FAQ

Q.	My father just entered a nursing home and my mother remains at home. She intends to keep the home, but if she decides to sell it in the future, will she have to pay capital gains?
A.	It depends on when the sale occurs and how much she realizes from the sale. If the sale occurs within four (4) years from when your father entered the nursing home (assuming he remains there and does not return to reside in the home in interim), your mother would not have any capital gains tax to pay unless she realizes more than $500,000.00 from the sale. If the sale occurs more than four (4) years from your father’s entry in the nursing home, your mother would have a capital gains tax liability for any proceeds above $250,000.00. For further details, consult with your personal tax advisor and check our Library of Interest section of the website (“Capital Gains Exclusion on Sale of Residence”).
Q.	Are there any circumstances under which a MediCal beneficiary’s estate will not be subjected to liability for a state recovery claim?
A.	Yes, in addition to the many methods by which the state’s recovery claim may be avoided by pre-death planning, if a MediCal beneficiary dies and is survived by a blind or permanently and totally disabled child, the state’s claim is completely barred. (This results from a federal court decision in Dalzin v Belshe, a 1998 case; and may not be applicable in jurisdictions other than California).
Q.	How long should I keep my tax records?
A.	You should consult first with your personal tax advisor in making a decision in this regard, since your personal situation might require a different result. The least amount of time generally advised is three (3) years. We have provided a description and chart for various types of records. See our Library of Interest section of the website (“How Long Should you Keep Tax Records).
Q.	My father and mother used the capital gains exclusion many years ago when they sold their residence. Afterwards, and after my mother died, my father purchased a new home, which has appreciated in value significantly. He is worried about what will happen if he needs to sell the house. What will be the tax consequences?
A.	This situation involves several aspects of the principal residence capital gains rules. For a detailed explanation of how this complicated set of rules apply, see our Library of Interest section of the website (“Capital Gains Exclusion on Sale of Residence”). First, the former set of rules have been replaced. Formerly, the exclusion could only be used once-in-a-lifetime, by a taxpayer 55 years or older; neither of these limitations currently apply. Thus, your father may still be able to exclude the gain from being taxable. So long as your father has owned and resided in the residence for at least two years, he should be able to avoid paying capital gains on up to $250,000 in gain.
Q.	I think I may be entitled to pension benefits from a former employer. Is there a way for me to find out?
A.	Yes, and you are not alone in feeling this way. As many as 2,000 people in California and 10,000 nationally are owed pension benefits. You have several places to check - 1) the Pension Benefit Guaranty Corporation (PBGC Communications and Public Affairs Dept., 1200 K St. NW, Washington DC 20005-4026, www.pbgc.gov). The PBGC has a guide - “Finding a Lost Pension.” 2) Pension Rights Project in California, (800) 474-1116.