Questions are on the uptick. Here are a few of them…and our answers. 

How do I report my fantasy sports winnings? 

Likely as gambling income. DraftKings, FanDuel and similar online sites let individual players vie for cash prizes that are based on the performance of professional athletes. According to IRS attorneys, the entry fee paid by the user is akin to a wager. So, as a result, the applicable tax rules for gambling should apply for these daily fantasy sports contests. You report winnings on Schedule 1 of the Form 1040. Losses are deductible by itemizers on Schedule A to the extent of reported winnings. Some gamblers can file Schedule C if their gambling activity is extensive enough to rise to the level of a trade or business, but this can be a difficult hill to climb. 

I just inherited from my mom EE savings bonds that haven’t reached maturity. Will I owe federal income tax on the accrued but untaxed pre-death interest? 

It depends. We assume your mom opted to defer reporting the bond interest as income until the earlier of the year the bonds mature or when they’re cashed in. Now that she has died, her executor can opt to include on her final income tax return all pre-death interest earned on the bonds. If this is done, then you would report only post-death interest on your 1040 in the year the bonds mature or are redeemed. If the executor doesn’t include the interest income on your mom’s final return, you will owe taxes on all bond interest in the year of maturity or redemption. 

What federal tax breaks are available if I decide to buy an electric vehicle? 

Presently, the federal income tax credit ranges from $2,500 to $7,500.It applies only to purchases of new electric cars, and there are various limitations. The House-passed Build Back Better bill would increase the tax break to a maximum of $12,500 for new electric vehicles bought in 2022 through 2031. The vehicle’s manufacturer’s suggested retail price can’t exceed $55,000 for sedans, or $80,000 for vans, SUVs or pickup trucks. The credit would begin to phase out for taxpayers with modified adjusted gross income over $500,000 for joint filers, $375,000 for household heads and $250,000 for single or married-filing-separate filers. The bill would also allow a lesser credit for people who buy used electric vehicles. 

Will these proposed higher credits survive in the Senate?

It’s too soon to tell. 

Will Congress limit the gain deferral from like-kind exchanges of realty? 

It’s looking very unlikely. When real property used in a business or held for investments is exchanged for like-kind real property, the gain that would otherwise be triggered if the realty were sold can be deferred. President Biden wanted to cap the amount of deferred gain each year at $500,000 for each taxpayer…$1 million in the case of married couples filing a joint return. Gains over the $500,000 and $1 million caps would then be immediately taxed. However, this idea didn’t make it into the House-passed $1.75 trillion spending bill.