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    Salt workaround

    Any way to get around or countact salt

    #2
    Well if you find a way to outfox 164(b)(6) of the Internal Revenue Code, please let us know.

    Comment


      #3
      Many, many states attempted to circumvent SALT; none were successful.
      Belle

      Comment


        #4
        New York created the New York State Charitable Gifts Trust Fund. https://www.tax.ny.gov/research/stat...-tcja-2017.htm

        The idea being you would receive a tax credit on the NY return for your charitable contribution. The charitable contribution being deductible on the federal tax return and not subject to the $10,000 limit.

        Some other states have done similar workarounds.

        In August there were proposed regulations that would require reducing the charitable contribution for any state credit received. https://www.irs.gov/newsroom/treasur...al-tax-credits

        I'm not aware of anything more recent than that, though I have not researched this issue in depth either.

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          #5
          Originally posted by David1980 View Post
          New York created the New York State Charitable Gifts Trust Fund. https://www.tax.ny.gov/research/stat...-tcja-2017.htm

          The idea being you would receive a tax credit on the NY return for your charitable contribution. The charitable contribution being deductible on the federal tax return and not subject to the $10,000 limit.
          Some other states have done similar workarounds..
          It does not appear that this NYSCGTF has anything to do with state and local income tax deductions (SALT).

          Comment


            #6
            Originally posted by Burke View Post

            It does not appear that this NYSCGTF has anything to do with state and local income tax deductions (SALT).
            It was made as a work around - that is it's purpose.

            Say for example you would owe $27,000 tax to NY state. If you paid $27,000 in one year you would be limited to deducting $10,000 on your federal income tax under the $10,000 SALT limitation.

            What they did was added a charitable fund that provides an 85% tax credit. Say you donated $20,000 to the fund. You would get a $17,000 tax credit reducing your state tax to $10,000 and thus staying below the $10,000 limitation. The $20,000 donation being a deductible charitable contribution not subject to the $10,000 limitation giving you $30,000 of deduction on the federal return.

            At least before those August proposed regulations.
            Last edited by David1980; 05-17-2019, 12:21 PM.

            Comment


              #7
              Originally posted by David1980 View Post

              It was made as a work around - that is it's purpose.

              Say for example you would owe $27,000 tax to NY state. If you paid $27,000 in one year you would be limited to deducting $10,000 on your federal income tax under the $10,000 SALT limitation.

              What they did was added a charitable fund that provides an 85% tax credit. Say you donated $20,000 to the fund. You would get a $17,000 tax credit reducing your state tax to $10,000 and thus staying below the $10,000 limitation. The $20,000 donation being a deductible charitable contribution not subject to the $10,000 limitation giving you $30,000 of deduction on the federal return.

              At least before those August proposed regulations.
              So how exactly do NY State et al get around the long-standing IRS requirements for a qualifying "charitable deduction" where it would appear some personal benefit ( = reduction in income tax, in your example $17k ) has been derived??

              FE

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                #8
                Originally posted by FEDUKE404 View Post

                So how exactly do NY State et al get around the long-standing IRS requirements for a qualifying "charitable deduction" where it would appear some personal benefit ( = reduction in income tax, in your example $17k ) has been derived??

                FE
                State credits for donations to a charity is nothing new and existed far before the $10,000 SALT limitation existed. See Chief Counsel memorandum 1105010 from 2011.

                https://www.irs.gov/pub/irs-wd/1105010.pdf

                Comment


                  #9
                  Originally posted by David1980 View Post

                  State credits for donations to a charity is nothing new and existed far before the $10,000 SALT limitation existed. See Chief Counsel memorandum 1105010 from 2011.

                  https://www.irs.gov/pub/irs-wd/1105010.pdf
                  Interesting. Count my lucky stars I'm far away from NY and the Cuomos of the world!

                  "Accordingly, in the instant case Taxpayers may take a 170 deduction for the full
                  amount of their charitable contributions of cash and appreciated stock, assuming the
                  requirements of 170 are otherwise met. Taxpayers are not entitled to a 164
                  deduction for the amount of the state tax credit used to offset their State tax liability.
                  The $m Taxpayers received in return for the transfer of excess State tax credits does
                  not reduce Taxpayers 170 deduction, but is instead includable in income as an
                  amount realized from the sale of the credits."

                  FE

                  Comment


                    #10
                    Originally posted by David1980 View Post

                    State credits for donations to a charity is nothing new and existed far before the $10,000 SALT limitation existed. See Chief Counsel memorandum 1105010 from 2011.

                    https://www.irs.gov/pub/irs-wd/1105010.pdf
                    I think you're comparing an apple to an orange. This is 2019 - post TCJA. The memo clearly states it is not intended as guidance - only as a limited answer.

                    Accordingly, in the instant case Taxpayers may take a 170 deduction

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