Category Archives: Announcements


In recognition of National Military Appreciation Month, IRS has recently updated its “Armed Forces Tax Guide” (Publication 3) which contains good information and important reminders of some tax benefits unique to members of the military, including:

~Combat pay – partly or totally tax free
~Moving expenses – deduction available for eligible items
~Tax return due date – service members stationed abroad
have until June 15 to file, and those in a combat zone
have even longer – typically up to 180 days after they
leave the combat zone

Check out Publication 3 for more.


Included on IRS’ famous annual “Dirty Dozen” tax scams list for 2015 is a warning about groups masquerading as charitable organizations to attract donations from unsuspecting contributors.

IRS goes on to advise potential charitable donors to:

~Be wary of charities with names that are similar to familiar or nationally known organizations. Check the IRS list ( for inclusion in the listing of legitimate charities.

~Not reveal personal financial information, such as your Social Security number to a charitable solicitor.

~Not to give or send cash. For security and tax record-keeping purposes, contribute by check or credit card or another way that provides documentation of the gift.


Don’t forget that certain small businesses which failed to timely file required retirement plan returns in recent years have only until June 2, 2015 to take advantage of special penalty relief offered last year via Revenue Procedure 2014-32.

The relief offered under this Revenue Procedure is only available to the plan administrator or plan sponsor of (1) certain small business (owner-spouse) plans, and plans of business partnerships, and (2) certain foreign plans.


U.S. citizens and resident aliens who have lived or worked abroad during some or all of 2014 may have a U.S. tax liability and filing requirement this year.

A filing requirement generally applies even if a taxpayer qualifies for tax benefits such as the foreign earned income exclusion or the foreign tax credit which nonetheless may reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return, the filing deadline for which is June 15, 2015 for U.S. citizens and resident aliens whose tax home and abode are outside the United States on the regular due date of their tax return.

To use this automatic two month extension, taxpayers must attach a statement to their return explaining their situation.

Check out IRS Publication 54 (“Tax Guide for U.S. Citizens and Resident Aliens Abroad”) for more info.

Jointly Owned Homes in Bankruptcy: What Happens?

housedividedA house divided against itself cannot stand.  

— Abraham Lincoln (assassinated 150 years ago yesterday)


Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon, 

My sister and I are joint owners of a home left to us by our parents. I live in the home and pay for the taxes and upkeep. There is no mortgage. My sister recently filed for Chapter 7 bankruptcy.  She and I are barely on speaking terms. 

Here’s the problem. I got a letter from the bankruptcy trustee telling me that if I want to keep the home, I have to buy my sister’s share of the home. If I don’t, the trustee will sell the house. The home is worth $200,000, and I don’t have $100,000 to fork over to the trustee. 

Can the trustee do this?  

Yours truly, 


Dear Jim,

Most likely the bankruptcy trustee will be able to sell your home if you can’t come up with the money. But once the home is sold, the trustee will turn over half of the proceeds to you.

(I am assuming that your parents did not create a legally binding directive permitting you to remain on the property. If they did, you should immediately get a lawyer to respond to the trustee.)

What Happens to Property in Bankruptcy

Your sister’s Chapter 7 bankruptcy filing automatically created a bankruptcy estate composed of all her assets. A bankruptcy trustee was appointed to administer the assets in her case. Like everyone filing for bankruptcy, she can keep certain property if it is “exempt.” However, homes in which you don’t live are usually not exempt. (Learn more about how Chapter 7 bankruptcy works and why the trustee sells property.)

If an item of property is not exempt, the trustee can sell it and use the proceeds to repay creditors. Even though your sister owns only half of the property, the equity in her half is a nice chunk of money that could go to her creditors.

When Can a Trustee Sell Co-Owned Property?

A trustee can sell a piece of property even if the debtor (your sister) doesn’t own the whole thing. But in order to do so, the trustee must meet the following criteria:

  • It’s not practical to divide up the property. A large tract of land might be subdivided to sell just the debtor’s share, but a single house and lot can’t be sawed in half to do that.
  • Selling the debtor’s undivided interest would bring in less money than selling the entire parcel. In your situation, it is unlikely that anyone else would buy your sister’s half of the property for what it is really worth, because the buyer would still have to deal with you.
  • The benefit to the bankruptcy estate from a sale of the entire property outweighs the detriment that will be faced by the other owners.
  • The property is not used for the production of energy.

In your situation, it’s extremely likely that the trustee will be able to sell the home. But keep in mind, once the trustee does so, he or she will have to give you half of the proceeds from the sale. So, if the sale nets $200,000, you will get $100,000 and the bankruptcy estate will get the other $100,000 (which will then be used to pay your sister’s creditors).

Coming Up With Money for the Home

If you have decent credit and you can afford to make payments on a $100,000 mortgage, consider getting a home loan and using the money to buy your sister’s share from the bankruptcy estate. In that way, you’ll become a 100% owner of the home.


Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer. 

Find Leon on Google+