Modify decree after 9 years?

[frogtexas]

I am going to respectfully disagree. The debt is related to a specific piece of property, not an automobile or other piece of personal property. I only received rents in 2007. It is no different than buying out a partner in a business. In fact, she was a partner. I paid interest to finalize the purchase of remaining interest in the property. Not to mention avoiding a conflict and having to share the income. I think I am entitled to deduct the interest, but will consult with a professional tax advisor.

One other tax question, if I do decide to take this position and deduct the interest, do you think that I could be subject to penalties?

Thanks,

 

[LdiJ]

I am going to respectfully disagree. The debt is related to a specific piece of property, not an automobile or other piece of personal property. I only received rents in 2007. It is no different than buying out a partner in a business. In fact, she was a partner. I paid interest to finalize the purchase of remaining interest in the property. Not to mention avoiding a conflict and having to share the income. I think I am entitled to deduct the interest, but will consult with a professional tax advisor.

One other tax question, if I do decide to take this position and deduct the interest, do you think that I could be subject to penalties?

Thanks,

Since I AM a professional tax advisor, I sincerely doubt that you will get a different answer from another professional, but please do consult another.

In addition, heck yes there would be penalties, since the IRS's position is crystal clear that there are no tax deductions allowed related to marital property settlements, unless those specific tax deductions already exist for other reasons.

 

[frogtexas]

OK, fair enough. It would probably only save me $300 in taxes anyway - not worth it.

Does the ex have to report and pay taxes on the interest that I pay her? Should I send her a 1099-int?

Back to the main matter at hand, I think I will offer the ex a lump sum payment with interest accruing from the date that we agree to the modification. Probably 12 to 16 months out. With periodic payments being optional and interest computed on the outstanding balance daily. This way I could make early payments and reduce the interest if I wanted to.

I will wait until Monday when I meet with an experty attorney in Texas Family Law. But does this seem unreasonable?

Thanks,

 

[mistoffolees]

OK, fair enough. It would probably only save me $300 in taxes anyway - not worth it.

Does the ex have to report and pay taxes on the interest that I pay her? Should I send her a 1099-int?

Back to the main matter at hand, I think I will offer the ex a lump sum payment with interest accruing from the date that we agree to the modification. Probably 12 to 16 months out. With periodic payments being optional and interest computed on the outstanding balance daily. This way I could make early payments and reduce the interest if I wanted to.

I will wait until Monday when I meet with an experty attorney in Texas Family Law. But does this seem unreasonable?

Thanks,

That doesn't seem unreasonable, although a lot will depend on the lump sum.

Remember that you don't really have much to say about the $15 K since that's ordered by the court. So if you offer her $15 K plus interest beginning tomorrow, she may not see it as advantageous. Personally, I don't think she's entitled to more, but she obviously does - and there's an outside chance that she can convince a judge of it.

 

[LdiJ]

OK, fair enough. It would probably only save me $300 in taxes anyway - not worth it.

Does the ex have to report and pay taxes on the interest that I pay her? Should I send her a 1099-int?

Back to the main matter at hand, I think I will offer the ex a lump sum payment with interest accruing from the date that we agree to the modification. Probably 12 to 16 months out. With periodic payments being optional and interest computed on the outstanding balance daily. This way I could make early payments and reduce the interest if I wanted to.

I will wait until Monday when I meet with an experty attorney in Texas Family Law. But does this seem unreasonable?

Thanks,

No, your ex doesn't have to pay tax on the interest either, again because its a marital property settlement. It would be completely improper for you to send her a form 1099 INT.

I can't say whether or not your offer is reasonable. I am not privy to your financial situation. However, since you stated previously that you wanted her to go a at least a year without getting a payment from you, I suspect that you could probably pay it off sooner than that, and be permanently done with her.