Tax treatment of debt forgiveness — Watch out for tax bills delivered “COD”

For many debtors receiving financial help, the initial feeling of relief is quickly replaced by surprise and confusion when they discover they owe taxes on cancellation-of-debt (COD) income. This article explains what qualifies as COD income, and what debts qualify as exceptions or exclusions. A sidebar explains how some COD income can be excluded under the Mortgage Forgiveness Debt Relief Act of 2007.
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Lending to or borrowing from your company the right way

It’s not unusual for owners of closely held businesses to move money into and out of the company for various purposes, and there are significant tax advantages to characterizing these transactions as loans. But to enjoy those advantages, it’s necessary to treat advances and withdrawals as bona fide loans and document them as such. This article shows how to do so.
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Why jointly owned property may not be a good idea

Many well-meaning parents think they can avoid estate planning by simply jointly owning their property with their children. But this may not be such a good idea. For one thing, the value of the gift will be counted toward the parents’ lifetime gift/estate tax exemption. For another, the heir may owe capital gains tax if the property is sold. The transfer could even lead to a denial of Medicaid benefits down the road. This article explores the pitfalls.
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Tax Tips

This issue’s “Tax Tips” explains that a gift tax return must be filed for all gifts that exceed the annual gift tax exclusion, even if no tax is owed. It looks at IRS intentions to discontinue the “high-low” method as an alternative for substantiating business travel expenses. And donors who wish to take advantage of charitable deductions should watch out for charities that lose their exemption.
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