Life Changes and their Effects on You
Steve PerryLife’s inevitable changes—such as divorce, death, or business closures—can significantly impact ownership and tax responsibilities, particularly when assets like stocks, bonds, or real estate are jointly held. These transitions often bring emotional stress and potential financial complications. For example, when Mr. and Mrs. Jones divorced, Mrs. Jones retained joint-owned bonds but failed to update the account ownership. Later, when the bonds were sold, the IRS reported the sale under Mr. Jones’s name, creating unintended tax consequences. Poor recordkeeping worsened the situation, emphasizing the need to retain tax and investment documentation—generally from the date of purchase until five years after sale. Businesses must be even more diligent, especially with depreciable assets and final tax returns after closure. Digitizing records or storing them securely is highly recommended. Another vital lesson is updating all account ownerships and deeds after a relationship ends, whether personal or professional. In business dissolutions, the complexity of asset ownership and tax implications makes professional help essential. Attempting to manage these transitions alone can lead to costly errors. Working with a knowledgeable tax advisor can ensure a smoother, more accurate resolution. Books Taxes & More is available to assist during these life changes, offering experienced guidance and support when it matters most.