Kathy: I am a working interest owner in an existing lease. I sold my deep rights under the existing lease to a large company. The 1099 showed up with the amount in box 1-rents. Is that correct or should it be in box 7. I was hoping for long term capital gains.

Kathy,
Thanks so much for the information.. I have down load the book for the self-employed book from the IRS. another question married filing jointly what are the taxes be.. from 0 to 200,000.00 (like 10%, 21% 28% 31%) Lord, I hope you can understand what I am trying to ask...lol!!! many thanks

Kathy, My husband has a log truck and I was getting our taxes ready. I have a few question for you if you don't mind. Can I take off for work cloths and work boots, and can we take off if he went and picked up parts and ate out while he was there. I was not sure about the eating out but I did know that if he was working off and staying in a motel that all meals could be taken off... thanks for you input!
PS do you know any other right off that we can take other than fuel, parts , repairs, insurance on the truck, reg. fees , supplies, tools, mileages, tires... many thanks

Thank you.

Kathy,
I can't find any of the previous discussions about setting up an LLC for bonuses and royalties. Are there tax advantages for setting up an LLC for the purpose of gas royalties, lease bonuses, and any other agreements such as row's? We are negotiating a pipeline row now and are expecting royalties by the end of the year on a well that is being drilled now. Any suggestions would be welcome.

My husband and I are discussing having wills drawn up for the two of us as well as his mother. Which is better to have, a living trust or a will?

Thanks for your help!

Also, in the POA we chose the option that said that we were allowed to comingle his mother's fund with my husband's. We did this b/c that would allow us to deposit the money his mother received as a lease bonus into our online savings account which has a 3.49% interest rate and that would allow both of us to draw more interest from that money. Since we will probably have enough interest in that account to have to claim it as income, could we also deduct the POA expenses from our taxes since it is the POA that allowed us to comingle those funds and led to the higher interest amount that is now taxable?

Ok, so, since we had to file the succession in order to get the land in DeSoto into my husband's name and out of his father's, and we received the lease bonus for the mineral rights leased on that land....can we deduct the succession attorney's fees from that income?

My husband and I are planning on sitting down with you at some point to discuss next year's tax return. We just have a lot going on right now...even with my husband not working. Once that settles down, we will give you a call to arrange a meeting. =)
My husband just filed a POA (Power of Attorney) for his mother at the Clerk's Office and was told that what he paid he could deduct from his taxes. I had never heard that. Why would that be considered a tax deduction? Also, we are in the process of filing a succession for his father's land so that it will be put in my husband's name. Can we also deduct those attorney's fees and court costs from our taxes? Thanks in advance!
Jessica

I'm back! lol I have a few more questions for you. I really appreciate all of your help. It's priceless.

First question is about IRA's. My husband and I are looking to purchase 2 IRA's this year, each for $5000....1 for him and 1 for myself. This will be the first time that either of us has purchased an IRA. So far, I know that we will have to purchase a Traditional IRA b/c our adjusted gross income with exceed the amount allowed by the Roth. Will our tax deduction be equal to the amount of our IRA's ($10,000), or will we only be able to take a portion off our tax liability? Also, is the $5000 an annual limit? Are we allowed to contribute up to $5000 each year to each IRA, and if so, does that mean that if we contribute $5000 a piece to our IRA's that we will be able to deduct another $10,000 from our tax liability in 2009 as well (assuming the limit doesn't change for 09)?
The second question concerns Texas real estate and taxes. We are in the process of purchasing about 4.5 acres in Waskom, TX with a little efficiency cottage. We are planning to live in Shreveport for the remainder of 08. I know that we will still have to file LA state taxes, but how will we treat the purchase of the land in Texas or will this even be a factor? This will be a "cash purchase", so we will not be using realtors and there won't be any closing costs or anything like that. We will continue to file homestead on our house in Shreveport and claim "AG" on the land in Waskom. Not really sure what all that entails, but I know that we will be purchasing at least 1 goat. lol We're not planning on selling the property in Shreveport anytime within the near future. Instead, we have plans to use a management company to rent it out for us. Hopefully within the next 6 months to a year we will be building a log home on the land in Waskom. Will we still be able to file homestead on the property in Shreveport even though we won't be living there? Just curious. I know that you aren't in real estate, but I thought that you might have some knowledge of this area since it does have an affect on taxes (property taxes as opposed to income taxes).
Last question. How do you treat income from the sale of timber? Is this included in the adjusted gross income figure? We have about 50-60 acres worth of timber on the 3 properties (Caddo, DeSoto, and Waskom) that we are planning to sell within the near future.

Thanks so much for your help!

Thanks for your quick response. Good to know. I guess we will be making the last payment by the end of the year instead of by Jan 15. =) We will miss out on a little bit of interest, but it's much better to be able to take the amount off our federal taxes.

Good evening, Ms. Morgan. Someone had posted that you could take a deduction off your federal taxes if you paid your state taxes early. Is this true, and if so, how does that work?

Hi Kathy,

Do you have a recommendation of a tax person in Portland Oregon? I thought you might know a seasoned one since you work with that firm.

Thanks,
Valerie
vdscott0305@msn.com
VSC 'O'

Ok, cool. These taxes are giving me such a headache! lol It's starting to look like we are definitely going to need someone to prepare our taxes for us to make sure that we take all the credits we are eligible for and since we have never itemized before. I'll probably be contacting you closer it gets to the end of the year...if you don't mind. Which branch of H&R Block do you work at?
P.S. We are anticipating an offer towards the end of the year on 40 acres in DeSoto since that is when the current lease expires. Do you see any advantage to waiting to receive the bonus payment in Jan 09 as opposed to Dec 08, or would it really matter?

Does that estimate figure include preparation of both federal and state, or is that just state?

Sorry, for the typo. Should have read "minimize".

Do you have any suggestions as to what we could do to minimoze our tax burden? Also, how much do you typically charge for your tax preparation services?