celebrating its 50th anniversary with a variety of exhibitions, events, and projects. The Chicago Reader's first issue was October 1, ...


Gay News

Latin Restaurant Weeks taking place in Chicago Oct. 4-18 2021-09-28
- National Hispanic Heritage Month takes place Sept. 15-Oct. 15, recognizing the many contributions of Hispanic Americans. As an effort to acknowledge the successful influences and cultures of Hispanic Americans, Latin Restaurant Weeks, LLC, will host its ...


Gay News

A new street festival comes home to Andersonville 2021-09-27
- The Andersonville Chamber of Commerce presented the new event Andersonville Homecoming on Sept. 24-26. As guests entered the area blocked off Clark Street between Catalpa and Summerdale avenues, a $10 donation fee was suggested to benefit ...


 



Copyright © 2021 Windy City Media Group. All rights reserved.
Reprint by permission only. PDFs for back issues are downloadable from
our online archives. Single copies of back issues in print form are
available for $4 per issue, older than one month for $6 if available,
by check to the mailing address listed below.

Return postage must accompany all manuscripts, drawings, and
photographs submitted if they are to be returned, and no
responsibility may be assumed for unsolicited materials.
All rights to letters, art and photos sent to Nightspots
(Chicago GLBT Nightlife News) and Windy City Times (a Chicago
Gay and Lesbian News and Feature Publication) will be treated
as unconditionally assigned for publication purposes and as such,
subject to editing and comment. The opinions expressed by the
columnists, cartoonists, letter writers, and commentators are
their own and do not necessarily reflect the position of Nightspots
(Chicago GLBT Nightlife News) and Windy City Times (a Chicago Gay,
Lesbian, Bisexual and Transegender News and Feature Publication).

The appearance of a name, image or photo of a person or group in
Nightspots (Chicago GLBT Nightlife News) and Windy City Times
(a Chicago Gay, Lesbian, Bisexual and Transgender News and Feature
Publication) does not indicate the sexual orientation of such
individuals or groups. While we encourage readers to support the
advertisers who make this newspaper possible, Nightspots (Chicago
GLBT Nightlife News) and Windy City Times (a Chicago Gay, Lesbian
News and Feature Publication) cannot accept responsibility for
any advertising claims or promotions.

 
 

TRENDINGBREAKINGPHOTOS







Sponsor
Sponsor


 

Sponsor


Donate


About WCMG      Contact Us      Online Front  Page      Windy City  Times      Nightspots      OUT! Guide     
Identity      BLACKlines      En La Vida      Archives      Advanced Search     
Windy City Queercast      Queercast Archives     
Press  Releases      Join WCMG  Email List      Email Blast      Blogs     
Upcoming Events      Todays Events      Ongoing Events      Bar Guide      Community Groups      In Memoriam      Outguide Categories      Outguide Advertisers      Search Outguide      Travel      Dining Out      Privacy Policy     

Windy City Media Group publishes Windy City Times,
The Bi-Weekly Voice of the Gay, Lesbian, Bisexual and Trans Community.
5315 N. Clark St. #192, Chicago, IL 60640-2113 • PH (773) 871-7610 • FAX (773) 871-7609.