Jewish World Review Dec. 15, 1999 /6 Teves, 5760
Small-claims court no panacea
DEAR BRUCE: You have often mentioned small-claims court. I won a small-claims decision against our contractor, but they appealed. The next court ruled that I had no case. I then received a court summons stating that I was being sued for the contractor's attorney's costs under the claim that my small claim was a "frivolous" lawsuit. The small-claims court is useful, but in my case I not only lost what the contractor's brochure promised, but the filing cost and many hours of court time as well. -- P.H., via e-mail
DEAR P.H.: I have said many times that small-claims court is not the panacea that many folks want to believe it is. A very common defense is to ask that the matter be moved up to a higher court. In most cases, the defendant has the right to do that. The filing of a countersuit on frivolous claims is not an ordinary attack, but one they have a right to use. Who ever said that life was even or just?
DEAR BRUCE: Let's say I have 100 shares of XYZ corporation at $50 a share. A year later, the price is $100 a share. If I then transfer my 100 shares to my son and he sells them for $110 a month later, what profit is he paying federal income tax on? -- J.O., Pa.
DEAR J.O.: The cost price is still $50 per share. Therefore, he would pay up to 20 percent on the $60 per share profit. If your son has very little income, it is possible he will pay a lower capital-gains tax, with the maximum being 20 percent.
DEAR BRUCE: We are in our 40s and have over $100,000 in cash from the sale of our home. We are not sure what to do with this money, as we have never invested before. We have seriously thought of paying off a $160,000 mortgage at 7 percent and then taking out a loan to build a duplex. Since we are general contractors, we can get by with minimal subcontracting. Is this a good plan? -- R.W., Palmer, Alaska
DEAR R.W.: I don't think so. Why would you want to pay off this 7-percent loan and then go and borrow more money against the building? Most likely, you will have to pay origination fees, as well as a higher rate of interest. If you are going to build duplexes, I have no problem with that, as long as you realize that you are building and then buying a part-time job. From the renter's point of view, duplexes or even triplexes are a much better investment than single-family
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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