Idiotic Gift

[Black Bart]

The Case of the Tennessee Tomato & Aunt Witch Hazel

My client is a quite sought-after divorcee in her early 30s with good looks

woman has been harassed on her own property by men with degrees in tent

Tabloid stuff in the making. Who knows?

rich aunt and uncle don't want to keep the property.

Looks like you've had a busy week. I just got back from sunny/surfy Bongo Bongo. The scenery was nice there, but, of course, the home-grown tomatoes are always best.

Anyhow, back to business!

You're absolutely right; this has all the makings of a good Ellery Queen novel. Tell client to watch out for professional people (lawyers, accountants, realtors) with designs on her design. Also advise her to put up a storm door since the collective huffing and puffing of all those Romeos in full throttle may blow her tent down.

Well, on to the problem. Too bad she doesn't live here. 1041's, etc. are completely unknown since nobody ever has enough assets to give anything away. I know a lawyer that would do the whole thing for $125 and he doesn't make 1099's. Quitclaim and sell (it gets the job done). So what if that document's not "pure?" Neither is the driven snow nowadays.

Actually, I too believe that Beesey is right, i.e., aunt and uncle are selling their property. Looks like they'd need to file on it, but if they didn't want to owe tax I guess they could pay her the proceeds (per written agreement) in excess of cost as a commission for using her realtor and, then, of course, she would owe tax. Even at that though, a miserly IRS agent might look at it as a sale and a gift anyway, since it's not normally done and her "commission" might be more than the realtor's. If it was so regarded, then agent might want to place the gain back to the kinfolk and in maybe a higher bracket.

Dang guv'mint anyways! Who asked them to get involved? Doesn't look lak it'd be any of their business if you want to give your property away. I may join one of those fringe kook tax protester outfits and go aroun' rantin' 'n' ravin' 'bout the constitution and the gold standard, etc. etc.

[dmj4]

Profit?

Snag,
You may not know how much the Aunt and Uncle paid for the land but how much profit could they have on backwoods land in TN over two years? Has your client mention that?

In my area of TN usual commission on land sale is 10% and 6% on home sales.

[Snaggletooth]

You're Right

Donna(?) you are so right.

Many of the responses have portrayed the Aunt from Hell as looking for ways to avoid massive capital gains taxes. When in fact, they are just looking to me to interpret the consequences of what they are doing.

Bought 2-3 years ago at what could not have been a bargain price under the circumstances. How much money can they really make in a couple of years after paying a realtor? Plus, we're talking about some 5 acres in backwoods Tennessee surrounding my client's 1 acre, more or less. Unimproved land probably going for around $800 an acre.

The "Aunt from Hell" may in reality be closer to Aunt Bea.

Got lots of good answers from these folks, though. For which I am thankful.

[Black Bart]

Much ado about nothing.

Donna(?) you are so right.

Many of the responses have portrayed the Aunt from Hell as looking for ways to avoid massive capital gains taxes. When in fact, they are just looking to me to interpret the consequences of what they are doing.

Bought 2-3 years ago at what could not have been a bargain price under the circumstances. How much money can they really make in a couple of years after paying a realtor? Plus, we're talking about some 5 acres in backwoods Tennessee surrounding my client's 1 acre, more or less. Unimproved land probably going for around $800 an acre.

The "Aunt from Hell" may in reality be closer to Aunt Bea.

Got lots of good answers from these folks, though. For which I am thankful.

Just kidding. I was doing a take-off on j's "witch" comment. Aunt Bea sounds okay to me and neither did I originally see any devious conspiracies or "bad people," etc. Just an older couple trying to do their niece a favor without making a federal case of it and, naturally enough, wanting to look before they leap (asking you what would happen if they did). I'd do the same.

Also, $5,000 bucks or so isn't enough to raise any hackles or make IRS interested, so looks to me like you could do it about anyway you want while minimizing the paperwork and people involved. No point in making a big deal out of it--that's their (IRS's) job.

[jainen]

Aunt Bea

Do you mean Aunt B-E-E from Andy Griffith show, or Aunt B-E-A from Josephine Tey's novel "Brat Farrar"? Anyway, one of a witch's most basic talents is deceiving you.

[Black Bart]

Do you mean Aunt B-E-E from Andy Griffith show, or Aunt B-E-A from Josephine Tey's novel "Brat Farrar"? Anyway, one of a witch's most basic talents is deceiving you.

Looks like we're both wrong. It's Bee in both cases (no, no--I didn't know that--I looked it up, of course). I never even heard of that writer. I'm not that fond of murder novels, but maybe I'll send off for it anyway (sometimes I think chance encounters are omens).You can get it (Brat Farrar) from Amazon for 44 cents plus shipping of two bucks or so.

Re: cynicism. If you expect to see a witch, you'll probably perceive a witch. Seems to me that's too much negative baggage to carry around. But...everyone to his own taste, said the old man when he kissed the cow.

Nice catch, anyway. Another literary muse on the board (bet the purists on the board don't care for that very much.

P.S. Note to the poster formerly known as "CHAT ROOM'' who, on the "other" board, complained about my "off-subject" posting: Here's your big chance to get even.

[jainen]

Aunt Bee

I don't know what made me think of that book, but I guess I didn't think hard enough. Aunt Bee is the central character in an English mystery novel with horses. An imposter claims to be the long-lost heir, and convinces almost everyone.

[Black Bart]

Old books

Yeah; odd isn't it when you read a book from your childhood years and years later and have an entirely different perspective of it? Although sometimes you want one just to get away from any deep plots that you have to think about--like sometimes watching an action adventure movie (Predator, etc.) or reading a Western series (LaMour) novel, so all you have to do is absorb it and not figure it all out. I saw the phrase "Pollyanna" used so much in contemporary writings as a metaphor for a relentless positive outlook (I'll bet you think that's overdone, don't you?) that I looked it up and, although I'd never read it, it turns out to be an antiquish book, similar in style, if not subject, to the Tey genre. Tey died in 1952 and (I can't think of her name) Pollyanna's author wrote, I believe, in the early part of the 1900's. Anyway I'm reading the thing online and, although occasionally tedious, it's still kind of fun to run through and recapture your childhood a bit.

TAX FOCUS (trying once again to fulfill vow to at least mention taxes in each post): Do writers get travel expense deductions off their taxes if they spend two weeks at Waikiki drinking Margaritas on a sun-drenched beach to get the "feel" of island life?

[Armando Beaujolais]

TAX FOCUS (trying once again to fulfill vow to at least mention taxes in each post): Do writers get travel expense deductions off their taxes if they spend two weeks at Waikiki drinking Margaritas on a sun-drenched beach to get the "feel" of island life?

Serioulsy now, folks,

I'd bet it would be a tough sell to a revenue agent, who probably doesn't get to Waikiki often and has that envy issue going on. But if you're going to bow to the whims of a revenue agent, there's no reason for the client to pay you for representation. They can bow down just as well by themselves.

If the writer was writing about island life, why not? I wouldn't list the expenses as "Waikiki/margaritas," maybe something like "Research and Experimental Expenditures." The deduction would be denied all the way up to court, but I don't know of any fun limitations in the tax code. Sounds ordinary and necessary to me. If the writer was writing about powder metallurgy, I don't think so.

[Black Bart]

Write-offs

If the writer was writing about island life, why not?

"Research and Experimental Expenditures."

I don't know of any fun limitations in the tax code.

Sounds ordinary and necessary to me. If the writer was writing about powder metallurgy, I don't think so.

Say Beau,

Your take on this question could lead to....hmmm; new and uncharted territory in the realm of tax deductible items; i.e., if a person can justifiably call himself/herself a writer, then it seems there'd be no limit as to what could be deducted. If I can just get something published, then I'd have the credentials to write off, say, a trip to Chicago to check out and get a "feel" (no pun intended) for the inner workings of the Playboy Club. Or maybe a day (might ought'a make that a week) in the life of a professional bourbon-taster. Gosh, the possibilities are endless.

I've got high hopes, so ah'm off to creative writing class at the local community college. I think I may have the edge on the other students too 'cause I'm not allergic to powder (which you say is a no-no).

[jainen]

Night light

Is this only for writers? I could be a musical composer, working on a piece called Moonlight Sonata which requires experiencing the night life I mean night light of Germany.

[ED SMITH]

PAT's

Has anyone looked into private annuity trusts? Depending on the circumstances and each parties needs, it might be an option. They work somewhat like an installment sale except that ALL the tax is deferred. The annuitant receives a lifetime income which is part CG, part return of cap.,and ordinary income on the interest earned.
ED

[Bees Knees]

if a person can justifiably call himself/herself a writer, then it seems there'd be no limit as to what could be deducted. If I can just get something published, then I'd have the credentials to write off, say, a trip to Chicago to check out and get a "feel" (no pun intended) for the inner workings of the Playboy Club.

Travel as a form of education is not deductible - Section 274(m)(2).

I think the IRS Pubs use the example of a High School French teacher traveling to France to take in the culture - no deduction for the trip.

[Black Bart]

Capital gains

Has anyone looked into private annuity trusts? Depending on the circumstances and each parties needs, it might be an option. They work somewhat like an installment sale except that ALL the tax is deferred. The annuitant receives a lifetime income which is part CG, part return of cap.,and ordinary income on the interest earned.
ED

Huh? What's he talkin' about? Oh, yeah; real estate sales!

Talk about off-subject! And here I've morphed Snag's thread into an English lit round-table discussion. Sorry, Ed. Sorry, Snag. Please carry on, Mr. Smith. I promise to restrain my baser instincts and stick strictly to business.

P.S. How you gonna get a lifetime's income out of five thousand bucks (although it'll go pretty far hereabouts)?

[Armando Beaujolais]

Is this only for writers? I could be a musical composer, working on a piece called Moonlight Sonata which requires experiencing the night life I mean night light of Germany.

The whole point is that you can't say "Yes, it's deductible," or "No, it's not deductible." It's a facts and circumstances deal.

Could Jimmy Buffet write off a trip to a place called "Margaritaville" where he stepped on a pop top and cut his heel, then wrote a song about it? I'd bet he could, because he (assume) reports loads of taxable income based on the place and his experience. I'll bet he could even write off his parrot as a business expense.

But that powder metallurgy guy would have a problem.

One guy was able to write off his dog as a business expense because he owned a junk yard and the dog was necessary to protect it from critters and humans at night. But I'll bet I'd have a tough sell if that gal who does day care and I wrote off her dog as part of business use of the home will have a rough time if she ever gets audited.

It's a facts and circumstances deal.