Ask the CPA

You can, but try not doing your taxes under pressure

Christopher Hughes

Welcome back – 5 days until your taxes are due, and it appears Mother Earth is not quite ready for sunny spring days just yet. My peonies are starting to bloom. I have never had them before – what a spectacular sight. A nice reminder to appreciate the simple things as I continue to reset my throttle after so many years on the Dallas hamster wheel.

The Coin Toss:

Speaking of due dates, Monday, May 17, is it. You cannot put it off any longer. Well, – you could begin your tax return at 10:30 p.m. Monday night if you are one of those “I work better under pressure” people. Works for me as the cool kids say. But do yourself a favor – take your time. Research your questions. Ask for help. Go to If the men out there are anything like me, you would rather stick a sharp stick in your eye than ask for directions. And if the customers I talk to every day are any indication, a lot of taxpayers simply are not aware that there are so many deductions and credits available to regular folks like us. Too much detail to discuss here, but if you have kids, pay for childcare, earn less than a pretty darn high threshold, own a business or a farm, installed energy efficient fixtures, took an early distribution from your retirement to pay the bills…yeah – there is tax relief available. You might be pleasantly surprised.

Short Yardage:

Let us talk about the basic tax rules for inherited property for a moment. Not my favorite subject either, but it is one of life’s certainties. Generally speaking, (it sure seems to me that a bunch of lawyers wrote the legislation and the resulting tax code, but what do I know), these rules apply:

  • The most important number for an heir to know is the fair market value of the property at the time of passing.
  • For monetized assets such as the departed’s bank accounts, savings, CD’s, etc., it is the account balance on the date of passing. A $10,000 savings account balance is worth $10,000. As my kids say, uh, duh, Dad.
  • For market-based investments (think stocks, mutual funds) and real estate (house, farm, land), this value – called “basis” in tax-speak – is important to both know and have documentation for.
  • Your basis – again, the fair market value on the date of passing – is used to determine how much gain or loss to include in taxable income upon sale of the asset.

– Example 1: Avis inherits her father’s house. She immediately sells it for $100,000. In this case, the acceptable fair market value is the selling price of the house when Avis sold it, because it is reasonable to assume the value of the house did not materially change in one month. No gain or loss to report. The $100,000 is tax free.

– Example 2: Mutt inherits a brokerage account from his mother. It is invested in a mutual fund with a market value of $25,000 on the date of death. Mutt holds onto it for a few years, then cashes out and receives $35,000. The tax law says he has proceeds of $35k / cost or basis of $25k / and the result is a taxable gain of $10,000.

Hail Mary TD:

I want you to meet another one of my neighbor ladies. We have become buddies with shared interests in dogs and gardening. Well, I build stuff and she is the Chief Plant Officer. She is 100% Italian, a 2nd generation Italian American daughter of immigrants from the old country. She makes ridiculously delicious shrimp pasta primavera with fresh veggies and custard pie, the recipes for which must come from Italy. Did I mention I really like this neighborhood?

We have had some fascinating discussions on her front porch, or in my front yard. One of my best friends in college was Italian, so I am somewhat familiar with the culture. Family, food, drink, and celebrations. A real, visceral zest for life. One evening, as we watched traffic go by and the dogs sniff each other (she has a westie named Albert IV) she told me a story that really knocked me back a bit.

As a young girl, she grew up in a tight-knit neighborhood in Connecticut. As she put it, “I was raised in an Italian community where everyone was related to everyone. At 3:30 in the afternoon, Mama sent you down to the bakery for bread, and to the butcher to get the meat for the meatballs.” Her father was the barber. She spoke of the neighborhood women who each season would rotate hosting a canning day. Beans, tomatoes, whatever was in season (I remember as a kid sneaking down into my great-grandma’s cellar to sample the sweet pickle juice right from the jar. I loved it). The lady of the house did no canning. She oversaw the children and prepared meals for the canning crew. The children knew better than to complain or say, “I’m bored.”

The story ended on a sobering note. As a young girl, one evening, she and a girlfriend were invited to a party in a different part of town, a Jewish boy’s house. The mother opened the door, looked the girls over, and asked my neighbor “Are you the barber’s daughter?” Neighbor answered “yes.” Boy’s mother: “You are not welcome here,” and closed the door in the girls’ faces. It took me a while to process that.

My sixth grade year, we moved to Mobile, Ala. That happened to be the year forced busing was implemented. I will never forget the sight of a long line of Blue Bird buses pulling into the school lot from downtown every morning. Riots. Clubs in lockers. Fights. Not so fond memories.

I said in my first column I would not write about politics, and this is by no means intended to be an opinion, statement about prejudice, or my turn on the soapbox. That said, I thought my neighbor’s story was both informative, and a bit of a reality check about our shared cultural history. Everybody does it different, everybody has an opinion. As it should be. God Bless America.

Thanks for reading. Please address any questions to

Go Chiefs,

Christopher Hughes, CPA

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.

Christopher Hughes, CPA

Chris Hughes, a proud Webb City High School grad, is back home after 30 years in business in the Dallas, Texas, area. He invites Sentinel readers to send any questions about income taxes, keeping the books, the IRS, or how ’bout them Chiefs and Cardinals. Questions should not include personal financial information. Send questions to

Verified by MonsterInsights