Are you having some difficulty with the Internal Revenue Service that you just can't seem to get cleared up? The IRS now has something called the "Problem Resolution Office" (PRO) whose sole purpose is to cut through the bureaucratic red tape to get taxpayers answers to long-standing problems.
The PRO will not get involved in the merits of an ongoing dispute and cannot be asked to examine the legal merits of such a dispute. What will they handle? Primarily paperwork and other administrative problems, such as missing tax refunds, confusion in Social Security numbers, misplaced files (a frequent problem after a marriage or divorce where a name change is involved), and delays in getting an address change registered.
You must have made at least one attempt to get the problem straightened out through normal channels before you ask the PRO for help. So you should have a record of the dates (and names of IRS persons contacted) of any earlier calls, as well as copies of previous correspondence.
If you think your problem fits these parameters, you can find the phone number of the Problem Resolution Office under Internal Revenue Service in the "U.S. Government" section of your local phone book. Q I have read that the new tax law allows the deduction of interest payments on funds borrowed to finance the holding of financial assets up to the amount of "investment income." Does investment income for this purpose include capital gains and interest as well as dividends? And what interest payments qualify -- must they be on a margin account with a brokerage firm or can they be on loans from banks or other sources?
A Net investment income is the sum of interest, dividends, rents, royalties and net capital gains on investment property, to the extent that these are not derived from a trade or business or from rental real estate that falls within the scope of a passive activity.
The deduction is not limited to margin interest in a brokerage account; interest on funds obtained from other sources may be deducted (within the income limitation) -- but you should be able to establish a clear paper trail from source to payout. Example: You borrow $10,000 on a personal loan from your bank, then show -- perhaps by an entry on a monthly statement -- deposit of the same amount into your brokerage account within a few days after obtaining the loan. Q I am self-employed, with no employes and not incorporated. My question has to do with contributions to charity. Half of my income is from a retirement pension and the other half from my self-employment. Can I deduct half of my contributions on Schedule C and the other half on Schedule A? The advantage, of course, would be the reduction in self-employment. A No. Contributions to charity may not be deducted on Schedule C, but must be passed through to your personal income tax return for deduction on Schedule A.
There is one circumstance when a contribution appears on Schedule C, but I don't think it applies in your case. If a self-employed person deals in the purchase and sale of goods (as opposed to a service), then the value of merchandise contributed to a qualifying organization should be deducted from inventory when calculating the cost of goods sold. Q My wife and I have individual revocable living trusts. We have transferred title to our home, in which we have lived for 25 years, to the trusts, so that each trust owns 50 percent of the house. We are now planning to sell our home. Will we be entitled to the one-time $125,000 exclusion of gain on our joint tax return, or do we need to retitle the home in joint ownership again to be eligible? A Assuming you meet the over-55 age requirement, holding of title by the revocable trusts will not disqualify you from claiming the $125,000 exclusion of tax on the gain. The situation would be different for an irrevocable trust; but by reserving the power to revoke, you retained the right to be treated as owners of the property.