sconti- There are many things you can factor in to minimize your capital gain on the house you sold if the profit exceeds the $500K exemption for a married couple. Start by taking a look at the IRS publication link below. Then, when you think you understand it, invest an hour with a CPA to make sure you've got everything you've entitled to. As far as the house you just bought, the deductions are going to be interest and property taxes. Here is a link that might be useful: Selling your home.

Debr, Federal (and maybe even state) INCOME Tax will need to be paid by the heirs if there are any tax deferred assets (like IRA's or NQ Annuities). This could have been factored in by the attorney. There also may be some probate expenses on top of the taxes which may push that total estate settlement cost to more than his estimated one-third the estate. Since you said no planning had been done I'd bet the estate would go through probate; unless everything was IRA or annuity with a designated beneficiary. This may save on the administrative costs, but brings us back to the Income tax that would be due. Like davidandkasie said, it really depends a lot on the individual situation and there isn't enough information here. devorah is correct - FEDERAL ESTATE TAX exclusion for 2006 is $2mil - but this has nothing to do with the income taxes or possible administrative costs on settling the estate. Good luck.

I did specifically ask last year (prepared by H&R Block) and they had no advice for me. The office wasn't particularly busy at the time, but I felt like we were being herded like cattle. Even funnier was that I had done them myself using their online program, but was concerned over the small refund amount and wanted to go into the storefront to have them check it all over. They didn't have to enter a single bit of info themselves (they were able to pull it up from what I'd already done) but that didn't stop them from charging the full amount, lol, and still had no advice for us. We're ending up owing this year, so I'm not sure what we're doing wrong, but I surely won't use H&R Block to find out, hehe!

It's really difficult to start up a home business--you have to be properly registered, you have to keep impeccable records, charge and pay the appropriate taxes. And when you decide to do something in the food line? Multiply the red tape by ten. You'd probably better start with the health department. In many jurisdictions, it's not legal to bake/cook food in a home kitchen for sale--if that's true where you live, you'll need to find an approved commercial kitchen to rent--and that's going to cut into your profits. Look, I hate to be a wet blanket, but I've done the home business thing--many years ago, and it didn't involve food. It turned into a nightmare. You have to do every little tiny thing by the book. Perhaps check in with the agency that promotes small businesses in your area. Or what about contacting a restaurant or two, to see if they might be interested in paying you to come to THEIR locations to bake your bread for their use--you might have to do that in the middle of the night, when they aren't preparing meals, but it might be an interesting solution. Pack up some samples of your best wares and visit some of the local independents. Good luck, but please be sure to do all your research before jumping into something that could end up costing you more than you'll make. And hey, if you're good at creating recipes? I'd highly recommend considering recipe contesting. That costs you next to nothing, and can bring in truly big bucks (I've made up to $25,000 for a single recipe, some contests pay even more).