I'MMA LET YOU FINISH
WTF?
Thanks, Biden (CitiBank - DE)!
gawd yes, what the fuck!
they sure love to bleed those without anything of everything.
The IRS also hiding WMDs? Link check please.
.
Yeah, debt forgiveness is taxable income. It's been this way at least since I took tax in l-school.
Forgiveness of debt has always been taxable income.
What's that term?
The logic of abusurdity.
'mornin'
Anyone else take notice of an athletic contest of some parochial interest in the Northeast of this great country of ours which took place last night?
of course it is taxable income -- you 'borrow' a big amount of money and the debt is forgiven? you have just been handed a gift of money.
drop taxation and we will see all those politicians getting sweetheart loans now getting what amounts to giant tax free bribes -- and this is of course the motivation.
how would a 'forgiven debt' be anything but income?
I thought if you made money on NON-WORK, like dividends and the like, you don't have to pay those pesky taxes.
Forgiveness of debt has always been taxable income.
I forgive you. Now pay up, dammit.
Forgiveness of debt has always been taxable income.
richard | 04.21.07 - 10:10 am | #
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------------------------------
You're kiddin, but res ipsa loquitur is saying the same thing. I didn't know that was done.
Yep. You get a 1099-C form to show your "income." I got one of those from American Express last year.
Meanwhile, Halliburton moves off-shore to avoid paying taxes.
Republican rule #3: Taxes are for wage earners!
Res ipsa is right - look at this this way - you don't pay the money, so you have it, so it is income because you were supposed to pay it and don't have to.
I just had the same discussion with Mr. Tena.
On the bright side, you don't pay Social Security on 1099-C income. Just the income tax part.
This would be true even if it wasn't a bank, btw.
If you borrow $100 from your brother and he tells you not to pay it back you are meant to report that "accession to income."
Anyone else take notice of an athletic contest of some parochial interest in the Northeast of this great country of ours which took place last night?
ProfWombat
Was the color green unusually prevalent?
.
catch you all laters 
have to finish unpacking, am back in Swansea.
vicki,
There are taxes on many types of unearned income, e.g., interest, dividends, lottery winnings, etc.
of course it is taxable income -- you 'borrow' a big amount of money and the debt is forgiven? you have just been handed a gift of money.
drop taxation and we will see all those politicians getting sweetheart loans now getting what amounts to giant tax free bribes -- and this is of course the motivation.
how would a 'forgiven debt' be anything but income?
artemesia | 04.21.07 - 10:11 am | #
--------------------------------------------------
------------------------------
You know this is spot on and just in time for all the Democratic investigations into repuke lobbyist payoffs....
This would be true even if it wasn't a bank, btw.
If you borrow $100 from your brother and he tells you not to pay it back you are meant to report that "accession to income."
res ipsa loquitur
Res ipsa is absolutely right -
Indeed, Agent O, green surely was everywhere to be seen. There are rumors of a basketball team associated with that color which habitually won championship games, though in these degenerate times it's a shadow of its former self...
There are taxes on many types of unearned income, e.g., interest, dividends, lottery winnings, etc.
res ipsa loquitur | Homepage | 04.21.07 - 10:16 am | #
But I worked so hard picking those lottery numbers why should those who don't use "quick pick" be punished?
If you pay the taxes on a forgiven debt and then pay back the debt are you entitled to a refund?
It may seem absurd in this circumstance, but if you were to change IRS position entirely you would find a lot of people using forgiven loans as a tax dodge. For instance, as part of tax shelters (where huge losses are amassed and used to offset current income, and then, when those losses (usually in the form of debt) are forgiven, the IRS expects taxes to be paid on the forgiven amounts. So it's not the position that is absurd, it actually makes sense, but I agree that in this particular circumstance it's harsh.
Well sure, a penny saved is a penny earned...
As my tax teacher put it:
Debt relieved = cash received
You people are so smart. That's why I come here.
though in these degenerate times it's a shadow of its former self...
No doubt.
Holy Smokes, what next.
Try not taxing LABOR for fucks sake.
HICA!
.
The vicki isn't me, fwiw. I asked her before to adopt another name and she refused. I just don't want to be confused with her posts, because she can be harsh.
Debt relieved = cash received
I like that. Oh, and it rhymes!
Sure it is. And you by-godfrey better report it, along with any form of gambling winnings. Generally tho, you can offset it in some fashion.
Armed Miss America 1944 Stops Intruder
Saturday, April 21, 2007
(04-21) 02:00 PDT Waynesburg, Ky. (AP)
Miss America 1944 has a talent that likely has never appeared on a beauty pageant stage: She fired a handgun to shoot out a vehicle's tires and stop an intruder. Venus Ramey, 82, confronted a man on her farm in south-central Kentucky last week after she saw her dog run into a storage building where thieves had previously made off with old farm equipment.
Ramey said the man told her he would leave. "I said, 'Oh, no you won't,' and I shot their tires so they couldn't leave," Ramey said.
She had to balance on her walker as she pulled out a snub-nosed .38-caliber handgun.
"I didn't even think twice. I just went and did it," she said. "If they'd even dared come close to me, they'd be 6 feet under by now."
Ramey then flagged down a passing motorist, who called 911.
Curtis Parrish of Ohio was charged with misdemeanor trespassing, Deputy Dan Gilliam said. The man's hometown wasn't immediately available. Three other people were questioned but were not arrested.
After winning the pageant with her singing, dancing and comedic talents, Ramey sold war bonds and her picture was adorned on a B-17 that made missions over Germany in World War II, according to the Miss America Web site.
Ramey lived in Cincinnati for several years and was instrumental in helping rejuvenate Over-the-Rhine historic buildings. She returned to Kentucky in 1990 to live on her farm.
"I'm trying to live a quiet, peaceful life and stay out of trouble, and all it is, is one thing after another," she said.
Simply amazing how many non-lawyer debt negotiators haven't been advising their "clients" of this rule.
So...how about taxing those corporate leveraged buy-outs?
Thanks for reminding me, I STILL have to do mine & my dad's estate's taxes.
AND I have to work this weekend.
AND it's sunny out!
Arrggh.
There is a little kid singing to himself while he plays in our yard right now. The kid is not making a bit of sense, but his singing is pretty charming...
Vicki, we know vicki isn't you, so worry not about the harsh toke.
Keep in mind that a lot of corporations would "loan" money to their CEO and then forgive the debt years later as a means of boosting their compensation.
Issuing loans which are later forgiven is also used as a means of bribing people without making it look like a bribe.
As my tax teacher put it:
Debt relieved = cash received
carlton
I had to ask Mr. Tena - I didn't take tax. We had a tax prof who loved to flunk entire sections and did. It was an elective, a 4 hour credit and I said no thank you.
He set the curve high grade for one section at 48 and flunked everyone. Man there were a bunch of hopping mad law review people when that happened.
There is a little kid singing to himself while he plays in our yard right now. The kid is not making a bit of sense, but his singing is pretty charming...
I absolutely love that.
If the IRS relieves you of some back taxes will they send you a 1099-C form obligating you to pay taxes on the amount of relief?
If you pay the taxes on a forgiven debt and then pay back the debt are you entitled to a refund?
Hmmmm....I need to consult my tax outline on this.
NTodd,
The Vickster abides.
Tax was the only final I ever took where someone gave up halfway through and walked out ... of tax ... and law school.
It was a very stressful test.
The Vick - far out.
he vicki isn't me, fwiw. I asked her before to adopt another name and she refused. I just don't want to be confused with her posts, because she can be harsh.
Vicki, Who ? Al Gore
O that's too bad. Sorry.
There is a little kid singing to himself while he plays in our yard right now. The kid is not making a bit of sense, but his singing is pretty charming...
Hee!
Is he singing about shooting up his class? Because that might be a sign of trouble later on.
Tax was the only final I ever took where someone gave up halfway through and walked out ... of tax ... and law school.
It was a very stressful test.
res ipsa loquitur
O I feel ya - I had a couple of exams like that - I panicked.
If you pay the taxes on a forgiven debt and then pay back the debt are you entitled to a refund?
Why pay back the debt if it was already forgiven?
Hot Stuff [Kathryn Jean Lopez]
It's official: Fred Thompson is getting in when Steve Hayes has to clarify that though Fred Thompson was indeed in a screenshot from Sex and the City, he was only in the background.
Whose behind was he behind, and how close was he?
If a CEO were loaned a million dollars by his corporation, and then told he didn't have to pay it back, we'd want that taxed.
Happy troops and happy families:
"Also, the Pentagon announced earlier this month that normal tours of duty in Iraq will be 15 months instead of 12 months. Gates said that gives the military the capability to maintain the higher troop levels in Iraq until next spring."
Thanks, Biden (CitiBank - DE)!
ignoreland
*
We have BoA now in DE [having bought MBNA], CitiBank, not so much. But we do have Biden.
As a tax professor, I'm pretty shocked that you just now discovered this. As many have already said, OF COURSE debt forgiveness produces taxable income! To use an example I use in class, you borrow $20,000, you buy a boat with it - you renege on the loan, and for some reason the lender forgives you - you spent the money, you got the boat. If I earn $30,000, pay 33% marginal tax rate on it, I will have left about $20,000 with which to buy a boat. To put you in the same position with me, that $20,000 in loan forgiveness HAS to be taxable income.
There are circumstances under which it's not income, though - section 108 of the Code lays it out - if you're bankrupt, or insolvent, some or all of the debt forgiveness is not included in taxable income.
Here endeth the lesson. Oh, and by the way, stop with the "IRS considers" crap. The IRS doesn't make the law, Congress does - the IRS just carries it out. You sound like a right-winger attacking the evil revenuers here.
NTodd,
The Gomez forced me to watch The Big Lebowski last night on exchange for rubbing my feet. Heh.
I abided.
Why pay back the debt if it was already forgiven?
To clean up your credit score.
Why pay back the debt if it was already forgiven?
watertiger
That doesn't make any sense.
Justice AND mercy, mi amigos.
An exception (no income) if you are insolvent after the debt discharge.
I don't know what the kid is singing about. I heard him say "we're going to the park" at one point, but the rest of it was sort of gibberish.
I think he's about four.
Someone's out there with him now.
res has mail.
Simply amazing how many non-lawyer debt negotiators haven't been advising their "clients" of this rule.
True. American Express didn't tell me about that when I negotiated the settlement with the law firm collecting the debt. I was a tad surprised when the 1099-C showed up in the mail, but after a moment of reflection, it seemed logical to me.
Why pay back the debt if it was already forgiven?
watertiger
That doesn't make any sense.
Tena
To clean your credit. I had to do it once - a forgotten debt, more than seven years old, turned into a charge-off, preventing me from buying my first house. As I recall, I paid it over in cash money - to the Borg! They nearly went crazy figuring out some way of accepting it.
.
Why pay back the debt if it was already forgiven?
Because if it was from a relative, you may be "paying" in ways that are a lot more painful.
An exception (no income) if you are insolvent after the debt discharge.
tbhul
I'm not sure about that since they passed the bankruptcy bill - I don't exactly what is and what isn't forgivable, now.
And if one credit company forgives one debt but you owe others - I don't know that you can get out from under.
res has a headache, too.
The bankruptcy attorney sitting next to me says there is an exception to this: any debt wiped out by bankruptcy is not taxable income.
To clean up your credit score.
oh, so THAT'S what those obnoxious banner ads are all about.
The bankruptcy attorney sitting next to me says there is an exception to this: any debt wiped out by bankruptcy is not taxable income.
Vicki,
Right - but what does the new Bankruptcy Bill do that all this?
"Limbaugh: Conservatives Should ‘Circle The Wagons’ Around ‘Idiot,’ ‘Weak Attorney General’ »
On his radio show Friday, Rush Limbaugh encouraged conservatives to “circle the wagons” around Alberto Gonzales, recycling his argument that winning elections is more important than governing. Here was Rush’s amusing defense of Gonzales:
Everybody on the Republican side now, along with the Democrats, wants to throw Alberto Gonzales overboard. He may be an idiot, I don’t know. He may be a weak attorney general. … It seems, every time there’s a public demand for somebody to resign in Washington, it’s always a Republican!" http://thinkprogress.org/2007/04...gh-gonzo-idiot/
So how is it fair if the loan institution gets to write it off as a loss too, eh?
well my premise is that debt is only likely to be partially forgiven if there's an inability to pay, so I see it as a renegotiation of credit terms between a lender and a risky borrower, rather than simply a cash gift.
Hold on a minute.
While I agree that the "freedom to rape consumers" credit "reform" was bad, this actually makes sense.
If you charge up a bunch of stuff, then don't have to pay it back, that actually is "income", in that you've gotten goods or services you didn't pay for. If, for example, you won a car in a contest, you would have to pay taxes on it. On the other hand, if you buy a car, default on the payments, and the lender negotiates with you so you don't have to repay the total amount borrowed, that's income just the same. (and please don't point out to me that this would never happen because they would repo the car - I know that's how it works with cars, this is just an example.)
I don't really think this is out of line, if what we are talking about is a principal amount that is being forgiven, because for all practical purposes, that amounts to additional income that has not been taxed.
Feel free to flame me.
20K would only buy a piece of shit boat today.
oh, so THAT'S what those obnoxious banner ads are all about.
That's it, in a nutshell.
The Borg is absolutely terrified of the taxman. Every time they issue a cheque outside of such things as ordinary pay, they deduct a straight 40% to cover any possible tax liability. I appreciate their point, but it kinda takes the fun out of the prize.
.
Tuesdays must see teevee:
Oversight Committee to Hold Hearing on Tillman, Lynch Incidents
The House Committee on Oversight and Government Reform will hold a hearing on Tuesday, April 24, 2007, entitled “Misleading Information from the Battlefield,” in Room 2154 of the Rayburn House Office Building at 10 a.m.
http://oversight.house.gov/story...ory.asp?
ID=1242
Took an open book civil procedure final on the entire year. Had not the slightest idea what the hell I was doing--back then, I was drinking while I was studying, a concatenation that does justice to neither activity--and passed the course only because I aced the midterm...
< It seems, every time there’s a public demand for somebody to resign in Washington, it’s always a Republican!"'
Hmmmmmm - could that be because the people don't like the Repugs and the Repugs are terrible governors and the Repugs are crooks?
Ya think?
Tena, Gomez says that the new bankruptcy bill has no effect on this.
Why are people focusing on the IRS?
Congress wrote the law. It's pretty explicit, too, "Income from discharge of indebtedness" is right there in the law.
Don't blame the IRS for enforcing the law that Congress wrote.
There are some specific exclusions to this for bankruptcy, insolvency, certain farm debts and certain business property. So, Congress could write further specific exclusions into the law if Congress thought it was a good idea to reward/encourage this kind of behavior.
Anyone else take notice of an athletic contest of some parochial interest in the Northeast of this great country of ours which took place last night?
Yes.
Yes I did.
Damn Yankees.
Took an open book civil procedure final on the entire year. Had not the slightest idea what the hell I was doing--back then, I was drinking while I was studying, a concatenation that does justice to neither activity--and passed the course only because I aced the midterm...
ProfWomba
law school is what send my drinking into 5th gear - we drank like fishes. And you're right - it did nothing for either studying or drinking.
...so I see it as a renegotiation of credit terms between a lender and a risky borrower, rather than simply a cash gift.
I swear we read a case like this in tax. God, the whole class is coming back to me, hence the headache.
I can't find the damned outline now, though. I hope I haven't lost it forever.
I'm havin' coffee. And cats.
.
Tena, Gomez says that the new bankruptcy bill has no effect on this.
Vicki,
Thanks, Vicki and thank you Gomez.
I see it as a renegotiation of credit terms between a lender and a risky borrower, rather than simply a cash gift.
Atrios
That may be as maybe, but in most circumstances it is in fact a gift in property or merchandise, which is retained. Now, if as in the old days, the goods were re-possessed and thus there was no material gain, that'd be a different story.
.
It seems, every time there’s a public demand for somebody to resign in Washington, it’s always a Republican!"'
But if it's a Democrat (Pelosi, Reid) the call to resign comes from the MSM.
.
HBK: I only hope they let Steve Gilliard watch the game; it would have advanced his recovery...
Gomez just pulled out a 1982 IRS Code book to show me how it hasn't changed since then.
Section 108.A.1A of the IRS Code has not changed in decades.
You should see all the books this guy has ...
German Telekom announces loss of 600000 customers 4 first quarter 07.
Yeah, I'd have to agree that the forgiven principle should be considered taxable income -- any portion of the fees or interest however should not.
And, yes, I agree, it isn't the IRS it's Congress. Fair point.
oh, jesus christ.
oh, jesus christ.
watertiger
What?
oh, jesus christ.
You rang?
The Gomez forced me to watch The Big Lebowski last night on exchange for rubbing my feet. Heh.
Now Pulp Fiction's in my head...
Wombat,
I think I remember Jen writing that Steve only has network TV, so if the game was one of the rare Fux or PIX (local station) games he could watch.
Hopefully if it was not they let him bring a radio in.
Apparently, he is in a "clean" room. Would that be allowed?
Heh.
HBK: I only hope they let Steve Gilliard watch the game; it would have advanced his recovery...
Only if he's not a Yankee fan.
It seems, every time there’s a public demand for somebody to resign in Washington, it’s always a Republican!"
*
whoa, goomba dickster speaks lies, why only a little ways back GOPers called for Clinton.
Now that the condo "boom" is over, will they replace them with debtors prisons?
This is goony.
Tena - I figured out what to get my best friend for her birthday.
I found a copy of a book we both loved when we were little kids - I had already bought a copy for myself a few years ago and she saw it while she was visiting and remembered it. Since she's a bookworm like me, it will be perfect.
Heh.
you know it.
More b-day party photos of the boys...
.
Fact is, there's no bunch more mendacious, incompetent or corrupt than the Republicans who populate the Bush administration. Choose one at random, look at his performance, and you're likely to be able to make a case for his resignation...
--and passed the course only because I aced the midterm...
You had midterms? Jesus fucking christ - we had exactly one test per course - the final. That was your grade, end of story.
Talk about brutal -
Now that the condo "boom" is over, will they replace them with debtors prisons?
well, they've got the space now.
If you charge up a bunch of stuff, then don't have to pay it back, that actually is "income", in that you've gotten goods or services you didn't pay for.
Except for those instances in which you've paid it back plus interest over the course of time you made payments, but you never got the damn thing paid off because the interest rates were usurious after you got behind a couple of times. Sometimes you can pay and pay and never catch up.
.
Now Pulp Fiction's in my head...
NTodd Kaczynski
I'll take that as a compliment (a comparison to Uma).
(JK, I am nothing like Uma.)
oh, jesus christ.
Be careful, I don't go by that name anymore.
I didn't have any midterms, either.
Shit, i could have used a few.
Gilly loathes the pinstripers. I believe the correct form chez Gilliard is 'Fuck the fucking Yankees'...
Now that the condo "boom" is over, will they replace them with debtors prisons?
Well I don't know where you are, but Dallas is still putting condos up as fast as it can on every fucking square inch of this city that isn't being used already. I can't believe the building - it's the 80s all over again.
I so much do not want to know any of this.
But can I just mention that CRTA has been re-introduced and that it would be a REALLY, REALLY good thing if it finally got passed?
Today Representative John Lewis (D-GA) introduced the Civil Rights Tax Relief Act of 2007(“CRTRA”) to end unfair taxation of noneconomic damages received by those who have suffered unlawful discrimination or violations of employment rights. Mr. Lewis was joined by a bipartisan group of original cosponsors, including Representative Deborah Pryce (R-OH) and Ways & Means Committee Members Sander Levin (D-MI), Jim Ramstad (R-MN), Xavier Becerra (D-CA), and Phil English (R-PA). The bill number is H.R. 1540.
In addition to having bipartisan support in Congress, the CRTRA is supported by employer and employee groups alike. For employers, the CRTRA will significantly reduce the costs of
employment and civil rights-related litigation. More cases will be settled before trial, and it will be less expensive for employers to settle them. For employees who have to sue to vindicate their rights, the CRTRA will limit their taxable income only to the economic component of their awards. It will also reduce the taxes employees pay on monies awarded as back-pay in lump sums by allowing them to average the damages over the years in which they would have earned them so that they pay taxes at fair and realistic marginal rates.
res: ever try to explain to someone who didn't go to law school how it feels to have an entire two semester course's grade depend on a single three hour exam that can be as difficult and unreasonable as the instructor wishes it to be? They just don't get it...
I can't believe the building - it's the 80s all over again.
I find it hard to believe there are THAT many people in the finance industry to justify the number of construction sites just in my neighborhood alone.
Go Panthers!
Oversight Committee to Hold Hearing on Tillman, Lynch Incidents
*
11/7 changed everything
I don't know anything about baseball. Except that it's cool to diss the Yankees.
I know there are some cool NY Atriots who will think less of me for this, but it's not like I had a lot to offer a Yankees fan to begin with.
Gilly loathes the pinstripers. I believe the correct form chez Gilliard is 'Fuck the fucking Yankees'...
Is he a native Brooklynite?
I notice there's a lot of that going on here.
res: ever try to explain to someone who didn't go to law school how it feels to have an entire two semester course's grade depend on a single three hour exam that can be as difficult and unreasonable as the instructor wishes it to be? They just don't get it...
ProfWombat
So you didn't have midterms? We just had finals and I have never been through anything any more stressful or nightmarish.
Gilly loathes the pinstripers. I believe the correct form chez Gilliard is 'Fuck the fucking Yankees'...
I dislike the Yankees (only because of their upper management "style"), but I would never resort to such language.
And OT:
Zapette and I bought a laptop last night with her educator discount; to be delivered at a later date. And we're going wireless!! And we have to use Vista now (no Apple OS jokes).
I just read the text of this bill and it's only for residential mortgage forgiveness, not credit cards. H.R. 1876
We had only finals, too.
That's when I realized that law school was no better than EST.
Wombat,
Even having an a single semester grade depend on one exam is tough. Two semesters is just brutal.
Could Gilliard have a radio in a "clean room?"
Atrios - I know that you are a PhD economist and all, but I have to disagree. If you borrow money with the intent to pay it back at a set interest rate, then find out that you can't pay it back, then the balance you owe is clearly income.
When you borrow money and successfully pay it back, the books are balanced so to speak. You inflow = your outflow (with interest, of course).
But when you fail to pay it back (forgiven or not) the balance you owe is excess your ordinary income. In fact, one could even term it "unearned income".
Should it be taxed? I think that really depends on the situation. Say me dear gray-haired mudder gets into financial trouble and can't pay her credit card bill. Her financial situation is fairly perilous and the penny-ante tax she owes on the few grand she charged would only add to her overall burden whereby paying for life's necessities are difficult enough. Of course she should not have to pay taxes on the charge.
On the other hand, say you are some rich, connected, asshole who borrowed a ton of money from his corporation with no intent to pay it back. Sort of the Enron model of executive compensation enhancement. If that is true, tax his saggy ass at 90%, then throw him in jail for twenty years.
In short, I believe that there is a liberal perspective where taxation in this situation is acceptable and even desirable.
Your avid reader,
JRI
Tena, I live in a town of just under 70,000 Asheville, NC. They are proposing a 23 story luxury hotel, condo, boutique building downtown. It will kill the skyline.
But we get a ton of tourists, so it's growing, no matter the national economy.
Maybe the most ridiculous part about BAPCPA is that it requires attorneys to refer their clients to a non-lawyer, where they are forced to make disclosures without any right or privilege of confidentiality, for "debt counseling."
Among many of the things I've asked after they come back is if there was ever any mention of forgiveness of indebtedness income, and not a one has indicated that they ever were.
(no Apple OS jokes).
Not an OS joke, but the housing of this Mac cracked this morning.
Have I mentioned that I looooooooove my Mac?
/snort
There are some specific exclusions to this for bankruptcy, insolvency, certain farm debts and certain business property. So, Congress could write further specific exclusions into the law if Congress thought it was a good idea to reward/encourage this kind of behavior.
trm | 04.21.07 - 10:31 am | #
When I looked at this thread I was thinking of poor people with little or nothing, losing everything and becoming homeless. Reworking the law to povide a means of repaying their debt, I think, is a good idea.
It could also be a lesson for predatory lenders to think twice before expanding loans to those already deep in debt.
I didn't think of all the wonderful ways those with cash could use loop holes to get free money.
That's when I realized that law school was no better than EST.
watertiger
God you're funny - I wish I had gone to law school with you.
Well I don't know where you are, but Dallas is still putting condos up as fast as it can on every fucking square inch of this city that isn't being used already. I can't believe the building - it's the 80s all over again.
Two or three condo projects in Minneapolis alone are being halted (they were gonna be 'uge); so developers are scrambling for a way to salvage all of the land that they've bought. I think that boutique hotels is the route that they're taking now.
Morning all.
Alec Baldwin -- threat to the Republic?
Sparkle - well, in the olden days, you would have "approved" of the terms of the loan when you charged it up, so that wouldn't get you off the hook. Of course these days, they can change the terms at any time without your consent, so you have a legitimate point there.
Capital One just doubled the rate on one of my accounts, without notification (they claimed they sent it, but since I pay the bill online I would never have seen it...I told them that there was really no excuse for them not announcing the rate increase on their website as well and needless to say, their response was "tough shit". So I told them they could either put the rate back to what it had been and continue collecting the several hundred dollars a year they were getting in interest, or I could just move it all and they would get nothing. They opted for option B, which means that soon I will be assaulted by all of these "we value you as a customer even though we treated you like shit" come-ons, trying to get me to come back.
I'm still paying off the ill effects of finishing up a whole-house remodel in 2003 at the precise moment I lost my biggest contract. So far, I've made half the debt go away, and should be debt free by the end of next year if not by the end of this one. I agree, it sucks - particularly when they change the rules mid-stream. I seriously considered taking bankruptcy before the new rules went into effect, but I would never have been comfortable with just punking someone - even a big evil corporation - on money I had borrowed.
Not an OS joke, but the housing of this Mac cracked this morning.
Were you throwing it against the wall or jumping up and down on it at the time?
!
They are proposing a 23 story luxury hotel, condo, boutique building downtown.
Because we don't have enough buildings in NYC, they are proposing a 90-story hotel by the Javits center.
Of course, the people in the upper floors will be completely screwed when ConEd fucks up another blackout.
Alec Baldwin -- threat to the Republic?
steve simels | Homepage | 04.21.07 - 10:44 am | #
No. But his 12yr old daughter is.
Tena: depended on the course. Civil procedure had a midterm, which saved my sorry butt when I wrote a disgraceful final. Constitutional law and contracts were a single exam. I took the courses in my fifties, after medical school, surgical residency and a 20-year career, which modified my notions of stress somewhat. Had an intuitive feel for con. law after a lifetime's interest in it, and 'got' contracts somehow, but it was weird having but the one exam. Nothing in my academic life prepared me for the notion that I could take a course whose only feedback about my grasp of the material would be my final grade...
Alec Baldwin -- threat to the Republic?
steve simels
What he said to his daughter was wrong, but...the fact that it was leaked to the media by his ex-wife (or one of her entourage) is despicable.
No one really needed to hear this, know this, talk about this...
Of course, the people in the upper floors will be completely screwed when ConEd fucks up another blackout.
Fuck 'em.
Two or three condo projects in Minneapolis alone are being halted (they were gonna be 'uge); so developers are scrambling for a way to salvage all of the land that they've bought. I think that boutique hotels is the route that they're taking now.
Zap
Dallas insists on condos. That's where the real estate bubble burst last time - in the middle of a condo boom.
I'm not kidding - yesterday I was in two different parts of town and every where I looked there were condo projects going up - it's incredible.
I wish I had gone to law school with you.
I was one giant bundle of raw nerves.
If I didn't have the entertainment law journal to keep me occupied, I would've quit.
Because we don't have enough buildings in NYC, they are proposing a 90-story hotel by the Javits center.
Seriously (cause I dunno):
Is there really that much of a demand? Does NYC really want to go the way of Tokyo?
No. I have never thrown the machine.
I am pissed, though. Now I have to go to the hated Apple Store.
What he said to his daughter was wrong, but...the fact that it was leaked to the media by his ex-wife (or one of her entourage) is despicable.
No one really needed to hear this, know this, talk about this...
Vicki, Who ♥ Al Gore | 04.21.07 - 10:45 am | #
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Bingo
Fuck 'em.
Heh.
I guess you could call me anti-media lately.
Sorry.
sheets...... wonderful sheets... all white and fluffy.... sheets....
Re Alec Baldwin,
If a personal letter is copyrightable -- is a telephone message, i.e., can she have "published" it?
watertiger:
Can't make it tonight, but that way I get to be surprised when you post the video.
Love to everybody there....
Atrios - This isn't about renegotiating terms, like dropping a card rate from 15 percent to 5 percent and paying taxes on the difference in total payments.
It's like borrowing $10,000, blowing through the money and then the person you borrowed from saying, "Nah, keep the money." It is income, and should be taxable. You didn't have the money before, someone gave you the money, and you got to keep either the cash or the stuff you bought with it. Taxable.
Is there really that much of a demand? Does NYC really want to go the way of Tokyo?
I have no idea, but this Bloomberg administration is all about raping the waterfront.
res ipsa loquitur said:
"This would be true even if it wasn't a bank, btw.
If you borrow $100 from your brother and he tells you not to pay it back you are meant to report that "accession to income."
Yes, but then the giver should get a tax benefit on the loss or the money would be taxed twice.
manowar
res ipsa - I was just joshing ya. I"m sorry about all your problems with you mac.
Going to the Apple Store is a bitch here because it's always crowded.
I make a reservation online first, usually.
John Edwards haircut -- Threat to the Republic?
Maureen Dowd -- most contemptible waste of space at the New York Times?
Steve Simels -- asking questions he already knows the answers to?
res: absolutely a radio in a clean room. They'd want to give him every opportunity to be stimulated even were he superficially comatose. And a Yankee fade in the eighth inning, resulting in a Red Sox victory, no less, would gladden the cockles of his healing heart...
20K would only buy a piece of shit boat today.
Feh!
I did a job not too long ago for a gentleman, it was for 1900 dollars. When it came time to collect he asked if he could trade his boat for the debt. Well, I'm interested in getting a boat so I said "way cool dood. Let's go look." We went into his back yard and he showed me this 1960's boat that had'nt been floated in at least a century and it had no seats.
I told the guy, "thanks but no thanks."
Jennifer -- Yeah, it sucks. I was just trying to make the point that people can borrow and pay in good faith and still, through whatever circumstances, get interest rates bumped from say 3% to 22% and just never get the bill paid off even though they've more than paid back the original loan.
.
Atrios-
Treating debt forgiveness as income has been part of the tax code forever. It doesn't just apply in the home mortgage situation, and in most cases, it's clear why it should:
Say company A wants to buy services from company B. If debt forgiveness wasn't income, they could structure it by A lending B the sales price in exchange for the services, then A writing the loan off as bad debt. Voila, B pays no income tax because there is no income.
I have no idea, but this Bloomberg administration is all about raping the waterfront.
watertiger
*
ditto Philly and Wilmington
Late to the thread,
there was a bulldog to walk.
Does this have anything to do with the recent bust of the Republican whose wife was making "between one million to five million dollars" and if so how would the new proposal affect said investigation?
Ok, wait, I'm confused. The article talks about the IRS considering as income loan amounts that get forgiven. Watch carefully what Congress does on this then, because I, for one, do not what the tax code changed so that the CEO of GM can get a yearly "loan" in January of $50M, which gets "fogiven" in December, thus becoming $50M in tax free income.
On the other hand, a large fraction of the loan amount owed by middle and working class folks who get into trouble is fees and charges, not the principal or even the interest. Forgiven principal should be taxable, forgiven interest and fees, not so much.
Forgiven principal should be taxable
I see no reason whatsoever why people who renegotiate credit card balances or short sell their homes to avoid foreclosure should have any fear or concernthat the transaction is taxable.
If it becomes apparent that rich folks are taking advantage of the loophole (which they will) I'm sure Congress can close it, if the will is there. These days I'm feeling better and better about our Congress.
If you pay the taxes on a forgiven debt and then pay back the debt are you entitled to a refund?
I'd bet you could file an amended return, within some timeframe, except I never bet on tax law.
-
If a forgiven debt becomes non-taxable, watch for politicians to "borrow" from their campaign funds.
I don't think getting 1099'd on forgiven debt is absurd at all. I'm sorry, but am I alone in thinking that when people borrow 100s of thousands of dollars they should actually take that process seriously and take 10 minutes to understand the consequences of what they're doing?
What happened in the past decade to make people so casual and blase about borrowing money? When i bought my first house in 1997, the bank asked for 4 years of tax returns, 2 years of bank statements, six most recent pay stubs, five references, and they ran my credit twice. I couldn't sleep at night during the escrow period. I kept waking up in the middle of the night, grabbing my calculator and a pad of paper to crunch the numbers all over again.
When I asked other friends who had recently bought houses if they felt the same way, they said they did. And I was only borrowing $250,000 on $100,000 HH income at that time! Nowadays, I read stories about young couples with the same income buying $650,000 houses (or more!) and it makes me want to scream in anxiety on their behalf, and then I wonder WHY didn't THEY have any anxiety about this?
Good lord, of course forgiven debt is considered income. What's the difference between someone handing you $500,000 to pay off your loan and the bank forgiving the loan. Guess what - that bank isn't getting that money for free! It's not like that debt is merely numbers on a computer screen somewhere that can just be deleted without consequence.
Our country is in serious, serious trouble if basic finance is now beyond the capability of the average attention span to comprehend. I read stories about people signing mortgage agreements they don't understand or didn't read, and it infuriates me as much as when Congressmen vote on bills they haven't read.
Sorry for the long rant on this, but I loathe the idea that conservatives believe that they have the franchise on personal responsibility and that progressives want a nanny state that will forgive stupidity. I'm glad we don't have debtor prisons anymore, but honestly, there are hundreds of thousands of average Americans out there who have displayed such incompetence and negligence in handling their own finances that it borders on criminal.
Lord knows I'm not perfect, but we need some national figure to finally stand up and shake America by it's collective scruff and demand that we get our shit together.
Sorry, Atrios, you lost me on this one.
If I give you $100,000 and we call it a loan, then you have not received any income and so have no tax liability.
If I give you $100,000 and then later say you only have to pay back $50,000 of it, then you just made $50,000.
I know that as a practical matter we know that people who used the whole $100,000 to buy a house that has lost value have not in fact gained anything.
However, the debt forgiveness as income theory is generally sound -- they just need an exception for mortgages when the house is sold for a loss.
Cheers
If forgiven debt is nontaxable, then you could imagine countless employers and employees trying to skirt income tax laws by taking advantage of this.
Say Sony normally pays Tom Cruise $20 million for a movie, but Tom has to pay 40% of it to the IRS in taxes. Well now imagine that Sony agrees to "loan" Tom Cruise $20 million, then "forgives" the debt six months later. Under this bill, Sony just gave Tom Cruise $20 million tax free.
Unless you can find a way to prevent this kind of loophole, the law should stand as written.
My problem is, how to calculate the income.
Example, you borrow $5000 at 10% for 12 months. Your debt is forgiven, so you made $5500, report and get taxed.
But, nowadays, no one really knows how much they are borrowing because, at any time, and for any reason, the credit card company can jack up your interest rate.
So, let's say, you go back to example 1. You borrow at 10% at first, but then, because you pay a different lender late one time, the credit card company jacks up interest to 30%. Now, you "owe" $1000 more. If that extra $1000 the credit company now says you owe them is forgiven, why the hell would it be considered income? How fair is that? You never touched that $1000, you never used it to buy anything, it never existed but as a theoretical debt.
As far as I am concerned, the proper way to view a situation when someone negotiates with a lender who has the ability to jack up the interest at any time, is to say, as soon as the lender jacks up the interest, any calculation of debt is theoretical, and the real and true debt becomes whatever the lender and borrower decide it is through negotiation, even if less than the amount under the original contracted interest rate. And any theoretical debt forgiven is tax free to the borrower and cannot be written off as a loss by the lender.
One way of clarifying the issue is to follow actual cash, and try to treat accounts symmetrically. Actual cash loaned and forgiven is actual income, likewise is a cash loss to the creditor and deductible. Smaller amounts of debt forgiven probably fall under taxable thresholds (see perilous granny case above), so wouldn't be taxed much anyway, larger amounts incur full marginal rates. Accrued interest and penalties are, as ryogam points out, largely hypothetical, (though taxable to an accrual-based company until reversed), and represent no cash or other benefit to the debtor. There's some basis for taxing forgiven interest insofar as the IRS "imputes" interest on any loan, but I don't know if this is actually done (or proposed). To me, the legislation looks like a feel-good giveaway with no basis in basic accounting, unless the situation it seeks to remedy is similarly warped.
It bears noting that one possible motivation for this initiative is the limit on losses from home sales, which are entirely nondeductible. Seems to me it would make more sense just to make this portion of the law symmetric than to create a special category of nontaxable income.
The imputed income from the mortgage loan forgiveness is offset by the captital loss on the sale of the home.
The homeowner should not have to actually pay any taxes on the amount of the loan forgiven. However, it could be a problem for those subject to AMT. But why would someone with that high of income default on a loan in the first place?
Forgiving debt is getting something for nothing.
Suppose you sign for a new car. You make two payments, miss the next and then for whatever reason the financing contract is forgiven. You now have a new car you paid 2-3k for. It's worth 12k or more.
You have received something of value. The dealer would have to categorize it as a gift for you not to pay a tax of some sort on it. Or they would have to repo it for the equation to balance out.
It's trickier if you default on a cash payment for something like major surgery. That would have been tax-deductible so the equation here equals zero, as far as the IRS should be concerned. The hospital is the one with the real claim, unless they no longer care, for some reason.
Atrios, didn't you use to be an economist? Then why the surprise?
That's absurd.
Not really.
If a creditor forgives a debt, in essence they are giving you the money to pay it off.
If a creditor forgives a debt, in essence they are giving you the money to pay it off.
How about this?
What's the difference if you take 10% off with a coupon, or you negotiate a 10% reduction after the deal is struck?
It's not absurd. If forgiveness of debt was not included in taxable income, every damn corporate officer in America would be getting loans every year that would be forgiven, and thus not taxable to them. Duh.
If it is forgiven in bankruptcy or insolvency, it probably is not taxable income, of course, depending on other circumstances.
Sometimes you need to think before you post, or you will turn into a wingnut. I kid you not.
Dear Duncan,
Is this satire or are you really this daft?
Cheers.
In recent years I'm also running into these "What money?" situations with the IRS. You buy some land. Years later, you borrow money against the land. After a while you sell the land, and pay off the loan, receiving no cash in the deal. Later you get a 1099-S saying that you just had some income, and owe some tax, but there is no money to pay it. Why not? Because the money you borrowed all went to settle your divorce. So you arrange terms with the IRS. And this is just an adjacent lot -- when the main lot and house either sells or gets foreclosed on, at a price sure to be less than the mortgage owed, the tax complications will be so incomprehensible that insolvency will look like a blessing. And oh, this is no sub-prime mortgage, it was written at 80% loan-to-value.
So I'd say we still have debtor's prisons, but we call them mortgaged houses.
When you guys bash this, you are missing out on the big picture.
Take a look at BushCo, or as I like to call them, the "Masters of Loan Scams". They are all about borrowing obscene amounts of money, then never repaying it. Do you actually want to encourage this behavior?
Now if someone borrows money and puts up property as collateral, they still owe taxes on the difference between the value of the property and the amount borrowed. It's still considered "profit". If the person doesn't have money, that's just a matter of really bad investing on their part.
IMO, most people become far too optimistic about purchasing property, and the mortgage industry no longer (for the most part) has any interest in making sure the borrower actually has the means to pay back the loan. Now most mortgages are bought up, lumped together according to risk category, and sold as investments... so the banks creating the loans are unlikely to be the same ones owning the debt.
Well of course it's just bad investment when morgages go underwater, SomeGuy. The question is, Who is going to pay? The bankers, who damn well knew what they were doing, or the borrowers, who mostly trusted professional advice. Who knew that property might sell for only a fraction of its appraised value? The appraisers? The bankers? And did they tell owners? So who's going to pay? Not the banker. Not in these plutocratic States.
Under Section 108, forgiveness of derbt is only income to the extent you are solvent. In other words, it is not income if you are broke (or to the extent you are broke). Most people making payment plans with their credit card companies are broke, so it is not treated as income to them.
What do you mean, "absurd?" If we don't demand people pay taxes in these cases, then you can bet the rich will start conducting all of their business as loans to be forgiven, hence tax free transfers of wealth. What ought to be negotiable is a payment plan for the taxes on this forgiven debt, not outright forgiveness of the tax.
So I still wonder -- is it wrong for an appraiser to overestimate the value of a home? Is it wrong for a banker to ask for such an appraisal? And when the loan, backed by the appraisal, goes bad, are the banker and the appraiser at fault? Or do we put the whole burden on the homeowner, and let the professionals walk free?
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