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Tax planning: How your home can help

02/01/2008

While it might not be possible to avoid taxes altogether, good tax planning can lessen the burden. Investors all too frequently fail to take advantage of tax saving opportunities that are available. We encourage our clients, whenever possible, to combine sound investment strategies with prudent tax planning strategies.

One simple but often overlooked tax avoidance strategy involves the family home. A personal residence enjoys a privileged position under the Internal Revenue Code. Section 121 of the Internal Revenue Code allows a married couple filing a joint income tax return to exclude from their taxable income up to $500,000 of gain from the sale of their residence (or $250,000 for an unmarried individual) if the residence has been owned and used by the taxpayer as the taxpayer’s principal residence for a period of two or more years. This is not merely a tax deferral strategy, not just a strategy that results in greater gain in later years: it results in a total exclusion from income. What’s more, the taxpayer can repeat this strategy every two years.

There are, however, several limitations to this rule. For example, this strategy would not apply to sales between related parties.

This publication provides general information and should not be used or taken as legal advice for specific situations which depend on the evaluation of precise factual circumstances. If you would like more information about this or other tax saving strategies, or assistance in setting up and implementing a plan, please contact your attorney at Moye White LLP.

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A summary of changes in Colorado employment law
  Prior to 6/01/07 Effective 6/01/07
Number of days to respond to former employee’s written demand 10 days 14 days
Penalty The Greater of:
50% of wages or compensation due
or
Employee’s average daily earnings X 10 days
The Greater of:
125% of wages or compensation due up to $7,500 + 50% of wages
or
compensation due ≥ $7,500 or Employee’s average daily earnings X 10 days Total penalty increases by 50%
Willful violations No penalty shall be awarded May be awarded
Attorneys’ fees

To employee:
If employee recovers a sum greater than the amount tendered by the employer

To employer:
If employee fails to recover a greater sum than that tendered by the employer

To employee: If employee recovers a sum greater than the amount tendered by the employer

To employer: If claim is > $7,500 and employee fails to recover a greater sum than that tendered by the employer

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