Page 18 THE EVERETT ADVOCATE – FRiDAy, FEbRuARy 23, 2024 BASKETBALL | FROM PAGE 15 Capital Gains Tax Exclusion And Irrevocable Trusts P eople often question if they transfer their principal residence into an irrevocable trust, will they still be entitled to the capital gains tax exclusion upon a subsequent sale, pursuant to Internal Revenue Code Section 121. The answer is yes. A married couple fi ling a joint income tax return has the right to exclude up to $500,000 of capital gain on the sale of their principal residence. The limit is $250,000 for a single taxpayer. The capital gain is simply the difference between the selling price and the cost basis of the home. The cost basis of the home is determined by adding the original purchase price, plus capital improvements over the years as well as expenses associated with selling the home such as a broker’s commission, tax stamps, legal fees, fi xing up expenses and any other expenses associated with the sale. In some cases, you also have the benefi t of using the date of death value as part of the cost basis if one of the spouses were to die. For example, if husband and wife purchased a home 25 years ago for $250,000 and the husband died 10 years ago when the home’s value was $350,000, upon a subsequent sale of the home by the wife, the cost basis is computed as follows (also assume capital improvements prior to husband’s death were $30,000 and selling expense were $25,000): • ½ of the $250,000 purchase price is allocated to wife, or $125,000. She only owned 50% of the home. • ½ of the fair market value of home at the time of husband’s death is $175,000 ($350,000 x ½, since the husband only had a 50% interest in the home at the time of his death). • ½ of the capital improvements attributed to wife, or $15,000. • Selling expenses of $25,000. In this example, the cost basis would be $340,000 ($125,000 + $175,000 + $15,000 + $25,000). If the home were sold for $575,000, the capital gain would be $235,000. The entire gain would be non-taxable. Since the husband passed comfortable, but I’m glad we got the win. (East Boston) coach Figueroa has his team playing sound.” Allsin Desruisseaux was the top scorer against the Jets with 19 points. Jaysaun Coggins was close behind with 16. Boyce then admitted they didn’t play that well against Sharon. “We didn’t come to play against Sharon,” said Boyce. “We were outplayed and outcoached. We must get better for the state tournament or it will end our season. But I’m confi dent in our guys to get it done.” Coggins and Tyson Chunn away, one half of the fair market value of the home at the time of his death enters into the calculation of the wife’s cost basis. This is referred to as the “stepup in cost basis”. For the $500,000 capital gains tax exclusion to apply, the married couple must have lived in the home for 2 out of the previous 5 years prior to the actual sale. Since the irrevocable income-only trust is designed to qualify under the “grantor-type” trust rules, the law treats the Settlors/Donors/Grantors of the trust as the owners for tax purposes. What makes the trust a grantor-type trust for capital gains tax purposes is the reserved right in the Settlors to direct where the trust principal and/or income of the trust can go during the Settlors’ lifetime. In accordance with Internal Revenue Code Section 674(a), this retained power is what makes the trust a grantor-type trust for capital gains tax purposes, thereby preserving the capital gains tax exclusion. This is referred to as a lifetime special power of appointment. Most often, a lifetime special power of appointment and a testamentary special power of appointment provision is included in an irrevocable Trust. The testamentary special power of appointment is designed to allow the Settlor the ability to change the ultimate benefi - ciary of the Trust by exercising that power of appointment via the Settlor’s Last Will and Testament being submitted to a probate court upon death. A power of appointment is essentially a power to redirect where the Trust principal will go. This also results in an incomplete gift for gift tax purposes. Joseph D. Cataldo is an estate planning/elder law attorney, Certifi ed Public Accountant, Certifi ed Financial Planner, AICPA Personal Financial Specialist and holds a masters degree in taxation. were the top two Everett scorers against Sharon with 19 and 10 points, respectively. Desruisseaux accounted for nine points. But Boyce was thrilled to see them immediately bounce back against Dedham. “There’s nothing like ending the regular season with a win, and then carrying it over to practice to get even better,” the coach said. Desruisseaux was the team’s high scorer against Dedham with 16 points. Coggins was next in line with 13 points. Jevaun Berberena and Chunn poured in 10 apiece to complete the double-digit scorers. Leison Ruiz and Cristian Vasquez were close behind with nine each. While Everett is ranked 37th , the Top 10 Division 1 teams are currently as follows: North High (18-0), Catholic Memorial (16-3), North Andover (16-4), Franklin (20-1), Central Catholic (13-6), Xaverian Brothers (13-6), Andover (13-4), Lowell (13-6), Lawrence (15-6) and Boston College High (11-7). Sa a Say nr y Senior Seni by Jim Miller Easy-to-Use Dental Care Products for Elderly Seniors Dear Savvy Senior, I have arthritis and hand tremors that aff ects my grip strength and makes brushing my teeth diffi cult. I’ve read that electric toothbrushes can help make the job easier. Can you make any recommendations for seniors? Arthritic Alice Dear Alice, For seniors who suff er from arthritis or have other hand weaknesses or tremors, an electric toothbrush is an often turned to solution for keeping your teeth clean. At the push of a button, an electric toothbrush will do everything but shake, rattle and roll to do the cleaning for you, and most come with a wide, slightly weighted handle and rubberized grip that make them easier and more comfortable to hold on to. How to Choose With dozens of diff erent electric toothbrushes on the market today, here are several points to consider to help you choose: Cost: The cost of electric toothbrushes will range from $10 for a model with replaceable AA batteries to more than $200 for some models with rechargeable lithium-ion batteries, multiple brushing modes, smartphone integrations, and other features. How much are you willing to spend? Brushing action: Brush heads tend to be either “spinning” (they rotate very fast in one direction, then the other, and bristles may pulsate in and out) or “sonic” (they vibrate side to side). Both methods are effective and a matter of personal preference. Electric versus batLIKE US ON FACEBOOK ADVOCATE NEWSPAPER FACEBOOK.COM/ ADVOCATE.NEWS.MA tery: Choose a brush with a built-in rechargeable battery and an electric charging station. They’re much more convenient and cost eff ective than toothbrushes that use replaceable batteries. Brushing timer: Since most dentists recommend brushing for two minutes (most adults average about 45 seconds), get an electric toothbrush with a built-in brushing timer – most have them. Some brushes will even split the two minutes onto four 30-second intervals and will notify you when it’s time to switch to a diff erent quadrant of your mouth. Extra features: Most higher-priced electric brushes come with extra features like cleaning modes, pressure sensors, a charge-level display and more. There are even “smart” toothbrushes that connect to a smartphone or tablet via Bluetooth to track brushing habits. What extra features do you want? Best Electric Toothbrushes According to Consumer Reports – an independent, nonprofi t product testing and research organization – the top electric toothbrushes for 2024 are the Oral-B iO 7 Series ($150); Oral B Genius X 10000 ($200); Bruush Electric Toothbrushes ($95); and the Philips Sonicare ProtectiveClean 6100 ($120). And the top rated lowcost electric toothbrush is the Brightline 86700 ($30). The New York Times Wirecutter, another popular product reviewing service, rates the Oral-B Pro 1000 ($40) as the best electric toothbrush followed by the Philips Sonicare 4100 ($40). Easier Flossing Tools If fl ossing has become challenging too, a good alternative to traditional string fl oss are fl oss picks. These are disposable plastic-handle tools that have fl oss threaded onto them, which makes them easier to hold and use. DenTek, Oral-B and others sell packages for a few dollars or check out the Listerine UltraClean Access Flosser, which comes with a toothbrush-like handle for a better reach. Some other fl ossing products to consider that are easy on the hands are the WaterPik Power Flosser ($15), which gently vibrates to dislodge embedded food particles between your teeth. Or consider a water fl osser, which use high-pressured pulsating water to remove food particles and plaque and will stimulate your gums in the process. WaterPik off ers a variety of water fl ossing products at prices ranging between $40 and $140, as does Oral Breeze, which off ers the Shower Breeze and Quick Breeze water fl ossers (around $40) that connects directly to your faucet or shower head. All of these dental care products can also be found at your local pharmacy or retailer that sells personal care items or online. Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book. nior ior
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