Potential Tax Liability

prpixel

Do you live in NE, IA, KY, PA, NJ or DE? If not, then you’re good. NJ officially killed it’s Inheritance/Estate tax on November 1, 2016. It’s real easy to find out, just Google "inheritance tax (state)"

No, NJ has not ended the inheritance tax. You’re completely mistaken. The state did repeal the estate tax. But the estate tax and the inheritance tax are two different things.

If you sell an item for more than the appraised value, or last purchase value, then you are required to pay Income Tax on the profit

That is also completely mistaken. You might be liable for capital gains tax, but not income tax. Again, they are two different things, and are taxed at different rates. Arguably, if buying and selling audio equipment was your livelihood, you would be liable for income tax. But in that case, your calculation of "profit" is faulty, because the earner would deduct from what you call "profit" all of his expenses: the cost of listing the ad, rent, phone, insurance, and so on.

You made $60k. Pay your accountant $200!

To be precise, again, I should add one more point regarding the fact that there is no Federal Inheritance Tax. Although heirs don’t have to pay Federal tax on what they receive from the decedent’s assets as they existed on the date of death, under many circumstances heirs may have to pay tax on whatever share they receive of income that may be earned by the estate subsequent to the decedent’s passing. That falls under what is known as the Estate Income Tax (for which the executor files Form 1041 if necessary, and it often will be necessary since the filing threshold is $600), as opposed to the Estate Tax (for which the executor files Form 706 if necessary, and it rarely will be necessary since the filing threshold is $5.45 million) :-)

Regards,
-- Al

This is getting very repetitive. In the unlikely event that you receive an inquiry from the I.R.S., or a Notice of Audit, you should hire a tax attorney or C.P.A. at that time. Period.

---Steve

warmglowingtubesart

This is getting very repetitive. In the unlikely event that you receive an inquiry from the I.R.S., or a Notice of Audit, you should hire a tax attorney or C.P.A. at that time. Period.

It's easier to get professional advice before you're in trouble than to seek it afterwards. It's cheaper, too.