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Posted by scott s. on January 21, 2008, 5:36 pm
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> "Rick Blaine"wrote:
>
>> Deductability of expenses/taxes generally falls on the person who
>> paid them.
>> Since I have a HUD-1 that shows that I (the seller) paid those taxes,
>> it would
>> follow that if they are deductable, I would be the person to take the
>> deduction.
>
> The identity of the payer was missing from the OP.
>
>> It's a somewhat unusual situation as most states have sales taxes. A
>> few, including this one, have a goods & services tax, which is much
>> more broadly
>> applied.
>
> Also new information. In the OP, it was a "gross receipts" tax, which
> is a form of income tax, not sales tax.
>
>> I suspect it will only be deductible if I opt for the sales tax
>> deduction instead of the income tax deduction.
>
> Correct. Plus it must be a "general" tax, as opposed to the transfer
> taxes that you (or the buyer) may also have paid. Is there a general
> rate for sales of goods and services? That would be the amount that
> would be deductible as sales tax.
>
> If you don't take the sales tax deduction for the year in question,
> the tax paid would add to your basis.
>
My wife is a commissions-based real estate agent in such a state
(Hawaii). It has been the custom in the past that the Gross Excise
Tax (which she is liable for, not seller) is included in the
customary 6% commission. There has been an effort by the company
(and no doubt others) to separately list the Gross Excise Tax, as
is permitted by Hi DoTax for retail transactions, resulting in
a commission (in this case the 3% due to each broker/agent) plus
the 4.5 % (actually 4.71 because it's inclusive) GET. It's really
just a way to increase commissions. There is a provision in the
IRC for itemizers who elect to deduct state sales tax to count
the GET when it is separately stated on a sales slip or invoice.
>From the standpoint of seller, I think it is just included in
the costs of selling. For the buyer, it isn't clear to me (in
some cases buyer signs a representation contract agreeing to
pay the GET to buyer's agent). I suspect maybe the buyer could
include it within the "sales tax" paid for sked A.
scott s.
.
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