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Jewish World Review Dec. 15, 1999 /6 Teves, 5760

Bruce Williams

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Small-claims court no panacea -- DEAR BRUCE: You have often mentioned small-claims court. I won a small-claims decision against our contractor, but they appealed. The next court ruled that I had no case. I then received a court summons stating that I was being sued for the contractor's attorney's costs under the claim that my small claim was a "frivolous" lawsuit. The small-claims court is useful, but in my case I not only lost what the contractor's brochure promised, but the filing cost and many hours of court time as well. -- P.H., via e-mail

DEAR P.H.: I have said many times that small-claims court is not the panacea that many folks want to believe it is. A very common defense is to ask that the matter be moved up to a higher court. In most cases, the defendant has the right to do that. The filing of a countersuit on frivolous claims is not an ordinary attack, but one they have a right to use. Who ever said that life was even or just?

DEAR BRUCE: Let's say I have 100 shares of XYZ corporation at $50 a share. A year later, the price is $100 a share. If I then transfer my 100 shares to my son and he sells them for $110 a month later, what profit is he paying federal income tax on? -- J.O., Pa.

DEAR J.O.: The cost price is still $50 per share. Therefore, he would pay up to 20 percent on the $60 per share profit. If your son has very little income, it is possible he will pay a lower capital-gains tax, with the maximum being 20 percent.

DEAR BRUCE: We are in our 40s and have over $100,000 in cash from the sale of our home. We are not sure what to do with this money, as we have never invested before. We have seriously thought of paying off a $160,000 mortgage at 7 percent and then taking out a loan to build a duplex. Since we are general contractors, we can get by with minimal subcontracting. Is this a good plan? -- R.W., Palmer, Alaska

DEAR R.W.: I don't think so. Why would you want to pay off this 7-percent loan and then go and borrow more money against the building? Most likely, you will have to pay origination fees, as well as a higher rate of interest. If you are going to build duplexes, I have no problem with that, as long as you realize that you are building and then buying a part-time job. From the renter's point of view, duplexes or even triplexes are a much better investment than single-family homes.

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).


12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
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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