Dr. Friday Tax & Financial Firm, Inc.

The Dr. Friday Radio Show is a weekly radio show broadcast live on 99.7/WWTN every Saturday from 2PM-3PM CST. If you are outside of the listening area of the radio station (Nashville, TN), you can also download the iHeart App on your smartphone and search WWTN to hear the LIVE show.You can also listen to past episodes on the Dr. Friday Tax and Financial Firm website (https://drfriday.com), on Apple Podcasts, Google Play and many more.

Dr. Friday Tax & Financial Firm, Inc. is a business podcast hosted by Dr. Friday Tax & Financial Firm, Inc., with 200 episodes on record and a Required Pod Score of 80. PitchCentric scores this show on Booking Probability, Listen Score, and live audience signals refreshed every 24 hours.

Dr. Friday Tax & Financial Firm, Inc. hosts Dr. Friday Tax & Financial Firm, Inc., a business show with 200 episodes published.

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  Dr. Friday Tax & Financial Firm, Inc.

  Dr. Friday Radio Show – June 13, 2026

  Jun 16, 202647 min

  Dr. Friday uses this final live radio broadcast to focus on tax planning before major life events, especially selling property, inheriting real estate, transferring family homes, and updating estate documents. She explains why basis, appraisals, trusts, POD designations, and powers of attorney matter before a family is forced to sort things out after the fact. The episode also includes caller questions on inherited property and prize winnings, plus reminders about marketplace insurance, Medicare IRMA, IRS identity checks, and business recordkeeping. Summary Points Home sale basis: Dr. Friday reviews the primary residence exclusion, explains that the old rollover rule is gone, and reminds homeowners to document major improvements that increase basis. Inherited property: She explains step-up in basis, why the date-of-death value matters, and why appraisals can be stronger support than rough comparable sales after repairs are made. Final live radio show: Dr. Friday tells listeners the show is moving off 99.7 and toward DrFriday.com, where she plans to keep answering questions and sharing tax education. Family property transfers: A caller asks about homes titled in her parents’ names, a long-running purchase arrangement, quitclaiming property, and how inherited homes differ from property she has been buying. Estate documents and gifting: The episode covers trusts, wills, POD designations, powers of attorney, probate risk, and situations where beneficiaries used gifts after taxes to honor a parent’s wishes. Prize taxes and records: Dr. Friday discusses lottery withholding, St. Jude home raffle tax questions, 1095-A marketplace repayment surprises, Medicare IRMA, IRS identity checks, mileage logs, receipts, and home-office rules. Episode FAQ Q: Do I owe capital gains tax just because I inherit real estate? A: Dr. Friday explains that inherited property generally receives a stepped-up basis, so capital gains usually become an issue when it is sold for more than its date-of-death value. Q: Do repairs after inheriting a home increase the inherited value? A: She says the inherited value is based on the condition and value at death, so later improvements should be tracked separately and the original value should be well documented. Q: Why should estate documents and POD designations be updated? A: Dr. Friday explains that courts and financial institutions follow the paperwork, so outdated documents can leave beneficiaries trying to fix things later with gifts and tax filings. Transcript 00:01 No, no, no. She’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the how-to girl. It’s the Doctor Friday show. If you have a question, Question for Dr. Friday, call her now. 737-WWTN. That’s 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday. Dr. Friday and the doctor is in the house. We are here today to take calls talking about taxes, talking about maybe making some planning. You know, taxes are great, but normally we’re doing taxes after everything’s already happened. So if you’re really thinking about taxes, you’re probably thinking about 2026. You need to put some plans into play to say, how am I going to pay less in taxes? Can I pay less? Is it better to pay more today and pay less later? If I sell this, if I inherit this, if I convert this, will any or all of these be good or bad things? Again, I don’t really have the perfect answer for you because I don’t know what you’re going to buy, sell, or trade. But if those are things that you’re thinking about, then those are the kinds of things you do need. 01:18 to make sure that you’re accounting for. I’ve had more than one person come in and they have sold their primary home or they’ve sold a piece of real estate Or even inherited property. And they’re like, well, I I shouldn’t owe any taxes, but you know, just because you people tell you you don’t owe taxes doesn’t always mean you don’t owe taxes. So, I mean, you can sell your primary home, but if you sell it for $800,000, you purchased it for $200,000 and you’re a single individual. There is a one-time exclusion of 250,000. Well, 200 plus 250 does not equal 800,000 So you would end up with a capital gain situation. And for any of you are sitting there thinking, but wait, as long as I spend the money within the next two years or put the money back into another piece of real estate, I don’t have to pay the taxes. That tax law died a long time ago. That was something that was actually back in the early 2000s that has not been in existence for a long time. Tax law now is if you sell your primary home You can take your original cost basis and that would include the land and some people built their own homes. And then any major improvements that would have increased the value of the home. 02:36 For example, an extension, or if you’re on piece of property and you built some barns or um or you gutted the kitchen so you purchased the house back in the 80s and and then you redid the kitchen um now that would be a better upgrade so therefore the house would be worth more money so Those are the kinds of things. So also for all of you that are listening, you might want to think about if you’re actually living in a house that you own or purchasing along with the bank for most of us. You might want to document those things, right? Because I have people that’s lived in their homes for 20, 30 years. And let’s be on it. You’re not going to remember everything you’ve ever done to increase the value of your property. You fenced in the properties, you put in a swimming pool, you You know, you you did different things. You took a gravel driveway and now it’s an asphalt driveway. When you purchased it was gravel, now it’s asphalt. That increases the value of the home. So these are the kinds of things you need to document as well. Now, as long as you’re living and that’s what you’re doing as far as selling your property, that’s fine. Now, if you pass away and you leave that real estate. to um whoever your beneficiaries are, they’re going to get what’s called a step up in basis. But one of the things I’ve noticed lately is A number of clients, they inherit the property. 03:56 And keep in mind, it’s what the value of the property was at the time of inheritance, is what your value is. Not after you’ve put $50,000 into that home and increased the value by another $150,000. Because when mom was living in the house, for example, um, she was older, she wasn’t able to maintain the property the way it should be. A lot of things went bad or got old or even, you know, had holes in the floor and bad doors and all those things. And you said, hey, you know what, if we go through and we put a little money in this house, we could get a lot more money out. Great idea. But keep in mind, the value of the home was not the value after you improved it after the passing of that individual. The value that you get of the home was before that happened. So this is one of the big things the IRS has really come down on is a lot of times people are taking comps, but the problem is the IRS is finding that many of the homes when people have lived in them for 30 years have not been maintained like the other comps you’re pulling. So it’s very important to really start getting into appraisal so that the appraisal that comes in you can justify your basis, not just a comp. 05:14 Now, if there’s somebody that you know that can do a uh appraisal based on, you know, the roof is 30 years old, the house is fifty years old, uh, you know, all these different things that come into play because a lot of times people will say, well, I matched it up to another three-bedroom, five bath that’s sold right around the time of the passing And it’s roughly the same square footage. But was it built at the same time? Was it actually had the same kind of maintenance? Because again, as people get older, it is something that, you know, that the house can get away from them So, um, if you are an individual that is uh going to inherit or have inherited um a property It’s a great idea, don’t get me wrong, fix it up and then sell it and put the money, you know, double your investment, which many times can be done with some really decent improvements But um otherwise sell the property before you fix it up and then you don’t have to worry about capital gains. That’s your two options. But uh don’t fix it up and think that Al after you fix it up, now you get 100% tax write-off Because the tax law is coming back and saying, nope, we found out a lot of people are trying to do this. And so they are, you know watching and looking. 06:26 And again, when we file our taxes, it’s not like we want to sit there and say, what can we get away with? We want to file taxes that we can put to bed And that, especially if it’s a an estate tax return, because as a beneficiary or the executor especially, you have legal obligations to make sure the information is to the best of your ability correct But either way, you want to make sure that all of that information is being put together and that it’s being documented and that you’re able to submit that along with everything else to the beneficiaries so that they know how much money they’re going to end up being taxed because everyone always thinks all inheritance is zero, which a good chunk is, which is really nice. If you think about the step up and basis you get, that is about one of the best tax laws that’s on the books right now. Um versus, you know, like an IRA that you inherit and then you only have 10 years to basically empty it. Um, and that’s that’s not an easy thing to do. There are some games people will play, part of it going into charity, charitable remaining trust, different things like that where you can um donate a big chunk of it, but it doesn’t mean that you’re going to put all that money in your pocket and pay no tax. All right, so if you want to join the show you can six one five seven three seven nine nine eight six six one five 737-9986. 07:50 I will tell you guys, this is my last live show. There’ll be no more uh Dr. Friday shows on 99. 7 unless I’m a guest on somebody’s show Um, the this is gonna be we’re gonna be moving fully to the internet, trying to, you know, keep the subjects going, have it a little bit more um ability to zoom in on just the topics that we want to talk about, taking your guys’ phone calls and then being able to really target those conversations. um and not worry about the time or the uh the the rules that we have per se but mainly um I’ve loved doing my radio show for the last I don’t know I was trying to figure out how long I think it’s been at least 15 years maybe more And um it’s been a pleasure having all of you guys listen. Many of you guys are my clients, so I’ll still be seeing and talking to you guys all the time. And if you have questions, you’ll be able to go right to the internet And we’ll be able to do them just as we’ve always done here on the radio and give you the one-on-one that you need. But just so you know, it’s going to be at drfriday.com. That is where you’ll want to sign up. We’ll be getting some sign-ups so that way we can notify you when we do have live blogs going and and just different things like that. So hopefully you guys will continue to follow me. 09:09 I know it’s been easier on the radio, but You know, um, with the current technology and everything, it’s just gonna be time for us to try something new, you know. You gotta every once in a while you can’t get stuck in a rut and just have it go that direction. And I have really enjoyed doing the radio. It’s it’s taught me a lot and you guys have taught me a lot. So I really hope that we’ll be able to continue this into um the next phase that we’re all going to go through, which is going to be the internet. So we’ll see how that works. But you can always go to drfriday.com. Just remember that and you can follow us and we’ll be able to get you linked into all of the different ways of trying to help you um do things or you know I want I love answering your questions and I I’ve always enjoyed the ability to help help you guys hopefully before mistakes are made to give you the ability to think or ask questions or do something like that. So whatever you have there. All right, let’s hit Trish before we have to hit our break, if you don’t mind. Hey Trisha, what’s going on Um yeah, I have a question. Um if I inherit, like I we’re getting ready to do the real flash trust for my parents and um they have a home, my brother has a home and apartment and I have one as well Um, but they’re all in my mom and dad’s name. 10:24 Um scary, I know. But I’ve been paying on my nose for thirty seven years They to turn it over into my name, I don’t know it am I gonna have to pay capital gains tax on that when I they turn it over into my name? Like well I’m I mean I’m not sure. Yeah. Exactly. Okay, so basically, I mean you’ve had um a le uh a land purchase from you to your parents, and I d I doubt that they’re reporting that as income and that you’re purchasing it. You know, I mean I don’t know. Maybe they have. Um if it’s been been reported that way, then it’s no different than me purchasing my house. Your parents are just your mortgage company And um so they just need to uh quick claim the title to you and they can keep a lien, but maybe I mean you’re at the point where you’ve pretty much paid off uh the property probably. So at this point They will quickly and you should have nothing because you’ve paid the full price or whatever agreed upon price you’ve paid now maybe worth a lot more today than it was when you purchased it from your parents back, I think you said 30 years ago. Um So whatever that time period. So basically whatever you paid for it, they need to quick claim it to you for. So that way then, yes, when you sell it, if you ever sell it, whatever the plan is. 11:41 Um, you know, you’ll be able to um sell it just like all orestos. There would be the two hundred fifty thousand or five hundred if you’re married uh exclusion and then you can sell. But are they all tied? I I mean do you have your own plat? Like are each of you guys on your own property? As far as yeah, can you two of the houses are on yeah, two of the houses are on one property and the other was mine is on a separate piece across the street. But my my fear is I mean I inherit the homes because I’m gonna inherit two of ’em Am I gonna have to pay capital gains of like 37%? Like a million dollars? No, because uh when you inherit them, you’re gonna get the value of what they’re worth now, not what they were worth The house that you’ve been purchasing, that’s different because that’s been a deal between you and your parents. But the ones that are just inheritance, inheritance gets to step up in basis. So you will have nothing as far as capital gains unless you sell them for more than they were worth at the time of death. Okay. I don’t plan on selling them, so I won’t have to take capital gains on them if I keep it. No. Exactly. No, you will not. Thank you. No problem. That’s a I’m glad I can give you a little relief. I literally can’t. 12:55 All right. Thank you. Thank you. All right, we’re gonna take a quick break. 12:59 We’ll be right back with the Doctor Friday show. 13:07 Alrighty, we’re back with the Dr. Friday show. Sorry about that. I couldn’t tell when it comes in. Um if you want to join the show, you can. 615-737-9986-615 737-9986 number here in the studio. We’re talking about my favorite subject, which is taxes. It’s gonna affect every single one of us. It even affects us as you can see Even when we’re not here, the people we leave behind are going to end up with some tax issues depending on how you set up your estate. And sometimes you really have very little option unless you want to pay the taxes before you pass away, there is uh always going to most likely be a part of our our inheritance that will end up partly taxable But if it’s handled right and handled with a um a good set of yeah I I’m a huge uh believer in a trust. For most people, a trust is just easier. And to be quite honest, it also allows you, even when you’re not here, when you’re no longer uh on earth, allows us to be able to um Still steer the ship, I guess you would say. Still make sure that what you wanted done even after you’ve passed away because the problem I always have with a will, plain and simple, it’s gonna go through court Court is made up of judges and and other people. 14:22 And sometimes people know how to play the system. And so if I’m not there to represent myself. A someone has to be paid to do that, which is kind of crazy, um, because I already told people what I want, but if somebody wants to contest or question what I want, then you’re in a situation where you’re like, okay, now I’ve got another problem, right? Now I’ve got to deal with this issue. Whatever it is, it still needs to be dealt with, which means you have to hire an attorney to speak on the behalf of the person that has passed away. So that being said, the next thing you really want to do is make sure that you have everything in order. And that’s easier said than done because as we start getting older, things are changing. Right? I mean when you’re in your 30s, 40s, and 50s, basically your main concentration is your spouse or your children or your parents, whatever. just taking care of those immediate. But then as you get older, you’re going to start thinking about what can I, what do I need to have? What kind of documents do I need to have signed? to make sure that there is someone there that’s going to be able to answer the questions when needed, right? Because if I’m incapacitated, who’s going to tell the doctor I do or do not want certain things Because I don’t want them, you know, but that there’s no way of them knowing. 15:36 Um, so you have to have power of attorney for somebody else to be able to do that. It’s that simple You need the ability to give someone the authority, someone you know that will say, I do not want to be resuscitated. I do, I don’t want to be kept on a life preserv a life machine or I do um all these different questions are going to be asked because the job of the doctor let’s just be honest their job is to do what you want but also to the best of their abilities But they don’t know what you want. So they’re going to go and do a hundred things that maybe you didn’t want done, or they’re going to, I hate to say this, look at your insurance and say, oh We can’t use this particular procedure because they’re not insured with this kind of company. Those kind of things. And then also, who’s going to take care of you as you get older? You’re going to be able to keep home care Are you going to need to move to a facility? If you move to a facility, are you going to need to sell your home so you have enough money to pay for the facility? These are all kinds of decisions and sometimes hate to say it, but sometimes the client is n

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  Dr. Friday Tax & Financial Firm, Inc.

  Dr. Friday Radio Show – June 6, 2026

  Jun 9, 202647 min

  Dr. Friday opens this episode with one more reminder that the Tennessee disaster-related June 8 deadline is about filing extensions, making payments, and avoiding avoidable penalties. She explains how missing or undocumented extensions can turn into failure-to-file problems, then walks through IRS notices, abatement, and why real human resolution still matters. Later, she covers gifting after estates or lottery wins, mortgage payoff choices, where retirees might park cash, extension filing questions, and home-office rules for young earners and W-2 employees. Summary Points June 8 disaster deadline: Dr. Friday reminds listeners in affected Tennessee counties to file, pay, or document an extension before the deadline, especially if they cannot finish the return. Extension documentation: She discusses Form 4868, certified or tracked mailing, federal disaster notation, and why e-filing an extension may not work after the normal April deadline. IRS notices and abatement: The episode covers missing-return letters, first-time abatement limits, duplicate 1099-S home-sale reporting, and the frustration of trying to resolve clear IRS matching errors. Estate and lottery gifting: Dr. Friday explains why taxes should be handled before gifting estate proceeds or lottery winnings, especially when withholding, Medicare IRMA, or other income can change the final bill. Mortgage and retirement cash planning: Caller topics include whether to pay off a low-rate mortgage, whether the mortgage interest is really helping on taxes, and how retirees might think about CDs, bonds, annuities, and liquidity. Business and home-office deductions: She touches on small farms, LLC or S-corp questions, young gamers or influencers earning money, and why W-2 employees generally cannot deduct a home office. Episode FAQ Q: If I missed the April 15 extension deadline but qualify for the disaster extension, what should I do? A: Dr. Friday says to mail Form 4868 with tracking and the federal disaster information by June 8 rather than assuming a late e-filed extension will work. Q: Should I give away lottery winnings or estate money before filing the tax return? A: She cautions against it because withholding or estimated payments may not cover the final tax, and Medicare IRMA or other income effects can also change the outcome. Q: Is it better to pay off a 4% mortgage or keep the money invested? A: Dr. Friday says the math may favor keeping a low-rate mortgage if safe returns are similar, but paying it off can still make sense for peace of mind. Transcript 00:00 She’ll cure your tax problems or your financial woes. She’s the how-to girl. It’s the Dr. Friday Show. If you have a question for Dr. Friday, call her now. 737-WWTN. 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday. G’day, I’m Dr. Friday, and the doctor is in the house. Um, and it’s gonna be a an interesting show, I think. For one thing, Monday is our big deadline for anyone that may have been in the 23 counties, which is almost everything around us, Davidson, Rutherford, Murray, um, you know. um Hickman, all of them um are under this major disaster um deadline that extended first to May 22nd then on April 15th, they extend it to June 8th. So all of us need to make sure that they’re filed and paid and dealt with. Um, at least, you know, even if you haven’t filed your taxes, if you’ve made the payment so that your taxes are paid in full or as close as you can estimate, because sometimes I’ve got a number of clients that are still waiting for K1s So it’s not like we can complete all returns, but we have the ability to complete as many as we can or make payments by by Monday so that we keep all of our penalties down. 01:23 We don’t mind not paying the government, but if we have to pay them, we don’t want to pay them with penalties and interest. So I had an interesting situation this week. Um pretty much I find it interesting Interesting, everyone else may or may not. Um, I found that we had a situation where a tax player had it paid um that they they came back, the IRS came back and said, you haven’t filed your 2022 tax return. And we’re sitting there going, okay, um, we show we filed it. We, you know, made all the payments, everything was done. We even sent in the payment with the last, with the filing. And so we’re waiting to find out. But then we um During that same time, the taxpayers had some issues in the past. So not knowing that, we just tried to put a waiver in first-time abatement. It’s an easy waiver and it makes things easy. And then we got on the phone with the IRS and the lady turns around and says, Well, you’re not going to qualify for first-time abatement because you’ve already had abatements in the past. Now we’re talking $46,000 abatement we’re working on here. So this isn’t, you know, a petty cash situation. Um, and and it’s basically coming failure to file the tax return. And so we’re we’re working on that and we have documentation and we’re showing. 02:39 But it’s uh it’s gonna be interesting. And then in the last week or two, I’ve seen Several well probably about four people that have received a notice on 2014 or 2024, 2023, 2022, and says they have not filed those tax returns. returns yet they know they filed them. They even have proof because a lot of them are e-filed. Um but the government’s saying hey EFU filed, you’ve got to resend a copy of that tax return and you need to sign it So you can submit it. But what you have to make sure is is that A, that you show payment in full. This couple did pay everything in full by the uh due date. Question is um The the biggest question that we have to find out is was there an extension file? Because then they were filing late and there was no extension. Always file your extension is what I’m trying to say. So if you have not completed your taxes yet. and you have a situation where you may not be able to file them by Monday, make sure you have filed an extension. And to do that, you have to certify one in. You cannot e-file an extension at this point. The IRS basically looks at extension due date as April 15th. But because of the federal disaster we’re under, you will qualify. 03:58 for an extension, but you have to document it, right? So you need to make sure you send in a certified copy along with on the IRS website they have the federal disaster extension. So you can actually put in the federal disaster or FEMA number that you can use for for your extension. But it’s very important because if you have not filed and you You know, may not be able to. And I know sometimes people listening, you don’t file because you don’t have the money. And it’s not necessarily the best plan, but I get it. Sometimes, you know, you’re just thinking, what can I do to survive? And sometimes surviving is I’m not going to uh file. But Your best bet is always file an extension if you’re one of those individuals. So that gives you until October. And then take that time and try your best to file the paperwork, even if you cannot afford to pay it because then you don’t get hit with failure to file, right? Failure to file just means you didn’t do the documentation. Now if you didn’t file an extension and you filed it in October, that’s failure to file because there was no extension on file. These are the kinds of things you have to make sure. And no matter if you have a tax person or not, you need to make sure that those extensions have been filed. 05:14 We do a lot of tax returns in our office and we do our very best to make sure everybody that we had the year before have been extended and we do it pretty early for probably some tax offices may not do what we do Because of the fact that I’m always afraid I’m a small office. And if something happens to me during the months that taxes are needing to be done, Then my clients could be out for a period of time, or you know, I’m not able to get them done as fast or whatever. And that’s very important to me that they’re covered at least If they have an extension on filed, they’re not going to get hit failure to file. They could still get hit with failure to not make proper estimate takes me. They could still get hit with uh not making proper payments. But the failure to file would not happen because the extension was on in play, right? Unless you wait till after the due date. And then, well, there is no extension after October 15th, unless you’re under a federal disaster extension. It’s that simple. So you just need to make sure that right now, if it’s the weekend, and so if you have not filed um your taxes and you don’t know if an extension’s been filed and you can’t reach your tax person on the weekend and You don’t want to wait till Monday. 06:30 Pull up a 4868 right on the IRS website. Pull up the extension um information, put it right at the very top. 4868 is about the easiest form in the world to prepare. It’s got your name, your social security number, your address. Um, and then it’s got like how much money do you think you paid in, how much money do you think you owe? Um, but you know, if those numbers are zeros, that’s still accepted by the IRS. If you don’t know those numbers, you don’t have to fill them in So bottom line, file that form, go to the post office, use priority mail, or go to FedEx or go to wherever you want to go. Make sure you have tracking. That’s all I’m going to say on that subject Because tracking is so very important, especially in these kind of scenarios, because the government um pretty much assumes that we’re all guilty, that we’re we’re doing our best to And it’s probably because it’s no different than if you probably have a policeman that’s a friend of yours or anything and they see the world a little different. My sister’s uh daughter married a police officer. And uh he’s an awesome guy. Love him. But he always sees the world as something. 07:42 Um, you know, he sees the negative where it’s not always that negative. So um and that’s because he sees the worst of the worst. I mean the things he could tell you. Um are that way. And that’s the way the IRS. They um most people that are calling or dealing. And I’m probably one of the few people in the world that’s like, we need more people to work for the IRS. And I know people are right this second driving your car or you’re in your house and you’re like, oh my God, this lady is a lunatic. Why in the world would we want more IRS? Because we need resolution officers, people. A lot of my cases could be resolved simply if we actually had a qualified resolution individual that could actually take the phone call and do something It’s hard to get a hold of a revenue officer. It’s hard to get a hold because they’re handling 30, 40, 50 cases. I mean, their table load is amazing. I mean And they immediately pretty much, if they don’t hear from somebody, if they don’t have something, that can go immediately back to the queue and they can get it off their desk. And in trying to call or resolve, the only way um if you cannot do it over the phone with a collection, because that’s usually who you end up with, is collections. And so, and their job, keep in mind, their job for the collection division of the IRS, basically all of the IRS, their job is to collect money. 09:06 Right? They’re a collection agency, a massively huge, huge um collection agency. But that agency is going to have situations where people amended tax returns. People had, I had one, it was kind of a crazy situation, but actually it’s happened twice. Um, and we have one both times, but it’s it should be such a simple fix They sold a house and somehow the closing agent as well as their own uh the buyer’s agent both sent 1099s on the sale. So they got two 1099 S’s Same house, same address, same date of closing, yet the IRS got two of them. So what do they do? They’ve changed the tax return saying you have not reported all your sales uh you missed your your sale of your home and that you um now owe hundreds of thousands of dollars. Um the clients freaking out because they’re like I only sold one home. Why would they think I sold it twice But again, most of the time you’re receiving information from the IRS is from a computer. A computer is generating the responses. I’m not sure how AI it is, but it’s definitely a machine that basically says, okay, there’s a collection issue. 10:23 We’re doing matching. If this match doesn’t happen, we’re changing the tax return, sending out the letter that says, oh, we’ve changed this tax return you need to respond by blah blah blah um and so in this situation it took us a year and a half to finally get through the tax advocate office, may I point out, that this was such a simple fix. And if they had had basic normal resolution people that could easily look in See the two 1099s, see the date of closing, see the business, uh the address of the closing, and then look at the forms that we uploaded, which was the sales documents This would have been a two-minute fix a year and a half later, besides seeing love letters from the IRS that keep saying that they owe more and more money. And you know, people kind of freak out over that. So it is one of those things you just You need to stay on top of, but it would be nice if Uncle Sam could put a few dollars and do not tell me we’re gonna go AI, people I’m not opposed to AI. I find it has its uses, but when I have a problem, I have an issue. With a business, it doesn’t make a difference if it’s just customer service. 11:37 I want to return a product, whatever. And I have to go through 20 minutes of some computer named Al um that is trying to help me resolve my issue, it’s just very frustrating. Maybe it’s my age, maybe it’s just the way I speak, because apparently it sometimes it doesn’t understand me. But it is very frustrating when you’re doing that. I had an auditor that to get to the auditor, it was a 26-minute AI meeting, I guess you would say, where I had to keep going through this this uh AI answering service to get to this person. I had their extension. All I needed to do was tell them one or two things. Meanwhile, I finally hung up to be quite honest. And I decided to go directly to the emails, right? Which is probably what most people would have done. But sometimes it’s just easier to talk. You know, I love to talk. All right, we’re going to take our first break. 12:31 You guys can’t join the show. We are live today, 615-737-9986. 615-737-9986. We’ll be right back. 12:43 Alrighty, we are back here live in studio with the Doctor Friday show. And I guess I need to go ahead and start saying that I am Going to after 17 years, uh Dr. Dr. Friday show is going to move to the internet. Yes, um, we just had a lot of people people that want to be able to do more that direction. So we only have a one or two shows left and then we’ll be going 100% through you guys will see a YouTube stations and we’re going to do a few more things like uh bring it more directly to you guys, but this radio show has been absolutely awesome. And uh I always hope that all you guys that are listening will just go to the drfriday.com and um follow us there. Just put your name out there, sign up so you can find out how you can uh keep giving me uh this kind of information as well as keep the education, but there’ll be a lot more documentation where you can search and find out more topics As you guys know, I love doing the radio and gosh knows I never like to stop talking. So can’t see that happening anytime soon. But if you want to join the show today, you can 615-737-9986-615-737-9986. We’ll take your calls talking about taxes. 14:01 So I did have um a gentleman come in this last week that had um I don’t know if it’s interesting, it’s probably more normal than most. His uh mother passed away, which unfortunately we all uh are gonna have a time clock on us, right? So his mom passed away. She had a will, but the will was older and he he had been taking care of his mom and she had wanted him to make sure everything was um split evenly between his sister and um and him. Basically it’s just the two of them. But you know the the at the time the will was written, the daughter and the mother were having issues um and uh she never updated the will. So in theory, he is the only beneficiary of everything that mom left. And there wasn’t It wasn’t a multi-trillion or billion dollar or even millions of dollars. It was a nice estate. And he was trying to figure out what he could do because the PODs, the paid on death and everything is going to go to him because that’s what the will says. And so he’s trying to figure out how can he make mom’s wishes that he knows what mom wants. But still the courts and and everything are saying that he’s the only beneficiary, can’t do anything. 15:22 And that’s the beautiful thing of what we call gifting. So what he’s going to do is make sure everything has been cashed out or rolled over. And then he is going to take 50% of the estate and gift it to his sister. Now, I know there’s a lot of people out there that have family issues that I’ll be honest I can’t totally relate to because I have very fortunate to have um At least six of the seven siblings. There’s seven siblings older than me, but six of them are my absolute best friends. So I can relate to this gentleman. You know, we’ve all had our years of fighting. We’ve all had our years of being um ounts, I guess you would say, with the family. But as you grow older and as you grow maybe mature a little bit It’s nice. So you’re able to move on and you know forgive. Now we all take big family vacations, which I looked forward to. And Their children now are getting ready to have children. So that’s another change in life that we all deal with. Um but in this gentleman’s case, I think it’s It’s admirable, to be honest, because I’ve had in the 33 years, 33 plus years I’ve been doing um taxes and accounting here in the Brentwood Nashville area. 16:38 Um it is um I’ve had a number of people that if they were the only beneficiary no matter what Um, especially when you know we’re talking, you know, probably about six, seven hundred thousand dollars that would be going to the sister, it’s a a very healthy amount to give. And, you know, if I guess, you know, sometimes you just have to look at your life. You have to look at what what’s the big picture, in my opinion. This guy had the perfect attitude. He he he and his sister really don’t get along. That’s the funny part. It wasn’t something, you know, I mean, it’s not like they’re best buddies and he’s just doing this because he knew No, mom wanted him to do it. Him and his sister haven’t spoken to, I I don’t know if I said this or not, but haven’t spoken to each other for about four years So whenever um whatever forgiveness that was given by mom, not necessarily by this guy. And and he doesn’t care to necessarily open that, but he wants to make sure what mom wanted is being done. And I’m just saying, you know, sometimes people get so hooked into the

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  Dr. Friday Tax & Financial Firm, Inc.

  Dr. Friday Radio Show – May 23, 2026

  May 25, 202647 min

  Dr. Friday opens this Memorial Day weekend episode with practical reminders about the June 8, 2026 Tennessee filing and payment deadline. She explains why extensions only move paperwork, not the need to estimate and pay taxes, then takes caller questions on inherited trust assets, a California home sale, insurance proceeds, commission withholding, ESOP shares, retirement distributions, and IRS notices. The episode stays focused on documentation, timing, and avoiding avoidable penalties. Summary Points June 8 tax deadline: Dr. Friday reviews the disaster-related extension and reminds listeners that payments and estimated taxes still need attention even when returns are extended. Estimated tax penalties: She explains why taxpayers can owe penalties even if the full balance is paid by the annual filing deadline, especially when quarterly payments were missed. Inheritance and trust questions: A caller asks about Tennessee inheritance tax, revocable trusts, IRAs, annuities, step-up in basis, and whether trust income should pass through on K-1s. Home sale and insurance proceeds: Caller topics include filing a California return after selling a parent’s home and whether excess insurance proceeds from storm damage are taxable. W-2 withholding and ESOP planning: Dr. Friday discusses commission checks, changing from self-employment to employee status, limited W-2 deductions, and tracking ESOP basis. Retirement and IRS letters: The show covers Social Security and RMD filing thresholds, retirement tax planning, IRS direct deposit issues, and paper audit letters requesting income documents. Episode FAQ Q: Does a tax extension mean I can wait until October to pay? A: No. Dr. Friday explains that an extension generally extends the paperwork, while taxes should still be estimated and paid by the applicable deadline. Q: Are insurance proceeds taxable if repairs cost less than the claim payment? A: In the caller’s situation, Dr. Friday says insurance money for property damage is generally not taxable income when it restores the property. Q: What should I do if the IRS sends a letter asking for W-2s or 1099s? A: Dr. Friday says to provide the requested documents and consider checking IRS transcripts so any mismatch can be found and corrected. Transcript Announcer 00:01 No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the how-to girl. It’s the Doctor Friday Show. If you have a question for Dr. Friday, call her now. 737-WWTN. That’s 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday. Dr. Friday 00:29 G’day, I’m Dr. Friday and the doctor is in the house and it has been a wild ride since uh the first of the year, I guess you would say, since you consider They initially extended because of the ice storm into May 22nd. Then on April 15th, they extended us out to June 8th Who knows what’s gonna happen in the next week? It makes my life exciting and and fun, but uh always difficult to stay on top of it. So For all of you that are wanting to make sure that you have made your April 15th payment on time, which means paying it by June 8th. then you should make sure that you have at least the payment made. I mean, if you filed an extension, most of us do, a lot of us will go out until October 15th. But keep in mind an extension only extends the paperwork. Sometimes we’re waiting for K1s. We need to make sure everything is right. We’re not wanting to rush through and complete a tax return just to get it done. Dr. Friday 01:25 But, you know, with that being said, you don’t want to turn around and then end up with um owing a dollar amount and paying it back in October, because if you pay it in October. Then you will have interest and penalties that you have to pay. Just that simple. So making sure that you have everything correct and you want to make sure that you’ve done what you need to do. Then, you know, at least get an estimate paid out there so that way you’re not in a situation where you don’t want to um uh end up with you know i owe ten thousand dollars and now it’s october and now you owe twelve thousand dollars or more depending on the penalties and if you made proper quarterlies and yes for anyone that’s listening There is a rule that says you need to make estimated tax payments if you actually owe more than $500 the year before. Now, that does not mean that everybody has to make them. You can make them through increasing your W-2 withholding. Dr. Friday 02:27 You can make it through if you’re older and you may be receiving um RMDs require minimum distributions. You can have them take out the extra payments. So that way you’re not having to make your estimated tax payment. And talking about estimated tax payments, your first estimate would be normally due April 15th. That would be now due 6. 8 or June 8th. Because of the federal disaster extension. So you had have one due on the 8th and the next one due on the 15th of June um to make them filed on time. Many people are getting, at least several of my clients have gotten letters saying that the IRS is um needing them to update their banking information because they have a refund and in many cases these individuals did not have refunds and they do now because Um, at least in in my situation, several of them had uh we had estimated penalties that um got waived because of the federal disaster in 2025. um and in 24. Dr. Friday 03:29 So some of them have them on one of the other. So again, paying your taxes on time could end up giving you a small refund, especially if you had estimated the tax software to charge a penalty or if you did not make proper estimated again estimates are mandated if you do not pay them properly you will end up with a situation where you have to pay a penalty, even though you paid it all by the April 15th deadline. Dr. Friday 03:55 I can’t really tell you after 30 plus years how many times I’ve had someone say, why are they charging me a penalty when I’ve already paid them all of the money why you know and sometimes it’s three four five eight thousand dollars because they paid it by april fifteenth but they did not make proper estimates Now, if this was a one-time sale that happened because you sold some real estate or something and you weren’t required to make estimates because of the situation Um, and you did pay it by April 15th, there may be a waiver, but in most cases they’re self-employed and they’re just paying all of the taxes at one time. All right, if you want to join the show, you can. 615-737-9986. It looks like we have David on the line, which is awesome. Hey, David, how can I help you? Caller 1 04:39 Uh yes, Dr. Friday. I just had a question about uh taxes, inheritance taxes on a revocable trust in Tennessee. Dr. Friday 04:48 Uh-huh. Caller 1 04:49 Is is there an inheritance tax on uh uh funds or cash on a revocable trust? Dr. Friday 04:59 Well, yes. I mean if it’s over, I believe it’s twelve million dollars or fifteen million, I’d have to look up the exact number. If the estate is over, uh Tennessee follows the federal tax law. So it would have to be higher than that to actually do something. But um if they haven’t, I mean if it’s just a normal estate where you inherited, then the only tax you would have to probably look after would be if it’s an IRA or an annuity. There may be taxable dollars involved in um in those funds and you’d have to pay tax on them. Caller 1 05:34 Okay. Would would that be just the tax on the income generated uh on that fund since the deceased Passed? Dr. Friday 05:45 Uh yes. Well in an IRA it would be tax on the entire thing because obviously it would be no different than if it was your own personal traditional IRA. On annuities, usually it’s only on growth, but I have had some people actually put the money in an IRA. I mean in an annuity from an IRA. So the same thing. It could be 100% taxable. It could just be taxable on growth, it really depends on the investment. If it’s stocks, there’s a step up in basis. So those would not be taxable Mainly I find the taxable falls into IRAs, 401ks, or annuities is where most of the taxable dollars without step ups. Caller 1 06:24 Okay. And and what is the difference between a tax rate on these amounts of thirty seven percent or just your normal tax rate, I think, on income for your bracket? What what do you think? Dr. Friday 06:40 37 is the highest tax bracket anyone pays. Okay, so that’s your highest bracket, um, ordinary income. If you if they file it through an irrevocable trust, which becomes revocable, I mean, um, it’s irrevocable that becomes irrevocable when they die. then then you you you can pay the tax through the trust, but the trust starts at twenty-four percent and works its way up to thirty-seven a lot faster than if you give a K1 from the estate and you file it on your own personal tax return. It really depends it’s that is up to the executor So um I’ve had more than one that says, no, I just want to pay the taxes because I don’t know if anyone will pay them and it’ll be just more headache, you know. Um, but normally it’s cheaper for all the beneficiaries if the taxes roll to the tax Players not through the estate. Caller 1 07:31 Gotcha. Gotcha. Okay. Very good. Uh good. I think you’ve answered my questions there. Dr. Friday 07:37 Thank you for calling. I really appreciate it Caller 1 07:39 Thank you very much. Thanks. Dr. Friday 07:42 Bye. All right. We have Sean and Bellevue. Let’s see if Sean has something I can help him with. Hey babe, how can I help ya? Caller 2 07:48 Hey doctor, thanks for taking my call. Sure. So uh in at the end of twenty twenty two, uh went to California to move my handicapped mom out here to to live with me for me to take care of uh take care of her. And she really didn’t have much, but she had a house and we sold the house. And after paying the loan off and and all the fees and so on, she profited about two hundred and sixty thousand dollars Before we left California I talked to her tax person and I said, Hey, you know, do I need to file taxes on this? You know, w what what should I do? And she said, Well, you know, her only income is Social Security at the time she said yes you you should file taxes. She said but the good news is is that you didn’t make enough profit off the house that she doesn’t owe any taxes on that And that’s just how I left it. I haven’t done anything. Caller 2 08:37 So now we’re getting letters from California saying that she needs to do her taxes because I guess California wants their piece of the Dr. Friday 08:48 Well, the good news is you should file California only because it’s likely that you won’t owe anything, but all they know about is a home sale. So they’re assuming that there is a profit. They’re assuming that there is money there for them to have. If you file the tax return because of the exclusion um that’s on the table, then you are she mom ‘s not most likely. I mean, you said if she if she physically had a $260,000 profit She may be looking at 10,000, which on the federal side would be zero tax. I can’t guarantee on California it would be or would not be because of the exclusion. Um, you would think that would be poverty um at that point if she only had social security and ten thousand dollars. So um, you know, it would not be, but I would say filing it, you may find that it’s just a matter of putting it to bed, you know, just get it done so that way you don’t have to worry about it. Dr. Friday 09:38 Likeli this miss mom doesn’t owe anything, but they’ll keep irritating. And they may even assess. California’s funky because Sometimes if you don’t respond to the letters and they do the assessment, you can’t fight the assessment, even if it’s completely bonkus. Um Yeah, so go ahead and and either if she had an old tax person or call her office or whatever, just you know, get the return done because like I said, it may just be be a matter of getting the proper documents to them to show that this was her primary, that you know she only made this much money. And you know Just because she put 260 in her pocket doesn’t mean she earned 260,000, you know, because she had to pay something back in the day for that house. And maybe it was very little. Um, and then she had to um Then she has the 250,000, but you need to know how much she originally paid and then what she sold it for and all the cost that she may have had going into the house. Dr. Friday 10:27 You might need some of that detail before you call the tax person. Caller 2 10:31 Okay, yeah, taking that into into consideration is it’s was probably a wash. Dr. Friday 10:36 It sounds like it’s pretty much a wash. But you know, yeah, exactly. If that’s the case then you know, even though she had money in her pocket doesn’t mean it was actual profit. So yeah, either way you look at it, just get the information, get it filed, and that would probably just take them off her back. And now she lives Here, it sounds like, or outside of California, uh so yeah, you don’t have to worry about it. Caller 2 10:59 So I don’t know if she’s gonna be around all that much longer, but so can can you do this? ‘Cause I asked my H and R block person when I did mine a few months back and and they said they couldn’t But if you can do it, Dr. Friday 11:10 you can call my office. Yeah, we do them all the time. Sure. Caller 2 11:13 All right. I’ll I’ll give you a call after uh Tuesday, I guess. And we’ll just finish this up. All right. Hey, thank you. Dr. Friday 11:19 Thanks, Sean. Bye. All right. We’re going to take uh a first break here in just a second. Again, um, that’s what we do. It’s obviously taxes for people that may not know what I do. I’m an enrolled agent licensed by the IRS. I have never worked for the IRS, but I am licensed by the IRS for the last 30 years to do taxes and representation. Um, we do all states And we do all tax returns pretty much. If you have a question or you’re getting a love letter, we’ll do our best to explain it to you or help you resolve it Uh that is what we do. And if you need help doing that, we are in the Brentwood area for those that may not want to drive across uh the state because I have people that are hilarious. They will drive all over the place just to get to my office, which is a huge compliment But uh just letting people know and if you want to, you can give our office a call on on Monday or Tuesday. Dr. Friday 12:10 I know Monday’s a holiday, so Tuesday, and we will be more than glad to schedule an appointment. Or you can call us on the radio today at 615-737 -9986-615-737. 9986 will be right back with the Doctor Friday Show. Alrighty, we are back here live in studio and uh you can join the show at 615 737 9986 for all those that may have thought that uh again this year’s deadline has just floated along obviously I’m hoping they get back to just allowing April 15th. It’s something we’ve all done for most of our life. It’s a good date to have. Um and then obviously last year it went all the way out to November. This year it went to May 22nd. And then on April 15th, they went at to June 8th. So right now the deadline is June 8th for filing your 2025 without late filing fees for the payment. Again, many of us have already filed extensions as we have in past So the paperwork is extended, but the money is what we’re looking for to make sure. Dr. Friday 13:23 All right, looks like we have Kay on the line. And if she’s already, I will be more than glad. Hey, Kay. Hello, Dr. Fr. Frighty, thanks for taking my call. Caller 3 13:32 Um my question is uh during the ice storm this year, um I had some damage on uh um uh a building uh on my property. And uh I filed uh so I wasn’t sure if I had a a tax liability on it because when I filed um a claim on it uh Um the insurance adjuster came out and gave me uh uh I thought a very generous estimate on it. And um And went ahead and they just deposited that money to my bank. And then it was up for me up to me to get uh, you know, the the property. Which I did And it turns out that my repairs were a lot less than what the money was that they gave me. So I d you know, I don’t know what to do. Should I Should I Dr. Friday 14:19 Are you feeling guilt, Kay? Um well the answer is insurance money is not taxable income. Uh the insurance company valued that barn or building as whatever it was. And if you were able to improve, and I’ve had people not even do the improvement, but you did. improve the property to back to what it was prior to the storm, then that’s fine. The income is just um a repayment of all the years that you filed uh or paid insurance in which you could not deduct that cost, right? The insurance every year we pay. So that’s kind of the way it is. There is not any um it doesn’t normally happen that way. So that was actually a nice story because most of the time I hear the opposite. where they come out, they give a bid, and then getting the job done, it costs them a lot more money, right, than what the insurance company uh had given them. So it’s kind of nice to hear that Um that there is the other side of that story. But Caller 3 15:18 and I w I was I thought uh you know, I didn’t know if there was some sort of form I had to file with IRS about it or I get something from the insurance company, but I don’t have to do anything. Dr. Friday 15:28 There’s nothing. No. I mean, uh, I mean if if you were ever audited, you’d be able to, you would have gotten something, most likely a form or something saying that they had done a settlement um, you know, when you filed your claim or whatever, there would have been something that you could keep with your tax documents, but it’s not something that’s going to uh most likely ever come up, but that would be the only thing you would need and just justify that the income came from insurance. Caller 3 15:53 Well that’s good. I had used some of the money, the extra money, to really help do some tree work here to maybe prevent another claim at some point. But you know. Dr. Friday 16:03 Yeah, and unfortunately that’s not something the insurance company normally pays for. You know, I mean if you have trees and stuff. So good investment. Caller 3 16:12 Anyway, well okay, so that sort of relieves me. I wasn’t sure if I should spend this extra money or or do whatever. But anyway. Dr. Friday 16:19 You’re good to go, whatever way you want. Caller 3 16:21 Okay, wonderful. Well, thanks so much. Thanks. Dr. Friday 16:23 No problem. Caller 3 16:24 Bye-bye. Dr. Friday 16:25 All right. Bye. Um, so if you want to join the show, again, 615-737 -9986. 615-737 -9986 taking your calls. And we talk about anything to do with taxes pretty much. Um, you know, we’re already what five months into 2026. So for all of you that may have either worked up all your numbers for 25 and or have already completed your 25, um congratulations. I can honestly say I haven’t uh had mine completed yet But um but my numbers are all worked up. So working on 26 is essential, right? Because if you’re really trying to work the best numbers you can Sometimes waiting till the end of the year or normally the first of the following year, it’s very hard to really get all the tax advantages. Sure, you can still, and right now for anyone that wants to put mone

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  Dr. Friday Tax & Financial Firm, Inc.

  Dr. Friday Radio Show – April 25, 2026

  Apr 28, 202647 min

  Dr. Friday uses this episode to step back from the rush of tax season and look at what taxpayers can still control after the Tennessee filing extensions. She covers retirement contribution timing, business-loss documentation, estate and trust tax handling, and why good records matter when the IRS asks questions. A caller also asks how to distribute an IRA that was paid into an estate trust, leading to a practical discussion of Form 1041 and K-1 reporting. Summary Points Tennessee filing extension: Dr. Friday notes that Tennessee taxpayers now have until June 8 and discusses remaining opportunities for certain 2025 contributions. Retirement and withholding planning: She compares traditional retirement contributions, Roth choices, capital gains, Social Security taxation, and the impact of under-withholding. Business versus hobby losses: The show reviews startup education costs, repeated Schedule C losses, short-term rental use, and the need to prove a profit motive. Estate IRA distribution question: A caller asks about an IRA portion paid to an estate trust, and Dr. Friday explains using a 1041 return and K-1s for the beneficiaries. Entity structure decisions: Dr. Friday compares LLC and S corporation tax treatment, payroll, self-employment tax, and Tennessee franchise excise considerations. IRS problem resolution and basis records: She discusses payment-plan problems, Taxpayer Advocate help, amended returns, and appraisals for inherited homes. Episode FAQ Q: Can I deduct business classes before the business is actually making or trying to make income? A: Dr. Friday says not automatically. The taxpayer needs to show a real attempt to operate a business and make money, not just take courses. Q: How should an IRA paid into an estate trust be distributed to beneficiaries? A: In the caller’s situation, Dr. Friday discusses filing a 1041 trust return and issuing K-1s so each beneficiary reports their share. Q: Why does Dr. Friday recommend appraisals for inherited homes? A: She says an appraisal helps document basis at the date of death, especially if the property is sold later or multiple heirs are involved. Transcript Announcer 00:01 No, no, no, she’s not a medical doctor, but she can sure cure your tax problems or your financial woes. She’s the how-to girl. It’s the Doctor Friday Show. If you have a question for Dr. Friday, call her now. 737-WWTN. That’s 737-9986. So here’s your host, financial counselor, and tax consultant, Dr. Friday. Dr. Friday 00:29 G’day, I’m Dr. Friday, and the doctor is in the house. Have we had some busy times lately with the whole Extension on taxes and then a second extension on taxes. So right now it’s June 8th that we have to have everything filed by um in Tennessee. They did all 96 counties. So um We uh obviously are are working on taxes. Not this weekend, thank goodness. So we get a little break. Normally it’s uh been crazy for a while here, but We are moving forward. And then if you’ve got additional questions or you want to join the show, you can at 615 737-9986. It’s actually a really nice Saturday out there. Everyone’s heading some time to uh start working, but we are just about done. with the month of April, which means that we should be seriously considering not only we can’t change a whole bunch that happened in 2025. Dr. Friday 01:30 Sure, if you are a self-employed person, you can have a self-employed Except that you don’t fund until as long as as October. Um and for some people, if you did not and you wanted to fund your HSA or your IRA for 2025. And even though we are past the April 15th deadline due to the federal extension, we would be able to still contribute the proper amounts into those accounts depending on your age and your income if they applied. So so there is a little bit of a window for some people that may find out that they owe money and they One way to reduce the amount you owe the IRS is putting it into a deferred account. I would always suggest talking to a financial planner, uh, tax people. We’re always looking at instant gratification, meaning if I’m going to save money today by giving it to a retirement plan versus to the IRS, guess what? Dr. Friday 02:24 I would say it’s usually a good idea, but then I have told people sometimes it’s better to do the Roth because you’re in the 12%, even though you might owe the IRS. You’re only saving eight or nine percent if you put it into your retirement now. Um, if you put it into the Roth, then you know it will grow tax free. And even though right now you may still owe the IRS it will be a better investment. But again, I’m looking at tax situations. You should always double check whatever Unless your tax person happens to be wearing two hats, one as a financial advisor, one as a tax exput, then you should always check. Um just like if your financial, I had a case this year where the financial planner thought they had done the math correct and they had done uh some conversions and um and then of course I did the taxes and they were quite a bit off They um I I don’t know if they just didn’t have the right numbers to start with. Dr. Friday 03:24 I wasn’t there. So all I can say is the client wasn’t happy. They owed an additional $17,000 um because of Social Security being taxed more, different things came into play. And it may have been that they didn’t know that they were going to have quite the capital gains that came in. A lot of times it’s a lot of little things. I had a another client that we just finished up last Friday, and um he’s like, why? Why do I owe money? I never owe money But they had overall had $60,000 more income because of capital gains, a larger distribution from retirement, which then made more of the Social Security. They were not at the 85% normally. So 85% of their Social Security became tax, a little bit more interest overall, and it all kind of trickled down. And most of the things that had um increase capital gain, social security, they were not having any kind of withholding. Dr. Friday 04:19 So it was um another case where they owed, it wasn’t horrific, it was like 3,900, but it was a lot when you don’t think about it, right? When you don’t normally owe the IRS. It’s quite a bit when you have to. So if you’re in the process of doing that kind of thing, you do need to make sure you’re tracking everything. Today’s show, I kind of wanted to touch on one of the couple things I’ve ran into this tax season. And maybe part of it is obviously a lot of you guys know I do um I now have a home farm. But also um small business owners. You have to have some reasonable concept. I mean I had a person that came in and They started a business and they um they they went and done a whole bunch of classes and took um took a a lot of courses uh from supposed experts in the field. Dr. Friday 05:16 I’m talking like up in the forty-five thousand dollars um of doing and um and then you know never generated any income from this business at this point at least. And um and she’s like, well I can write all this off because I was self-employed. And I’m like The tax law isn’t quite that simple. First, you have to be making the attempt to make money. You have to be able to show that you have done this because you’re able to make money. The IRS says, hey, if you’re going out and learning how to make pots and you’ve never made a pot, you’ve never sold a pot, you’ve never done anything, but you’re taking these courses When you do start selling your pottery, that would be part of your startup to learn how to do it. It would not be something you could write off. at the time of taking those courses and not not having anything to sell, any product, any classes, anything that shows that you actually took this um education and created a business that is now at least attempting to make income I mean, maybe you’ve got a full website and you can show that you put out a marketing uh plan and and that, I mean, it doesn’t mean you have to have shown that you made a profit. Dr. Friday 06:34 But keep in mind, the IRS does also say for uh small businesses or anyone that operates as a Schedule C, um, two out of five years, you need to have been making money So a lot of times the first year or two, we don’t expect to make money. You know what I mean? By the time you get all your startup costs and you learn how to make and get clients Sometimes the first year or two is a dry year or an upside down year, whatever you want to say. Then you go into the third year and and you’re you’re least breaking even. The fourth year you made a profit. And goodness gracious. The fifth year you’re actually paying back the first year’s losses. That’s the way the IRS sees it. If you’ve been at this for four, five, six years, and I’ve had a couple clients come in this year, and they’ve been taking losses I mean, you know, they forever is what they basically have said, but let’s just say for four or five years. Dr. Friday 07:25 At that point, I’m questioning, is this really a business? Is it a legitimate business? Is this something that’s a hobby? Um Something that uh another one is the a um the short-term rentals. Um if this property is a short-term rental and we put that on Schedule C so we can take the losses Um, if this is actually your vacation home and you are using it more than two weeks in a year. Keep in mind you cannot take all of those losses because it’s personal use. It is not just a business now. You’re using it or giving your family and your grown children and your grandchildren. Everyone has access to this home. That turns around and now you’ve got a situation where if you’re ever audited, they’re going to say, well, was the home available for rent for 365 days? And you may say, well, no, I had this week that we had to go down there for repairs and this, and we had another week where we came down and we we did three more days of repairs. Dr. Friday 08:26 I’m not saying you can’t work and be down there. I’m just saying the tax law specifically says you have to be repairing something. Doing something, you can’t just be down there enjoying the house with your kids and your grandchildren and calling that a repair weekend or just using it. But you know, so if you do have those kind of homes. You need to figure out the percentage of actual rental days and how much of the mortgage, the HOA, the depreciation, the utilities, all of that that’s a deduction because Every year you’re showing a $35,000 loss. That doesn’t make sense. Nobody can have, and the IRS basically says, who can afford to lose money if it’s a legitimate business every year? I mean, if it’s your hobby, if it’s a place that you’re looking at, like, oh, this is a great vacation place. You know what? Dr. Friday 09:20 Someone pays most of the stuff. So I don’t mind having $35,000 a year going out because I I use it for personal use. That’s cool. But then you can’t take it as a tax loss because it’s not really a business. So you’ve got to sit down and really look at these businesses that you’ve been using for years to offset Your gains, your personal income, your other lifestyle. And then saying, hey, I I’ve lost 15, 20, 25 It’s going to catch up with you. I’m not I’m not the IRS guys. I’m not telling you this because that’s going to, I don’t know. You may you may be able to do it for 30 years I have people that barely got away with it one year and then they end up audited. So no one knows when or what’s going to happen on that element. But when we do our taxes Hopefully we’re doing our taxes with the idea that we can justify the numbers on that return so that way you can sleep at night. Dr. Friday 10:16 You put all that together. You scan it all in or you put it someplace safe. And if Uncle Sam comes knocking or the IRS, you have the documentation that you need to justify whatever they’re questioning. You’re not there sweating it saying, oh my God, I’m being audited. No one likes to be audited. It’s never going to be a good. Unless you’re one of my very first clients, I’ll just call him Earl. He he got audited Oh goodness, this had to be twenty plus years ago now. And um and he was when he was done, the IRS owed him like twenty-five dollars. But there was um a couple things that you know, but he had and enjoyed. I think he really enjoyed going through that audit. Um, but most people, most of us are busy. We do not want to be spending time dealing with all that. Dr. Friday 11:06 So when you finish your taxes, you scan in, and I’ve got some awesome clients. I see, I mean they come in with their whole box And you know who I’m talking about, girl, of all your receipts, all of your folders, everything in there, so that if something were to come back, you have everything organized in one place Um, and many of you that do. But um but you you need to have that. And if you don’t have to have it in paper form, IRS accepts electronic. In fact, nowadays we almost have to upload them into a link To give them the documentation. So having it electronically is almost better than having it uh in paper nowadays. But that is the way you want to live. So if you’re a self-employed person or you’ve got a bunch of um short-term um rentals that you’re using a schedule C because let’s be honest, short-term rentals for people that make more money, you get a better tax deduction. Dr. Friday 11:58 If you’re making more than about 125 on a schedule E, most of us do not get to claim the losses in the year that happens. We’ll eventually get to claim them when we sell, but it’s not an instant gratification. All right, we’re going to take our first break here. If you guys want to join the show, you can. 615-737-9986-615. 737-9986. We’re talking about taxes. But if you’ve got a question or some sort of love letter you’ve received You can also join the show and share it with us if you’re brave enough. We’ll be right back with the Dr. Friday show. Alrighty, we are back. Here live in studio. You can join the show at 615-737-9986. 615-737-9986. And we’ve got Robin in Murfreesboro, which I appreciate. the phone call, Robin. Thank you. Sure. Happy to happy to be Yes, I’m here. Caller 12:59 Can you hear me? Dr. Friday 13:00 Good. Yes, I can hear you now. Yes. Caller 13:03 Okay, great. Thank you for taking my call. I have a question not exactly about small business, sorry. Um, but this is about taxes and um It’s about I I actually lost my father um last January. He left um an IRA that has there are five daughters and he left those uh to us All of them were marked and we were named as the beneficiaries with the exception of about eighty thousand dollars So that did not have a designated beneficiary listed for that part of the IRA. So the um the company that it was with Right. Decided they they wanted to put that into his trust and they wrote that check to the estate his estate trust. which it is in a uh bank account with an EIN number. Um but my question is how do I disperse that to the beneficiaries properly to pay the taxes um legitimately. Dr. Friday 14:13 Right. Well it sounds like Robin that they actually cashed out that eighty thousand, wrote you a check to the trust. So theoretically That is now cash, correct? So we have to pay the tax. I should say the five girls, if you’re splitting it evenly, will all have their share that needs to be taxed. You have two options. My First option, it does depend on the tax bracket of the beneficiaries. Okay, just putting it out there. But normally a trust is at a higher tax bracket than individuals. It starts out at 24%. Individuals start out at zero theoretically and work their way up. So the easiest way would do is a 1041 tax return, a trust tax return. And then do K1s where you’re distributing interest. There could be interest being earned on it, maybe not. And then their percentages at the end of the year, they then would file those with their personal tax return and pay their share of that $80,000 because the other ones each rolled into inherited IRAs, they can do whatever they want individually on the distributions of those. Caller 15:21 Okay. And and we did that on the rest of the IRA. I just know that as the estate trustee, I I didn’t know how to disperse that money. So I can I can take that and actually just give that. And then you said it’s a ten forty one Dr. Friday 15:38 1041 and then they’re going to be getting a K1. So just make sure they understand at the end of the year that the money they’re receiving today is going to be taxed at their current Tax rates. I d each of them will be different, right? We don’t know. So they need to be setting aside their share. Let’s just say it’s uh well, fifteen thousand dollars. So whatever you know, 10% somebody’s in, they need to set aside, you know, 1500 of the 15,000 and they’ll be responsible for paying that tax themselves. Caller 16:09 Okay, perfect. And then what would I need to save? Like I don’t want to be liable for that as the estate trustee. I want to make sure that gets done and like for because I’m gonna have to close out that uh estate at some point. Dr. Friday 16:27 Right. So depending on uh what the I mean an a ten forty one can be done any time Okay, so theoretically you’re they would be filing this with their 2026 since it hasn’t happened, right? So you can distribute And then file the 1041 as final. And then we can provide the K1s so they’ll have them plenty of time. to do their 2026 taxes. So they’re not waiting at the first of the year for it, you know, um, and then then that account can be closed. you could physically send them the check along with their K1s. Um so that way everybody with a cover letter saying here is the check, here is the taxable for. So if they have a tax person, if you were my client I would say, hey, what is the K1 based on last year? Your estimated tax for this year would be this, right? Dr. Friday 17:18 Based on whatever that dollar amount is. And then that way they have time to say, I’m going to take the 15, I’m going to send in 2500, the rest of it I can invest or pay off something or whatever they want to do with it. Caller 17:33 That is great news. I really do appreciate your help with that. Dr. Friday 17:37 Sure, no problem. If you need help with the returns, let me know. Caller 17:41 Thank you so much. Dr. Friday 17:42 Had a great day. Appreciate it. All right, that was a good call. We do a lot of estate tax returns. Um, and you know, no matter how well people like to be organized, which sounds like pops are their father. Um, it’s funny they had five girls, my parents had two girls and six boys, so It’s with bigger families, it’s always difficult, but sounds like he was well organized. But something got missed, happens all the time. Um and that that makes it simple for um I say simple, probably wasn’t all that simple, but simpler to deal with some of that than other things. So that being said, um a lot of times you end up with either an estate or a trust um being open uh even through probate for an estate because sometimes people have a house, they need to be able to sell the house. Dr. Friday 18:30 A home can be titled into a trust, but if it’s not, then it&#8217

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  Dr. Friday Tax & Financial Firm, Inc.

  Tax Day Filing, Payment, and IRA Deadline

  Apr 15, 20261 min

  Dr. Friday reminds listeners that April 15 is the last day to file on time or submit an extension. She also notes final same-day timing for payments and IRA contributions. Transcript G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one-minute moment. It is April the 15th. This is tax day. Today is the last day that you can hit the send button to be on time. Today is the day you need to be making your payments. Maybe you need to be putting money into an IRA or a Roth. Today is the last day. You cannot contribute after this date. If you need or haven’t filed an extension, I would suggest going to IRS.gov. You can file a free extension right on the website. You need to make sure that’s done. The penalties for not filing on time are kind of ridiculous and not necessary. If you go today, make an extension or file your taxes, then they’re on time and all we have to do is deal with the money. You can catch the Dr. Friday Call-in Show live every Saturday afternoon from 2 to 3 p.m. right here on 99.7 WTN.

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