Tasting Three Flavors of Tax Software

TAX-PREPARATION software usually makes an onerous task easier. It doesn’t make doing a tax return fun, but it does make it far less frustrating and time-consuming.
Tax-prep programs guide you through the minutiae of the tax law. That’s no small feat: reading the Internal Revenue Code may seem like trying to decode a cipher written solely for the benefit of lawyers and lobbyists. If deciding whether to use software is simple, picking among the three leading programs is tougher.
For people with straightforward finances — a salary and some investment income, a mortgage and common deductions — any of the leading ones should work. All three — TurboTax, H&R Block at Home and TaxAct — use a question-and-answer format to guide you through your return and then plug your responses into the appropriate places on the I.R.S.’s many forms.
Each has its advantages. TurboTax offers the best overall experience — the easiest and speediest — but, with nagging about buying additional software and services, it occasionally annoys. Block at Home is just as good at handling the basics and gives an unbeatable guarantee. TaxAct is the cheapest.
 TurboTax can retrieve data from more than 250,000 employers, banks and investment companies, and Intuit, its maker, continues to add more. The most confusing pitch embedded in TurboTax is the one that pops up once you finish the federal section: “It says, ‘Would you like a professional preparer to look over your return?’ For a fee of $39.95, of course. Didn’t I buy the software so I don’t have to worry about that? Doesn’t this suggest that TurboTax doesn’t believe that I should be doing my own return?”
If you don’t want to pay extra, the program offers gratis guidance via pop-up boxes and links. Users can also pose questions online through TurboTax’s Live Community. Intuit staff members and TurboTax users provide the answers. It’s like a Facebook page for tax nerds — and a test of one’s belief in the wisdom of crowds. Would you take the home-office deduction because “Volvogirl” or “Texas Roger” explained it online?
Block at Home works just as well as TurboTax — in most cases. Most of its explanations are just as clear, and its interview process is just as efficient. If you have your paperwork ready and you’re a filer with common deductions, you can probably complete your return using either brand in less than two hours.
Block isn’t able to pull in as much financial information as TurboTax. It fails to grab statements from investment accounts. In theory, the program has that ability, and Block has links with the bigger companies. 
When it’s time to file, Block does offer up a reminder of a difference between it and TurboTax: Block users are entitled to in-person audit support. A Block enrolled agent will advise you if you’re audited and accompany you if you have to appear at the I.R.S. It’s as if Block is kicking in an insurance policy at no extra charge.
TaxAct is the Wal-Mart of tax software; its virtue is price.
Prices for all three brands can vary, depending on where and when you buy. But in general, the online versions, where you prepare your return via a Web browser, are cheaper than the CD and downloadable ones, which you copy onto your computer. But the CD’s and downloadables allow completion of multiple returns.
At $34.99 in the store, TaxAct Premier Federal + State was less than half the price of TurboTax Premier, which cost $79.99. H&R Block at Home Premium was $59.99.
TaxAct even offers a free federal return online to anyone, regardless of income or age.
People who use TaxAct’s free service shouldn’t expect the same level of guidance that they’d get from the company’s paid offerings. For that, they have to upgrade, with the cost rising with the level of guidance.
But don’t discount the quality of TaxAct’s offerings.

4 questions to ask before hiring a tax preparer

To take advantage of all the tax breaks available, preparers must keep up with changes in the tax code. Late last year, for example, Congress extended several deductions that had expired in 2009.

In most states, anyone can prepare taxes for a fee. There are no training or licensing requirements. Some individuals use the promise of low-cost tax preparation to sell dubious products, such as high-cost refund-anticipation loans.

That's changing, though. Last year, the IRS announced that tax preparers will be required to register with the government, pass a competency test and take continuing-education courses. The IRS plans to phase in the program over several years.

Starting this year, all paid preparers must obtain a Preparer Tax Identification Number from the IRS and include it on all returns they file. At this point, all a PTIN signifies is that the individual has registered with the IRS. Still, you should make sure a preparer has a PTIN. Someone who hasn't gone to the trouble to comply with this requirement may be slipshod in other areas.

Before hiring a preparer, check with your local Better Business Bureau to find out if there have been any complaints against the individual or company. Once you've done that, be prepared to ask some questions, including:

•Do you have any professional designations?CPAs, enrolled agents and attorneys must fulfill continuing-education and licensing requirements and are bound by ethical standards. They're also authorized to represent taxpayers before the IRS in all matters, including audits, collections and appeals. If the preparer doesn't have one of those designations, ask him if he belongs to any professional organizations that have continuing-education requirements.

•How much experience do you have with my type of return? Everyone has to learn the ropes somehow, but you probably don't want someone learning them on your tax return. Ask the preparer how long they have been preparing tax returns and whether they are familiar with your type of return.

•How do you determine your fees? Many reputable preparers charge a flat fee based on the complexity of your tax return. For example, someone with a 1040EZ will usually pay less than someone who has income from rental property and investments, she says. Ask the preparer to put the billing and payment terms in writing.

Steer clear of any preparer who bases fees on a percentage of your refund. Likewise, avoid preparers who claim they can get you a bigger refund than the guy down the street. No one can estimate your refund without first reviewing your financial information.

•Have you represented many clients in IRS audits? A preparer who has experience with IRS audits could provide valuable assistance if your return is scrutinized. But be wary of someone who has been through the process numerous times. That may be a sign he claims a lot of questionable deductions.

Keep in mind that you're responsible for the information on your tax return. Ideally, your tax preparer should e-mail or call with questions before completing your return. And you should always review and sign your return before it's filed with the IRS.

Desperate for tax deductions? Consider an IRA

You can't deduct food as a medical expense, even though you get sick if you don't eat. And your dogs may be like children to you, but you can't claim them as exemptions. Knock it off. There's little you can do now to reduce your 2010 taxes. But you can do plenty to reduce your 2011 taxes, if you start now. At some point while doing taxes, people start getting frantic for deductions. "I had a client ask if he could use the time he spent helping his dad remodel his basement as a charitable contribution," says Terrence Rice, a CPA in Milwaukee. He also had one client try to deduct the cost of four boxes of Girl Scout cookies. (No, says the Girl Scouts, you can't deduct the cookies unless you donate them to charity. And come on: four boxes of Thin Mints?)

The only thing you can do now to reduce your 2010 taxes is contribute to a deductible individual retirement account. You have until April 15 to make your 2010 contribution. If you're not covered by a retirement plan at work, you can make a fully deductible contribution.

Tax law limits your ability to contribute to a deductible IRA if you do have a retirement plan available. It also limits how much you can contribute. A person under age 50 at the end of 2010 can contribute up to $5,000 to an IRA. If you're 50 or older, you can contribute $6,000. Your contribution reduces your taxable income, which, in turn, reduces your taxes.

If you can't open a deductible IRA, you're pretty much limited to scrounging around for additional deductions if you want to reduce your 2010 taxes.

As long as you have your finances spread out on the table around you, however, why not look to see what steps you can take to reduce this year's taxes?

Start with the proposition that the higher your tax rate, the less you're going to like anything taxed at the same rate as income. True, the taxes on interest from a CD wouldn't buy a rivet on an aircraft carrier, but sooner or later, rates will go up.

So make sure that most of your income-generating investments, such as CDs, bonds and money market funds, are in tax-sheltered accounts, such as IRAs and 401(k)s. As much as possible, keep stocks and stock mutual funds in taxable accounts. "It would be foolish to put stocks in retirement accounts and bonds in a taxable account," says Rice. "You'd be passing on spectacular opportunities that our tax code offers."

You normally don't hear "spectacular opportunities" and "tax code" in the same sentence, but Rice has a great point. If you put your stocks in a retirement account, such as a 401(k), your withdrawals will be taxed at ordinary income tax rates.

But, as any CEO knows, long-term capital gains are taxed at a maximum 15%, as are most dividends. Someone who makes $1 million in profit from a stock sale pays 15% on his gains if he has held them for a year; someone who gets income of $1 million pays a maximum 37.5%. Furthermore, stocks offer multiple ways to reduce your tax bill.

Losses. You can use a capital loss to offset any amount of gains. If you have more losses than gains, you can deduct up to $3,000 of your losses from your income and carry forward any unused losses to the next tax year.

If you're sitting on a big loss, but are hoping the stock market will turn around, you can buy another fund the same day, provided it's not substantially similar. For example, you could sell an equity-income fund and buy an S&P 500 index fund and get the loss. If you buy a substantially similar fund within 30 days, the IRS will disallow your losses.

Gains. You won't owe any taxes on a winning fund until you sell it. (The one exception is the annoying capital gains distribution that most funds make late in the year, but you can use losses to eliminate the taxes on those.)

Taxable accounts offer other ways to get rid of gains. If you donate appreciated stock to charity, you can deduct the market value of the stock and pay no taxes on the gains. If you're especially tax-averse, you can die. Your heirs will be able to calculate their gains based on the stock's price when you die — which, one hopes, is higher than when you bought it. Not that you'll care. True, you could put your stocks in a Roth IRA, in which case withdrawals won't be taxed. But you still won't be able to take advantage of your losses.

As always, don't let the tax tail wag the dog. If your employer offers a 401(k) match, contribute at least as much as the match, even if your overall allocation dictates that some of that money be invested in stocks. You'll reduce your taxable income and get free money — which certainly beats trying to find extra deductions in your shoebox.

Top 10 Smartest Things You Can Do With Your Tax Refund

1. Not get one at all – The money you loan the government interest-free, could be earning you interest somewhere else.
2. Pay off/down your debt – The absolutely smartest thing you can do in your life is eliminate your debt.
3. Build your emergency fund – Hint: Imagine you had 6 months of expenses saved up. Now imagine the economy tanking. How does it feel to be recession-proof?
4. Grow your nest egg for retirement – Taking your retirement in your own hands instead of relying on social insecurity will make you look like a genius!
5. Use it to pay 100% down on a reliable used car…if you need one – Buying a good used car can save you lots of money in terms of depreciation and interest.
6. Prepare it yourself using Turbo Tax – We have NEVER been disappointed with this option. Now you can even do your Federal return for free online. For us – $50 versus WAY TOO MUCH $$ anywhere else. Way worth it!
7. Give it to someone in need – If your financial situation is solid, why not give it to someone who is struggling if you can?
8. Use it to help fund your kids college – It will be time for your kids to go to college before you know it. Wouldn’t it be nice to bless them with a nice education without the debt that usually comes with it?
9. Use it to pay down your mortgage – If you have no debt, except for your mortgage, imagine how nice it would be to owe NO ONE!! Your income is COMPLETELY yours! What a feeling!
10. Donate a portion of it.

Top 10 Dumbest Things You Can Do With Your Tax Refund

1. Pay for a refund anticipation loan – Pay hundreds of dollars to get your refund faster? Hmmm. You may as well pay the Government to cash out your retirement fund while you’re at it?
2. Buy lottery tickets – Instead just give it to me. I’ll give you 30% back, while making you believe there is a chance you could win big.
3. Waste it on a new car – New cars lose value as soon as you drive them off the lot…duh!
4. NOT use it to pay down/off your debt – Continuing to pay interest on your debt while you waste it away on something meaningless is quite frankly immature.
5. Have it prepared by H&R Block –
6. Loan it to your broke relative – Just give it to them because chances are you will never see it again.
7. Ignore the fact that you have ZERO dollars in your emergency fund – Hint: unemployment, medical emergencies, a bad economy, and that little thing called life will happen. It’s just a matter of when.
8. Buy something that you think will impress your friends – The Joneses are not going to help you when your life comes crashing down. They will probably laugh at you though.
9. Blow it all by throwing a party – Perhaps the most fun way, but definitely the dumbest if you have not prepared for your future.
10. Drive down the interstate throwing it out the window $100 at a time – Believe it or not, a lot of people do this — I certainly used to!

Biggest Tax Changes for This Season

There are many important new tax breaks for U.S. individuals on the 2010 Form 1040, and several more have been eliminated, noted one tax expert.
Some of the new tax breaks are straightforward, others are complex, and some present choices,” said Terrence Rice, CPA. “But they all provide an opportunity to save money.”
1. Roth IRA rollovers no longer restricted. You can now make a qualified rollover contribution to a Roth IRA, regardless of the amount of your modified AGI.
2. Income from Roth rollover can be spread out. Half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012, unless you elect to include all of it in 2010. Normally, deferral is the better choice. However, if you have deductions or losses that could offset the income, or credits that could wipe out the tax on it, including it on your 2010 return may be the better choice.
3. Limits on personal exemptions and itemized deductions ended. For 2010, you will no longer lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your adjusted gross income.
4. Personal casualty and theft loss limit reduced. Each personal casualty or theft loss is limited to the excess of the loss over $100 (instead of the $500 limit that applied for 2009). This yields larger deductions and thus greater tax savings for affected individuals.
5. Corrosive drywall damage. A taxpayer who paid for repairs to his personal residence or household appliances because of corrosive drywall that was installed between 2001 and 2008 may be able to deduct those amounts as casualty losses under a special safe harbor from the IRS. Without the safe harbor, a casualty loss might not be allowed because long-standing rules bar deductions for damage resulting from progressive deterioration of property through a steadily operating cause. The safe harbor treats the corrosive drywall damage as a casualty loss and includes a formula for determining the amount of the loss.
6. Homebuyer credit. An eligible first-time homebuyer (and a long-term resident treated as a first time homebuyer) may be able to claim a first time homebuyer credit for a home that was purchased in 2010. To qualify, the home must have cost $800,000 or less. You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before October 1, 2010.
7. Adoption credit. For tax years beginning after December 31, 2009, the maximum adoption credit is increased to $13,170 per eligible child for both non-special needs adoptions and special needs adoptions. In addition, the adoption credit is refundable, i.e., you get the credit even if it exceeds your taxes.
8. Gifts to charity. The provision that excludes up to $100,000 of qualified charitable distributions (distributions to a charity from an Individual Retirement Account) has been extended. If you elect, a qualified charitable distribution made in January 2011 will be treated as made in 2010.
For businesses:
1. Luxury auto limits. First-year luxury auto limits for vehicles first placed in service in 2010 are $11,060 for autos and $11,160 for light trucks or vans (for vehicles ineligible for bonus depreciation, or if taxpayer elects out, $3,060 and $3,160, respectively).
2. Self-employed health insurance deduction. Effective March 30, 2010, a self-employed person who paid for health insurance may be able to include in his self-employed health insurance deduction any premiums he paid to cover his child who was under age 27 at the end of 2010, even if the child was not his dependent. Also, health insurance costs for a taxpayer and his family are deductible in computing 2010 self-employment tax.
3. Small business health insurance credit. For tax years beginning after December 31, 2009, there is a new tax credit for an eligible small business employer who makes qualifying contributions to buy health insurance for his employees. This credit is very complex but it can yield substantial tax savings. In general, the credit is 35 percent of premiums paid and can be taken against regular and alternative minimum tax.
4. Enhanced small business expensing (Section 179 expensing). To help small businesses quickly recover the cost of capital outlays, small business taxpayers can elect to write off these expenditures in the year they are made instead of recovering them through depreciation. Under the old rules, taxpayers could generally expense up to $250,000 of qualifying property—generally, machinery, equipment and software—placed in service during the tax year. This annual limit was reduced by the amount by which the cost of property placed in service exceeded $800,000. Under legislation enacted in the fall of 2010, for tax years beginning in 2010 (and 2011), the $250,000 limit is increased to $500,000 and the investment limit is increased to $2,000,000. The $500,000 amount can include up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property).
5. Special depreciation allowance. Businesses that acquire and place qualified property into service after September 8, 2010, can now claim a depreciation allowance in the placed-in-service year equal to 100 percent of the cost of the property. Businesses that acquired qualified property during 2010 on or before September. 8, 2010, can claim a bonus first-year depreciation allowance of 50 percent of the cost of the property.
6. Cellular telephones. For tax years beginning after Dec. 31, 2009, cellular telephones (cell phones) and other similar telecommunications equipment are removed from the categories of “listed property.” This means that cell phones can be deducted or depreciated like other business property, without onerous record keeping requirements.
7. Carryback of general business credits. Generally, a business's unused general business credits can be carried back to offset taxes paid in the previous year, and the remaining amount can be carried forward for 20 years to offset future tax liabilities. However, for the taxpayer’s first tax year beginning in 2010, eligible small businesses can carry back unused general business credits for five years instead of one.

Property Taxes on Vacation Homes & Timeshares

Depending on how often you use your vacation home yourself, how often you rent it out and how long it sits empty, you will fall into one of three different tax categories.
Use a Lot, Rent a Lot
The first category includes homes that are rented often but that are still used a fair amount by the owner. Specifically, this applies to homes that are rented more than 14 days a year and have personal use of more than 14 days or 10% of the rental days, whichever is greater. Personal use includes use by family members and anyone else who pays less than market rental rates.
Vacation homes fitting this description are considered personal residences. This helps you, because Uncle Sam lets you deduct interest on up to $1 million of mortgage debt (and up to an additional $100,000 for home equity loans). Property taxes are generally deductible, no matter how many homes you own. Those fortunate enough to own more than two homes can pick the two with the most mortgage interest each year — usually the main residence and the vacation home with the biggest loan.
Now for the hard part: accounting for rental income and expenses for your dacha. Basically, there is one way to deduct the expenses incurred while you use the house, and another way to deduct expenses incurred while you rent it. But if done correctly, there is generally no tax liability in these cases.
The first step is to allocate interest and property taxes between rental and personal use. For example, say the home is rented for three months, used by you and your family for two months, and vacant for seven months. Since vacant time is considered personal use, you allocate three months' worth, or 25%, of the interest and taxes to the rental period and nine months' worth, or 75%, to personal use. Write off the personal part of the interest and taxes as itemized deductions on Schedule A. In the past, the IRS has disputed this method of allocating the interest and taxes, but the tax court has ruled it's okay.
So far, so good. Now buckle up your chin strap, because there's white water ahead. The goal here is to reduce the rental income to zero to eliminate any tax liability. First, you reduce the income by 25% of the interest and tax expenses you incurred while renting. If there's any rental income left, you can deduct a percentage of operating expenses — maintenance, utilities, association fees, insurance and depreciation — but only to the point where you "zero out" that remaining income.
There is one difference, though: When you calculate operating expenses, you don't count the days the house stood empty. In our example, the house was occupied for only five months, so three months' worth, or 60%, of the maintenance, utilities etc. goes to the rental period and two months' worth, or 40%, to personal use. That 40% evaporates as a totally nondeductible item. On your tax return, you will use Schedule E (Supplemental Income and Loss) to report 100% of the rental income, 25% of the interest and taxes and 60% of the expenses. In many cases, the bottom line on Schedule E will be zero because the rental income and expenses will be a wash.
When all is said and done, this procedure should allow you to fully deduct interest and taxes (part on Schedule A and the rest on Schedule E) and usually enough operating expenses to wipe out your rental income. Any operating expenses that you cannot deduct are carried over to future years, when they can be deducted if you have rental profits. (In real life, this rarely occurs.) Overall, this is not a bad deal once you master the paperwork.
Rent a Lot, Use a Little
The second vacation-home tax category typically applies to houses that are used very little by the owner. Your home will fall under the tax rules for rental properties rather than for personal residences if you rent more than 14 days a year and if your personal use doesn't exceed 14 days or 10% of the rental days, whichever is greater. For example, assume you rent 210 days and vacation 21 days — you have a rental property on your hands. (Vacation 22 days, and you're back under the personal-residence rules explained earlier.) Interest, property taxes and operating expenses should all be allocated based on the total number of days the house was used. The total number of days used in this example is 231, so the split would be 21/231 for personal use and 210/231 for rental.
Here, if the money you get from renting the house does not cover the cost of renting it, you can post a taxable loss on Schedule E. But don't start tallying up your deductions just yet. First you must successfully clear the hurdles set up by the Internal Revenue Service in the form of passive-loss rules. In general you can deduct passive losses in a given tax year only to the extent of passive income from other sources (such as rental properties that produce gains).
There is an exception, though. The IRS will let you write off up to $25,000 of passive-rental real estate losses if you "actively participate" and have adjusted gross income under certain income thresholds. Making the day-to-day property management decisions will get you over the active participation hurdle. Unfortunately, the exception is phased out once you reach a certain income level, and the IRS says the exception doesn't apply anyway when the average rental period is seven days or less. But it's not a total loss: The IRS will let you carry over the passive losses you can't take this year into future years. The reality is that many owners find their hoped-for tax losses deferred by the passive rules.
Another problem: The interest incurred during your personal use (21/231 in our example) is nondeductible, because your home doesn't qualify as a personal residence. (The personal-use portion of property taxes is still deductible on Schedule A.) This means you may actually benefit from slipping in some extra vacation days this year. Then you drop back into the personal residence category — which means you can deduct the interest and taxes and usually offset all of your rental income with deductible operating expenses.
Use a Lot, Rent a Little
The final category is a rarity in the tax laws: It is simple and benefits the taxpayer. This one applies to homes that are rented for fewer than 15 days a year and used by the owner for more than 14 days. These homes are considered personal residences, so you simply deduct the interest and property taxes on your Schedule A, the same as you would for your primary residence. (There's no allocation nonsense to worry about.)
Here's the free lunch: You need not declare a penny of the income. You don't get any write-offs for operating expenses (maintenance etc.) attributable to the rental period, but who's complaining?
If your vacation home is fortuitously located near a major event — like any golf tournament featuring Tiger Woods — you may be able to rent for a few days at an outrageous rate. Under the tax rules, you can stiff Uncle Sam with a clear conscience.
What About Timeshares?
For many people, owning a timeshare is as close as they can come to having a vacation home. These days, a timeshare week can easily cost over $15,000. In fact, two winter weeks in Beaver Creek, Colorado can run you $60,000 and up, so we're not talking about trivial sums here. Many folks borrow all or part of the purchase price, often through the developer. Unfortunately, the tax rules are not particularly favorable if you rent out your unit.
But first let's assume you use your timeshare rather than rent it out. Your share of property taxes (usually buried in the annual maintenance fee number) is deductible on Schedule A. If you have mortgage interest, you can generally deduct it on Schedule A as interest on a second home. Simple enough.
Now let's say you do rent — as long as it's for less than 15 days, the income is automatically tax-free. Right? Wrong. According to the IRS, the tax-free rent deal is available only when the combined rental days for all the owners of your unit total less than 15 and you personally use the unit for more than 14 days. Not likely.
If you rent your unit at all, the Feds say you should follow the personal residence rules (use a lot, rent a lot) explained earlier by allocating expenses (interest, property taxes, maintenance, utilities, etc.) between personal and rental based on total usage by all the owners of your unit. This approach makes little sense and it's usually impossible to gather the necessary information from other owners anyway. So I advocate making the allocation based on either your own usage pattern or your best guess about total rental usage and personal usage by all the owners.
For example, if it appears that 50/50 is the appropriate split between rental and personal use, allocate 50% of the expenses to the rental period and take deductions up to the amount of your income on Schedule E. Then deduct the personal portion (50% in this example) of property taxes on Schedule A.
Unfortunately, you can't deduct the personal portion (50% again) of your interest expense unless you hang out in the unit more than 14 days during the year. That's impossible unless you own at least three weeks, and few people do. Arguably, you can write off the personal portion of the interest on Schedule A as investment interest expense if you acquired your timeshare with the expectation it would appreciate in value. (In some areas, timeshares have indeed gone up.)
Playing the Gain Exclusion Game With Multiple Residences
As you know, there is now a generous gain exclusion for sales of primary residences ($250,000 for singles, $500,000 for married couples). If you are lucky enough to have one or more vacation residences, there are some tax-saving games to be played here, if you are so inclined. The basic gain exclusion qualification rule is simple. You must have owned and used the home as your main residence for at least two years out of the five-year period ending on the date of sale. If you are married, the full $500,000 break is available as long one or both of you satisfies the ownership test and you both satisfy the use test.
So here's the deal. Say you are married and own three homes. First there's your current main home, which qualifies for the $500,000 exclusion and could be sold for a $400,000 gain. You sell it tax-free and move into your vacation home in Destin, Florida. Live there for two years, and you can unload the property and exclude up to $500,000 of gain from this sale as well – but here’s a caveat: You have to run a calculation to prorate the gain accrued during the period you used the property vs. the period it was rented. The gain built up during your use of the property is subject to the gain exclusion. Then, move into your remaining vacation home in Santa Fe, New Mexico, and live there for two years. You get the idea.

And if you are determined to own three homes, you can simply replace each one after it's sold with another property in the same or different location. Then you could start the "use and sell" rotation all over again, while happily excluding gains all along the way. Obviously relatively few people are affluent enough to be able to stiff Uncle Sam to this extent, but if you are one of them, enjoy. One more thing: Be sure to check on the state income tax implications before actually implementing this maneuver.