Announcement

Collapse
No announcement yet.

Salt workaround

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Therrell123
    started a topic Salt workaround

    Salt workaround

    Any way to get around or countact salt

  • New York Enrolled Agent
    replied
    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

    Leave a comment:


  • FEDUKE404
    replied
    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

    Leave a comment:


  • David1980
    replied
    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

    Leave a comment:


  • FEDUKE404
    replied
    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

    Leave a comment:


  • David1980
    replied
    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.

    Leave a comment:


  • Burke
    replied
    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).

    Leave a comment:


  • David1980
    replied
    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.

    Leave a comment:


  • belle
    replied
    Many, many states attempted to circumvent SALT; none were successful.

    Leave a comment:


  • New York Enrolled Agent
    replied
    Well if you find a way to outfox 164(b)(6) of the Internal Revenue Code, please let us know.

    Leave a comment:

Working...
X