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John P Fazzio III
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John Fazzio’s Answers

691 total


  • What tax will my son have when he inherits my house if he's lived in it for years & doesn't sell right away? Explain the step up

    As a senior citizen, I can no longer afford the cost of the house I've lived in for 40+ years. It has a fair market value of $450k. I'm selling a 2nd home & will apply my profit of $100k to the $400k equity loan on this house. My loan will then be...

    John’s Answer

    This is a comprenhesive question and has many variables that cannot all be answered in an Avvo response.

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  • Property was reassessed after purchase. Who is liable for prior years tax due?

    Few months ago, I purchased residential property with 3 units in it. I just received RE Tax bill which was tripled of what it was when I bought this property. It turned out that prior owner did not let assessors come in to examine the property and...

    John’s Answer

    You can file a property tax appeal.

    It is not clear who will be responsible for the retro taxes, but you will likely have to pay them if you want to avoid the state filing a property tax lien for unpaid property taxes.

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  • I have a tax warrant. Will filing for bankruptcy discharge it? Do I have any recourse to sue my former partner?

    I went into business with the wrong person, and he continued to use my tax ID after I left the partnership. (I didn't know this until the tax warrant notice showed up in my mailbox.) I have not done any work with the former business partner for o...

    John’s Answer

    It is likely that filing a Bankruptcy will not discharge the debt. In general, you can sue your partner to recover damages that you can prove you suffered. It is difficult to answer your question without more information.

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  • My divorce has final stipulation that my ex husband is denied right to claim my kids on his taxes

    when my kids filed their financial aid papers for college they always ask if they are claimed on anyone's taxes,my kids always say no cause he has no right to do so and I don't work,but it came out this year they were claimed which affected their ...

    John’s Answer

    You will likely need to hire a family law attorney for this issue.

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  • My divorce has final stipulation that my ex husband is denied right to claim my kids on his taxes

    when my kids filed their financial aid papers for college they always ask if they are claimed on anyone's taxes,my kids always say no cause he has no right to do so and I don't work,but it came out this year they were claimed which affected their ...

    John’s Answer

    You will likely need to hire a family law attorney for this issue.

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  • I received a 5043 letter from the IRS and need advise ASAP

    I received a 5043 letter from the IRS. They are basically asking about my credit card charges which was about 80% of my reported sales and according to them it should have been more like 20%. They probably think that I'm hiding sales….. I thought ...

    John’s Answer

    You are probably going to need an Attorney. We cannot offer you Legal Advice, but I can give you some general information:

    1. Letter 5043 means that what you reported on your tax return did not match what was reported to the IRS
    2. The IRS can make a change and assess you a hefty penalty if you do nothing
    3. Generally, if you disagree with the 1099-K, you will have to work it out with the payment processor and have them amend the 1099-K.

    Based on your question, I highly recommend you hire an attorney.

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  • Offer in compromise for business state tax debt

    Is it possible to settle a state tax debt for less than the amount due when the state has given it to a collections agency? Also, the state has filed a tax warrant against the business

    John’s Answer

    NYS can certainly entertain an offer, but it really depends on what type of tax is owed. If it is a Sales or Withholding Tax liability, they will likely not accept an offer.

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  • Tax Court decision $100,00 and final. How to settle? Does Court enforce? Do I file IOC? Does that stay the Court?

    Tax Court; $100,000; issue: business expenses with records lost to Katrina. Out of MS. For 2006-2008; final today. Help. Also an issue on traveling consults but succeeded on the point. Need to settle; save home and stock; ready for an OIC ...

    John’s Answer

    When the tax court issues it's determination, your case gets billed and sent for collection.

    There are many variables that determine the possible settlements. I cannot tell you what you qualify for without seeing all of your financials, but here is a general overview:

    1. Full Payment Plan: The IRS can generally accept a payment play over 6 years if it full pays the liability. In your case, you are looking at paying around $1,700 per month.

    2. Partial Pay Installment Plan: If your income does not support a full-pay payment plan, you will be offered an installment agreement that allows you to pay less than the total liability until the statute of limitations on collections expires, generally in 10 years.

    3. Currently-not-Collectible - If you have insufficient income and assets, the IRS can agree to sieze collections for a period of time.

    4. The OIC will settle the debt with the IRS.

    Filing the OIC before the judgement is entered likely will not help you.

    Filing the OIC will stay the statute on collections and may not be the best choice without weighing your finances and trying to work with the IRS first.

    Please contact me if I can assist you further.

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  • Will I have to pay capital gains tax on the sale of my vacation home if I still owe on it?

    I bought my Florida vacation home for $150,000 cash 13 years ago. When the real estate market spiked, its value went up a lot. I took out an equity loan & still owe $115,000 on that loan. I can now sell the property for $240,000. It looks like I w...

    John’s Answer

    You will have to pay capital gains taxes on the "net profit" of the sale of the property. You will have to figure out your basis in the home. In your case, I will assume you reported the income from the property on your schedule E.

    The income subject to the capital gains tax will be: The selling price - Purchase Price + Depreciation deducted on the schedule E over the years - Capitalized improvements.

    To defer the capital gains tax, consider a 1031 exchange.

    Please let me know if I can assist further in this matter.

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  • Does a Tax Lien from the IRS or state protect me from other creditors?

    I owe a large amount of money to the IRS, around $20k. I am on an installment agreement with both the IRS and State of Colorado. I was told that I would have a tax lien filed against me because of the amount I owe. I also have several credit cards...

    John’s Answer

    Mr. Berkus has it right. I'm not a Colorado attorney, but I believe creditors there are limited to a 25% garnishment. Thus, if the IRS garnishes you and takes 25% of your disposable income, they would be paid first. Compare that with an Installment Payment Plan. That plan is a voluntary settlement, not an enforced collection under state law. The tax lien is there to protect IRS if you stop paying. But, the other creditors can still garnish 25% if you are not being garnished by the IRS. The government tax lien takes priority in securing assets, like your home, not in the collection process. Hope this helps.

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