A PLUG FOR A FRIEND’S PROJECT
Because Len is a very old friend (we met in 1975), but also because he’s got a great property that’s about to hit the market, check out the photos of Southwest Urban’s just completed renovation project. Len and his partner Adam did a tremendous job in renovating a mid 50s house on a big lot in a great location.
They don’t have the interior pictures posted yet as I write this, but I saw the interior today. It is very modern, yet retains the character of the original house. It is also very tasteful. It’s definitely worth a look.
REPORT: 29% OF AMERICANS KEEP SOME SAVINGS IN CASH; ARE YOU KEEPING IT SOMEWHERE SAFE?
According to this January 29 report from CNBC, based on a survey by American Express, nearly one-third of Americans say that they keep at least some savings in cash. An earlier survey mentioned in the CNBC report found that of those who keep cash in their house, 27% kept it in the freezer.
I have had clients tell me that they keep their estate plan documents in the freezer. I say, as long as someone other than you knows where they are and can get to them if necessary, anyplace where they won’t burn up if the house burns down is fine. With estate plan documents, a safe place is where they won’t be lost or destroyed. Preventing theft isn’t the issue, unlike with case.
As for not keeping your savings in the bank, I can’t say that I blame the 67% of young people who said they keep savings in cash rather than in the bank. They have grown up in an era where there is really no financial advantage to keeping a savings account. When I learned to save, one of the incentives was that the savings earned interest. Although I understand that the whole interest rate thing is very complex, it’s a shame that the younger generation (not to mention senior citizens who relied on interest income from their retirement savings) has been deprived of that incentive to save. I’m sure it has had a negative impact on the savings rate.
Instapundit takes credit.
Bah. I have wasted enough time on this junk. This proposal was bad enough, but there’s lots more where it came from. The White House actually thinks that this Congress will not only do away with the step-up basis rule, but raise the tax rate on capital gains?
Of course, there is the maybe only slightly paranoid school of thought that this is what they call “battle space preparation” for ramming such ideas through in the future, when Congress may be more favorably disposed to such ideas.
THE SUGGESTION THAT COLLEGE SAVINGS ACCOUNTS BE TAXED IS GETTING DECIDEDLY MIXED REVIEWS
Well, I said I wasn’t going to spend a lot of time on the President’s tax proposals, but I can’t help but follow the discussion on the proposed change in treatment of tax-advantaged savings accounts. The change would be that earnings on future deposits in those accounts would not be exempt from tax as they are now, but instead would be taxed upon withdrawal.
The suggestion has been roundly dissed, and not just by the commentators you would expect to be critical of a tax increase.
For your edification and/or amusement, hopefully, my January newsletter has been posted in the publications section at deconcinimcdonald.com. It’s a primer on foreclosures and where I think things stand in the aftermath of the “foreclosure crisis.”
While I’m on the subject, there’s an informative recent post at Overlawyered about the effect on the real estate market of delaying foreclosures, a subject I touch on in the Update, as well as on what is happening with the companies that service residential mortgages.
TURBOTAX MAKER SAYS THEY’RE SORRY FOR BAIT AND SWITCH, WILL REFUND THE EXTRA PRICE THEY BAITED YOU INTO PAYING
I wrote about this last week. Apparently TurboTax decided to charge extra for a previously free upgrade that you need if you have certain types of income to report on your individual tax return, but didn’t disclose the extra charge up front.
They have now backtracked and said they will refund the extra charge to anyone who bought the software last year and had to pay extra for the upgrade this year. I guess that also means that from now on if anyone who bought the software last year needs the upgrade, there won’t be an extra charge.
Via Tax Prof.
A BLOG I LIKE (OFF-TOPIC)
I won’t waste much time on the President’s recent tax proposals because they will probably go nowhere, but I am compelled to comment on the reference in the fact sheet describing the tax proposals in the State of the Union address to a “trust fund loophole.” Here’s how the fact sheet describes it:
Close the trust fund loophole – the single largest capital gains tax loophole – to ensure the wealthiest Americans pay their fair share on inherited assets. Hundreds of billions of dollars escape capital gains taxation each year because of the “stepped-up” basis loophole that lets the wealthy pass appreciated assets onto their heirs tax-free.
This is about the tax rule that when you die and leave an asset to someone else, the recipient gets a new tax basis. That means that when the recipient sells the asset, they pay capital gains tax on the difference between the sale price and the value of the asset when they inherited it from you, not the value of the asset when you acquired it. This is known as a step-up in basis.
So what does the step-up basis rule have to do with trusts? Absolutely nothing. The “trust fund loophole” label dreamed up by the White House – I have never heard the step-up basis rule called that before – is a way to give the impression that this “loophole” is something that benefits only rich people. Because only rich people have trusts, right?
Garbage. First of all, the step-up basis rule applies to anything that is inherited, even if the person who owned it didn’t even have a will, let alone a trust. And as for the premise that trusts are only tax-avoidance vehicles for the wealthy, I prepare dozens of trusts for clients every year. Only a small percentage of those clients are wealthy, but lots of them own things that they want to leave to their children, things that will be worth a lot more when the clients pass away than they were when the clients acquired them. The notion that only rich trust beneficiaries benefit from the step-up basis rule is false.
The “trust fund loophole” label is, to put it bluntly, dishonest. It’s a way to portray the step-up basis rule to people who don’t know anything about it in a way that will persuade them that it is unfair.
It reminds me of the “fake but accurate” justification for political dishonesty, only this time in the context of tax law.
LAW PROFESSOR FAILS TO FILE TAX RETURNS, GETS PROSECUTED AND CONVICTED FOR IT, THEN SUES HER EMPLOYER FOR FIRING HER
A law professor (apparently she taught criminal law, not tax law, but claimed to have worked as a tax lawyer before becoming a professor) was convicted for criminal failure to file Minnesota income tax returns.
Her excuse for not filing tax returns? She has ADD!
Predictably, her criminal conviction negatively affected her employment status as a law professor. She then filed two lawsuits claiming that she was wrongfully fired.
Her reason that her firing was wrongful? Collusion to violate her rights!
As they say, you can’t make this stuff up.
The lawsuits, by the way, were unsuccessful.
What’s the old phrase? “Woodman, spare that tree.” That’s it. In Staten Island, if you can’t spare that tree when you want to build a new house, you have to pay the city government, or plant a number of new trees determined by the city, to compensate for the removal of the existing tree. I read about it in a news item on the Crain’s New York Business web site.
I can’t really tell from the news item whether the tree in question was on public or private property, but the reference to it as being “on the public sidewalk” makes it sound like the tree was in a public right of way. To me, that makes a little more palatable the notion that the property owner should compensate for cutting it down (although if it has to be removed because it’s an obstacle to construction, then maybe it’s encroaching on private property, and the property owner should be able to remove the encroachment without having to compensate for it).
The contents of this blog, this web site, and any writings by me that are linked here, are all my personal commentary. None of it is intended to be legal advice for your situation.