Jewish World Review August 3, 1999 /21 Av 5759
DEAR O.L.: Almost any commercial bank should be able to help you. Simply put, the person who mortgages the house receives a monthly check for a portion of the value of the house. When they pass away, the house is then sold to satisfy the obligation. In the case of a 93-year-old, the checks could be substantial and still actuarially not put a strain on the collateral. This would allow your aunt to stay where she is most comfortable until the end of her days. For someone such as your aunt, this makes a great deal of sense.
DEAR BRUCE: Before the capital-gains tax was revised, the seller of a home could deduct the expenses for improvements made on the property against any profits made. However, now the profit from the sale is tax-free up to $250,000. Is it still legitimate to claim these deductions? -- K.A. Topeka, Kan.
DEAR K.A.: Unless your profit exceeds $250,000 per person ($500,000 for a married couple), expenses are not relevant. In the very few circumstances where your profit exceeds $500,000, before the sale is consummated, show the numbers to your attorney. There may be a creative way to set the sale up where your tax impact would be less. Very few homes are sold showing a $500,000 profit.
DEAR BRUCE: I started a small retail computer store a couple of years ago. The only job I had up until that time was as a manager at an HMO. My question concerns inventory. I have lots of things that I will never sell -- parts like mother boards and software -- because the technology has zoomed past them. What is the best thing to do with these items? I am of the opinion that they are over-valued in my inventory, because no one will pay what they were purchased for originally. Should I auction them off, use the parts to build computers to donate to non-profits, use the parts in my business or keep them forever? What can you tell me? -- C.B. Barrigada, Guam
DEAR C.B.: This is a question more properly asked of your accountant. Not taking advantage of the real depreciation -- even down to $0 -- seems to me a mistake. That is an accounting question rather than a practical question. In a business like yours, I suspect this is something you will deal with on a regular basis, due to the rapid acceleration of technology. It is also a wake-up call. You might want to consider keeping as little inventory as you can possibly get away with, particularly in a world where you can get overnight delivery, or two-day at best. While it is more expensive to ship that way, I have a strong suspicion that over the long haul, it would be a lot cheaper than markdowns on surplus