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Jewish World ReviewSept. 10, 1999 /27 Elul, 5759

Bruce Williams

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Whose taxes are they, anyway? -- DEAR BRUCE: My mother signed her home of 50 years over to my sister and me after my dad died 10 years ago. She did this to safeguard the residence from loss in case she had to be hospitalized or put in long-term institutional care. This did not happen. She recently sold the home with a big profit. Since my mother had placed it in our names, what will be her, or our, capital gains liability? Obviously this was not the best approach, but she was adamant in her decision. -- A.Z., Cuba, N.Y.

DEAR A.Z.: Your mom doesn't have any tax problems, because she didn't have anything to sell. You and your sister are the ones with the tax problem. It is very likely that it could be substantial if there was a big profit here. You are going to have to determine how legally she signed the residence over to you without a tax consequence 10 years ago. If the base was established then, the next question is: What has she been doing for the last 10 years? I assume that she has been living there, so no depreciation has been taken (or has it?). You are going to have to run this past your accountant to sort things out. It may be relatively simple, but on the other hand, if the initial transaction was not done according to the then-in-place IRS rules, you may have a bit of unraveling to do.

DEAR READERS: A reader, Mary, has enclosed a recent column of mine regarding a letter from a retired, handicapped, long-time widow in her 70s. She owed $5,000 and simply had no way of paying it off. I said to her that she could go through bankruptcy but the reality is that with no assets, the credit-card companies really had no recourse. Mary writes, "Would you have given her the same advice if she owed you the money? Please don't encourage your readers to be freeloading cheats." It seems to me, Mary, that if an individual has no assets and no anticipation of any assets, somebody is going to take a hit. Would I like it if it happened to me? Of course not. Has it happened to me? Yes -- many, many times. It would be nice if I could give a "Polyanna" answer to each query and show people how to go down the road to success and recapture their dreams. Unfortunately, in the real world this is not possible on every occasion. I try to address the things that are written to me from a practical, and hopefully moral, standpoint.

DEAR BRUCE: In a recent column you talked about dropping collision and comprehensive insurance on a 10-year-old car. You assigned the value of $3,000 as your cut-off point for dropping collision. I did a survey of the local newspaper and found that there are not many cars that are selling for $3,000. My ex-wife and I are considering buying an automobile for one of our teen-agers. We don't think it can be done. Would you consider raising the dollar amount on your collision floor, or acknowledging that there just aren't any cars around for that price? -- J.M., Georgetown, Ky.

DEAR J.M.: Recently it came to our attention that one of our employees who has a very nice company car is obliged to go into a particular neighborhood three or four times a week and the car has been vandalized on several occasions, received hit-and-run bruises and more. One of our partners said that it would be a lot cheaper for us to buy a "beater" for her to drive into those neighborhoods and then come back home and drive a regular car for her other activities. It wasn't easy but we found a 10-year-old car for $1,500 that is running like a watch, and obviously we don't carry collision on it. I am not suggesting that you can find these cars instantly, but if you are looking for a car for a teen-ager and you have several months to look for one, I promise you they are out there -- you just have to keep searching. Many people have exaggerated ideas of what their older cars are worth, but with diligence I am sure you will find that older cars with a lower price value are out there.

Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).


09/08/99: How do I roll over my 401(k)? 09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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