[bobpete]

I am retired with $1400 SS and $600 monthly pension. I must dispose of fully depreciated & underwater real estate which will result in $200,000 tax liability to CA and the IRS w/o any cash from the disposal sale. After this sale I will have no assets and only liabilities,

How much can CA and the IRS take from my SS and pension?

[AtlantaTaxExpert]

The Social Security is safe, because you can show with no problem that the Social Security is necessary to maintain your living standard above the poverty level.

I suspect the same applies for your private pension, i.e. you need it to pay your monthly bills for living at a subsistence level.

You can submit paperwork to the IRS under the Offer in Compromise process to prove this fact to the IRS. Once you convince the IRS that there are no hidden assets, they will declare the tax debt "uncollectible" and effectively leave you alone except for the quarterly tax notice showing the accruing interest on the tax debt. After ten years, that tax debt will go away.

Though I do not practice in California, I believe a similar process can be initiated with the California Franchise Tax Board.

Ideally, you would get help from a competent tax professional to file the required paperwork to make this happen, but such professionals do NOT work for free, and it looks like you could NOT afford the fees associated with this process. You MAY want to check out a legal clinic to see if they can help you.

Phone calls to both the IRS and Franchise Tax Board should get you started in the right direction on submitting the paperwork yourself if the legal clinic cannot provide the professional help needed.

Note that if you have some type of financial windfall (lottery or casino win, inheritance, etc.), these tax bills WILL still be in effect for the next ten years and the IRS and California Franchise Tax Board WILL have their hands out to get some payment from you.