Legal question?

Reply #36

justxploring — Wed, 26 Jul 2006 22:30:18 GMT

True. In addition to the tuition, you can pay approved medical expenses and insurance premiums for someone. You can also give more than $12,000 as long as the total doesn't exceed the lifetime allowance which I believe is now a million, which might change. I think it just has to be reported as a gift covering XXX amount of years, so if you give someone $60,000 in one check, it would cover 5 years of gifts. As I wrote earlier, people should always contact a trustworthy accountant or lawyer.... [ More ]

Reply #35

truecritic — Wed, 26 Jul 2006 08:41:37 GMT

Hey fast eddie where are you? Your comments, ideas and presence would be welcome!

If any taxes should be removed, they are the taxes on any form of gambling. By definition and by reports in the news media, more money is lost than ever won. Therefore anyone able to make a little profit after overcoming the odds deserves to keep the winnings without being penalized with taxes.

Gifts aren't taxed until you go over the $12,000 (as pointed out by justxploring) - seems like a reasonable amoun... [ More ]

Reply #34

justxploring — Wed, 26 Jul 2006 06:53:27 GMT

I don't understand the people who think trying to legally avoid paying taxes has anything to do with immorality. Corporations are the biggest offenders and often try everything available to save money on taxes. I am a very ethical person. I've never stolen as much as a candy bar. However, I pay my taxes because I have to and it's the law, not because I want to and I don't think that's a blemish on my moral character. But why can't I decide where my money is spent? I don't think the common taxp... [ More ]

Reply #33

justxploring — Wed, 26 Jul 2006 06:43:52 GMT

Very interesting suggestion, Gasmeterguy.

Reply #32

guesser — Wed, 26 Jul 2006 05:25:02 GMT

So you see no problem with paying 240 mill out of 365 mill in taxes, and being able to keep only 125 mill ?

I already know what you are going to say: '125 mill is enough for me'.

Fine, most folks that got 125 mill wouldn't care, not even sure I would, BUT, let's go down a few notches:

Say you win 36.5 mill, you pay 24 mill in taxes, leaving you with 12.5 mill - I know that's still a lot of money also, but doesn't anyone think a tax rate of 55-65 percent is just not right ? 2... [ More ]

Reply #31

KY Floyd — Wed, 26 Jul 2006 05:24:17 GMT

What were you attacked about? Was it because you're new or because of what you said?

As far as the taxes on winnings go, the most you could lose to taxes would be about 53%. That's a worst case scenario based on living in one high tax state and winning in another high tax state, and having every dimetaxed at the highest rate. That could be 18% to the states, and 35% to the IRS. If you actually won $365 million that means you might pay $193,450,000. So far, nobody has ever come close to winnin... [ More ]

Reply #30

Tx_Mega_Player — Wed, 26 Jul 2006 04:55:48 GMT

I agree with Jori. I decent, moral person will report it to the IRS because that is what the law requires. Why would any millionnaire try to evade taxes when you can hire a good accountant for help in avoiding taxes. There isn't anything wrong or illegal in avoiding taxes, as long as you follow the letter of the law. Can you imagine having several million dollars in the bank, but having to go the prison for tax evasion for not paying several thousand dollars in taxes. Just pay what the law r... [ More ]

Reply #29

guesser — Wed, 26 Jul 2006 04:10:38 GMT

Jorli, can you please explain to me why folks on this website have a problem with 'newbies' such as Alec West, or me ?.

I am a member on several other websites, maybe 30 or 40 that I visit from time-to-time, and when I joined this one, I was attacked as well.

Why is that ? I've never been attacked on any website for being a noob aside from this one, so I am wondering why some folks attack noobs on THIS website ? It's uncalled for.

Noobs have to start SOMEWHERE, correct... [ More ]

Reply #28

TheGameGrl — Wed, 26 Jul 2006 01:43:47 GMT

A direct and definitive answer based solely on the limited information supplied: yes your friend can retain the money without the spouse getting a dime. Since you didnt ask anyone here for how to accomplish this, its best to answer your question directly and leave it as such.

Thanks for the hypothetical question.

Reply #27

KY Floyd — Tue, 25 Jul 2006 18:11:53 GMT

The government simply taxes transactions. That most financial transactions involve a tangible benefit is just a function of human nature. We don't have unlimited resources, so we want something in return when we expend our resources.

I'm sure you're a nice, deserving guy, but if I simply give you 20 grand I don't think I'm going to call it philanthropy. You're right that I wouldn't get a tangible benefit, but why would I give away money if I didn't believe I got some benefit? Some warm, fuzz... [ More ]

Reply #26

GASMETERGUY — Tue, 25 Jul 2006 01:05:20 GMT

Another avenue you might wish to consider is making this person a loan instead of a gift. See an attorney. He can draw up all the proper legal papers.

The difference will be that you, as the loaner, will never enforce collection. But should the IRS claim you made your friend a gift, refer to the Federal court case United States vs.Harold Ford.

Reply #25

AlecWest — Mon, 24 Jul 2006 18:45:34 GMT

KY,

Usually, the only time taxes are levied when money changes hands is during a transaction for goods or services where two people reap tangible benefits - a buyer/seller or employer/employee. Therefore, the reason why each party is taxed on the same money is because they both get a tangible benefit. However, if a benefactor gives his money away to a friend, only the friend receives a tangible benefit. The benefactor is out the money. So, comparing transactions for goods or services to p... [ More ]

Reply #24

KY Floyd — Mon, 24 Jul 2006 15:15:31 GMT

A decent, moral government, wouldn't attempt to tax a man twice for the same money

Arguments about how decent or moral it is aside, for the most part the government we've got doesn't tax us twice for the same money. Money changes hands, and that's when most taxes are levied. The gift tax is simply an income tax on the amount of the gift. Since the tax is paid by the person making the gift it's just not as obvious as when taxes are levied against what your employer gives you.... [ More ]

Reply #23

AlecWest — Mon, 24 Jul 2006 10:27:47 GMT

Jack,

I understand. I suspect my opinions on anonimity and privacy as they apply to lottery winners are minority opinions. But, that's kind of what the site was for ... the unsung minority that has those concerns. Hmm ... that might be a topic for another thread.

Regards,

Alec

Reply #22

justxploring — Mon, 24 Jul 2006 08:46:14 GMT

The 2006 annual exclusion for gift tax is $12,000 not $10,000. The annual lifetime exclusions change from time to time, so it's always best to check with the IRS or a CPA. This is not illegal or cheating. You can also pay premiums for medical insurance, medical bills and school tuition. The IRS has a list of these gifts. It's a legal way of reducing one's estate tax before death. Most of the time the donor pays any gift tax above the legal exclusion, not the recipient of the gift, but they... [ More ]

Reply #21

Rip Snorter — Mon, 24 Jul 2006 06:14:26 GMT

AlecWest:

Thanks. I visited your page.

While I don't share your concern for what becomes of lottery winners, we do share an admiration for Thoreau.

Best to you,

Jack

Reply #20

AlecWest — Mon, 24 Jul 2006 05:51:26 GMT

Jack,

Well, I'll have a long and fruitful tenure here as long as I manage to stay out of jail (grin). To be honest, I'd probably pay the darn gift tax. But, I've been reading Walden (by Thoreau) lately and have been in an antsy mood about our tax peculiarities.

BTW, I'm not a complete newbie. I've been here since January ... but lurking more than posting. FWIW, anyone who's interested in why I'm here (lurking most of the time) only has to check out my profile page and click on the link... [ More ]

Reply #19

Rip Snorter — Mon, 24 Jul 2006 05:17:34 GMT

Welcome to LP AlecWest.

Here's hoping you have a long and fruitful tenure here.

Good luck,

Jack

Reply #18

AlecWest — Mon, 24 Jul 2006 03:02:33 GMT

Jorli,

Yes, we are clear on this point. And if I went to jail for doing what I suggest, so be it. To some people it's called breaking the law. To others, like Henry David Thoreau, it's civil disobedience. Either way, there's jail time for not paying expected taxes (just like Thoreau had to serve) ... if you get caught. But given the two scenarios I mentioned in my first post to this thread, I don't really see how that would be possible.

But, I think I'd sleep comfortably enough.... [ More ]

Reply #17

Jorli D — Mon, 24 Jul 2006 02:33:40 GMT

Then we are clear on this point Alec. There are a lot of people who hate to be taxed and will find ways to try to steal from the government by not paying taxes. It is the law of this land and if you don't like that law, there are other places to go. You apparently sleep well at night knowing you have cheated on your taxes. There will come nights when you won't sleep so comfortably if you're ever caught cheating on your taxes.

I wish you luck. Uncle Sam isn't always so forgiving.... [ More ]

Reply #16

AlecWest — Mon, 24 Jul 2006 02:25:54 GMT

First, if I win a $10,000,000 cash-option jackpot, I'll pay 39.6% income tax on it. In short, taxes have already been paid. If I gave $1,000,000 to my friend Bob, it doesn't matter whether he or I paid the gift tax. The gift tax is a tax on top of income upon which taxes have already been paid (ie., double taxation on the same income). Maybe you don't comprehend what you read.

As to what brought me to this particular thread, I suspect it's the same thing that brought you. And, frankly, I... [ More ]

Reply #15

Jorli D — Mon, 24 Jul 2006 02:01:33 GMT

Q: Who pays the gift tax?

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

You speak with a forked tongue or maybe you just don't comprehend what you read.

I also find it interesting that you are a newbie and this was the one topic to draw your attention. Why is that?

Of all the threads on LP, you were drawn... [ More ]

Reply #14

AlecWest — Mon, 24 Jul 2006 01:45:49 GMT

BTW, someone earlier suggested that a person could deduct the gift tax from their own income tax at the end of the year. This is not true ... which is why it constitutes being taxed twice for the same money. For the proof, visit the IRS FAQ page on gift/estate taxes and scroll down to the question:

Q: May I deduct gifts on my income tax return?

http://www.irs.gov/businesses/small/article/0,,id=108139,00.html

Reply #13

guesser — Mon, 24 Jul 2006 01:26:56 GMT

WHY ??

WHY is that indecent or immoral to not report it (gifting) lottery winnings, or anything else for that matter ?

If you win a jackpot, pay taxes, then gift some out, and they have to claim it, isn't that double-taxation ?

Do you know the Gov't takes about 55% of lottery winnings before you (we) ever see them ? THAT is immoral.

Win 100 million, take home 45 million, 55 million to the Gov't, that's just wrong.

8 co-workers in Nebraska won/split 365 milli... [ More ]

Reply #12

AlecWest — Mon, 24 Jul 2006 01:01:24 GMT

I wanted to make certain of something. Is the gift tax assessed per taxpayer or per gift? For example, if I decided to make a $10,000 gift to one friend, a $10,000 gift to a second friend, and a $10,000 gift to a third friend, would I be exempt from paying a gift tax - or would the IRS say that only the first gift was exempt and other gifts over $10,000 per year by the same taxpayer were taxable under the gift tax?

For what it's worth, there are a number of ways to give a friend more mo... [ More ]

Reply #11

Jorli D — Sat, 22 Jul 2006 02:57:33 GMT

Barista are you feeling a bit sensitive? I never called you a name, but apparently the shoe fits. The only fool is those who find comfort in stealing, and that's what evading taxes is. Then when they're caught, they go kicking and screaming like the fools they are.

Please inform me how someone doesn't have to pay taxes when they don't have too. What you really mean is someone doesn't have to pay taxes if they think they can scheme and get away with it. That still makes them a thief.

A... [ More ]

Reply #10

Clairvoyance — Sat, 22 Jul 2006 02:27:06 GMT

Exactly If there is no paper trail as in putting it into a bank etc. Then one can say what money? I'm not sticking up for either party. All I am saying is people do it all the time! And Lawyers can't find money that has no paper trail as far as they are concerned what money? If they can find it .....Its not there

Reply #9

BaristaExpress — Sat, 22 Jul 2006 02:10:55 GMT

A decent, moral person would report it to the IRS, that's who. Also, there are circumstances where the donee can agree to pay the gift tax, so it is not correct the donor is solely responsible for this tax.

Only a person who's not so bright would pay taxes on something when they don't have too by law/ tax code. I never could understand anyone with that type of mentality!

Who says anyone who pays just what they have to pay without over paying taxes is any less DECENT or MORAL than you Jorl... [ More ]

Reply #8

Raven62 — Fri, 21 Jul 2006 16:55:36 GMT

For a definitive answer one should consult with an Attorney that specializes in such matters from the State in which the giftee resides.

In most states, whether they follow a community-property or equitable-distribution scheme, the property that each spouse owned before the marriage, as well as property given to or inherited by one spouse during the marriage, remains that spouse's separate property. It may, however, be considered as part of the total circumstances in determining a fair alloca... [ More ]

Reply #7

truecritic — Fri, 21 Jul 2006 16:24:44 GMT

Since it is cash you are giving - he could always bury it in the backyard and use it just when he needs to. Of course, who knows, he might want to share it with his wife - divorce or no divorce in the future.

Reply #6

Blackie — Fri, 21 Jul 2006 16:05:11 GMT

Just a thought. Someplaces money and property is devided equally unless one or the other had it prior to a marriage. Unless of-course you live in VA. Look at the state flag. May be wrong but thats what I had always thought.

Reply #5

Jorli D — Fri, 21 Jul 2006 15:58:05 GMT

Reply #4

BaristaExpress — Fri, 21 Jul 2006 14:55:12 GMT

The gift tax only comes into effect when the amount is 10k or above. So anything below that amount is not taxable, unless you choose to report it to the IRS as income or a gift! But who would do such a thing? Never mind what I just said, some people are just to honest with the government for their own good! The Gift Taxes that are due are the sole responsibility of the person who is giving the gift, not the one who receives the gift. Oh one more thing, you can set up a trust for anyone you wish

Reply #3

MillionsWanted — Fri, 21 Jul 2006 14:42:49 GMT

If you know they're about to separate, wait until it's finished and give him the money then.

Reply #2

Jorli D — Fri, 21 Jul 2006 14:14:38 GMT

A legal separation would bar the wife from recieving the money you give your friend in some circumstances. If the wife knows about it, and their are minor children involved, a judge might find that money to be necessary to finance the well being of the children. But Eddie, this whole thing could backfire, because if you are giving your friend this money and it is taxable, your friendship could be on the line when the question becomes which of you will pay the gift tax

Reply #1

LOTTOMIKE — Fri, 21 Jul 2006 11:34:43 GMT

if he has the money and they are still married she is entitled to half.as long as they are married its that way even if they are seperated but still married.i'd wait until he is officially divorced before i'd let money change hands.

Legal question?

fast eddie — Fri, 21 Jul 2006 11:23:35 GMT

Let's say I win a large amount of money in the lottery (this post to GOD's ears) and give a nice amount to a close friend of mine who is married but that could change at any minute. My question is can he put the money somewhere where he is only entitled to it if the end up getting divorced or does half the money I gave him become hers no matter what? Just curious . Thanks