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#12
11-25-2003, 04:00 AM
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 stray ">" character. - quote - > Wouldn't the existence and rental at FMV of the other 9
It looks like something is placing a stray "> " character> rental units be enough to establish a profit motive? > Looking at his rental activity as a whole seems to > indicate clearly a business expectation of profit. at the beginning of the first line of each paragraph in reply-messages. -- To reply to me directly, remove the XXX characters from my email address. ================================================== ==== Moderator: I saw that too and I know what I did wrong! ================================================== ==== << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#11
11-25-2003, 03:40 AM
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| Re: Charitable? Check my thinking........ Vic Dura <vpdura[at]XXXhiwaay.net> wrote: - quote - > kamlet[at]panix.com (Arthur Kamlet) wrote:
Since the rental for this one unit is far below fair market> > Nan Eklund <naneklund[at]aol.com> wrote: > > > Client just called. Genuinely religious man. Also owns 10 > > > single family rentals. He wants to rent one to his church > > > for half the normal rental. He wants to know how the church > > > should validate the arrangement so he has a charitable > > > deduction. I am thinking..... > > > > > If his normal rental is $12,000 and he rents for $6,000, I > > > would think the lesser rent and his normal deductions on Sch > > > E would be all the "charity" allowable. He is > > > thinking.....he needs some statement from the church so he > > > can take a $6000 charitable deduction. > > > > > The more I think about it, the more that looks like double dipping. > > > Any ideas out there? > > If he charges far below fair market rental he is not in this > > to make rental income, and his rental expenses would be > > severly limited. > Wouldn't the existence and rental at FMV of the other 9 rental units > be enough to establish a profit motive? Looking at his rental activity > as a whole seems to indicate clearly a business expectation of profit. rental, the expenses attributable to that one unit would be limited. __ Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#10
11-23-2003, 11:12 PM
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| Re: Charitable? Check my thinking........ kamlet[at]panix.com (Arthur Kamlet) wrote: - quote - > Nan Eklund <naneklund[at]aol.com> wrote:
as a whole seems to indicate clearly a business expectation of profit.> > Client just called. Genuinely religious man. Also owns 10 > > single family rentals. He wants to rent one to his church > > for half the normal rental. He wants to know how the church > > should validate the arrangement so he has a charitable > > deduction. I am thinking..... > > > If his normal rental is $12,000 and he rents for $6,000, I > > would think the lesser rent and his normal deductions on Sch > > E would be all the "charity" allowable. He is > > thinking.....he needs some statement from the church so he > > can take a $6000 charitable deduction. > > > The more I think about it, the more that looks like double dipping. > > Any ideas out there? > If he charges far below fair market rental he is not in this > to make rental income, and his rental expenses would be > severly limited. > Wouldn't the existence and rental at FMV of the other 9 rental units be enough to establish a profit motive? Looking at his rental activity -- To reply to me directly, remove the XXX characters from my email address. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#9
11-23-2003, 11:11 PM
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| Re: Charitable? Check my thinking........ Gene Utterback wrote: - quote - > His other option is to collect the full $12K in rent from
It seems to me it depends on the precise phrasing of the> the church and immediately cut them a check for half - he > could do this every month. This would get him a Schedule A > contribution instead of lesser income on Schedule E. > Another HOWEVER, I would NOT put this part in writing as it > would create a quid-pro-quo situation which would be the > exact same as if he reduced the rent, thus subjecting him to > the "for profit" issue again. agreement. If this secondary agreement were to be written as refunding half the rent, I agree. If it were to be written as DONATING half the rent, that would seem a valid donation. Yes, I know, "substance over form", but look at it this way. A written agreement to donate half the rent to ANOTHER charity wouldn't affect the validity of the donation. Why should it matter which charity the donation was made to. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#8
11-23-2003, 10:52 PM
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| Re: Charitable? Check my thinking........ taxservice[at]aol.compliance (John H. Fisher) wrote: - quote - > naneklund[at]aol.com (Nan Eklund) writes: > > If his normal rental is $12,000 and he rents for $6,000, I > > would think the lesser rent and his normal deductions on Sch > > E would be all the "charity" allowable. He is > > thinking.....he needs some statement from the church so he > > can take a $6000 charitable deduction. > The church would have to first pay the full rent. The > client could then contribute the $6,000 back to the church > but that wouln't make much sense since the contributor would > have to report the income. If he didn't receive the income, > there is no expense to deduct. If the church paid him, and > he gave it back, he would not have a Schedule E deduction. > Instead, it would be reported, less favorably, on Schedule A. > I agree. My problem is figuring out how to deal with the problem of imputed income for rent that could have been charged. Stu << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#7
11-23-2003, 10:33 PM
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| Re: Charitable? Check my thinking........ Nan Eklund wrote: - quote - > Client just called. Genuinely religious man. Also owns 10
There is nothing on schedule E to report.> single family rentals. He wants to rent one to his church > for half the normal rental. He wants to know how the church > should validate the arrangement so he has a charitable > deduction. I am thinking..... > If his normal rental is $12,000 and he rents for $6,000, I > would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? - quote - > This all goes on Schedule A, less rent actually paid, as a contribution. > There are some court cases from the 50's regarding where NO RENT at all is collected, but I don't recall any where some rent was paid (but less than FRV). - quote - > According to the Tax Court in a ruling this year, all amounts, even those where
charity. The non-aggregration rule was nullified.the component transaction is less than $250, must be acknowledged by the << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#6
11-23-2003, 10:33 PM
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| Re: Charitable? Check my thinking........ - quote - > Thank you all for the answers. My opinion was verified but you had many helpful suggestions for the client. He'll appreciate it - and so do I. Nan, EA in LA << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#5
11-23-2003, 10:13 PM
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| Re: Charitable? Check my thinking........ naneklund[at]aol.com says... - quote - > Client just called. Genuinely religious man. Also owns 10 > single family rentals. He wants to rent one to his church > for half the normal rental. He wants to know how the church > should validate the arrangement so he has a charitable > deduction. I am thinking..... > If his normal rental is $12,000 and he rents for $6,000, I > would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? > Seems it would be simple to just rent for $12K and then give them $6K and he has his deduction. Cliff << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#4
11-22-2003, 12:57 AM
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| Re: Charitable? Check my thinking........ "Nan Eklund" <naneklund[at]aol.com> wrote: - quote - > Client just called. Genuinely religious man. Also owns 10
Your assessment is correct. He gets his charitable> single family rentals. He wants to rent one to his church > for half the normal rental. He wants to know how the church > should validate the arrangement so he has a charitable > deduction. I am thinking..... > If his normal rental is $12,000 and he rents for $6,000, I > would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? deduction by accepting lesser rent. HOWEVER, this may cause other problems if the lower rent is less than FMV for the area - would the lower rent disqualify the rental as a "for profit" enterprise? His other option is to collect the full $12K in rent from the church and immediately cut them a check for half - he could do this every month. This would get him a Schedule A contribution instead of lesser income on Schedule E. Another HOWEVER, I would NOT put this part in writing as it would create a quid-pro-quo situation which would be the exact same as if he reduced the rent, thus subjecting him to the "for profit" issue again. Good luck, Gene E. Utterback, EA << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#3
11-21-2003, 11:59 PM
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| Re: Charitable? Check my thinking........ naneklund[at]aol.com (Nan Eklund) wrote: - quote - > If his normal rental is $12,000 and he rents for $6,000, I
If he is renting for 1/2 the normal rate, will he not get> would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? himself into a "rental-not-for-profit" and can only take some of his normal expenses? << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#2
11-21-2003, 11:40 PM
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| Re: Charitable? Check my thinking........ - quote - > Client just called. Genuinely religious man. Also owns 10
I'm with you Nan, it looks like double dipping, but then> single family rentals. He wants to rent one to his church > for half the normal rental. He wants to know how the church > should validate the arrangement so he has a charitable > deduction. I am thinking..... > If his normal rental is $12,000 and he rents for $6,000, I > would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? again, it is less than fair market rent and that may stop him at -0-. Just a thought. Helen, EA in PA Member of The Tax Gang President, PA Society of Enrolled Agents Campaigning for NAEA Board of Directors - Looking for YOUR vote << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
11-21-2003, 11:39 PM
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| Re: Charitable? Check my thinking........ Nan Eklund <naneklund[at]aol.com> wrote: - quote - > Client just called. Genuinely religious man. Also owns 10
If he charges far below fair market rental he is not in this> single family rentals. He wants to rent one to his church > for half the normal rental. He wants to know how the church > should validate the arrangement so he has a charitable > deduction. I am thinking..... > If his normal rental is $12,000 and he rents for $6,000, I > would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? to make rental income, and his rental expenses would be severly limited. I would have him charge fair market rental, and then write a tax deductible check to the church. He would then take all the income, and be allowed the rental expenses, and if he itemizes, be allowed the donations. __ Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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11-21-2003, 11:20 PM
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| Re: Charitable? Check my thinking........ naneklund[at]aol.com (Nan Eklund) writes: - quote - > Client just called. Genuinely religious man. Also owns 10 > single family rentals. He wants to rent one to his church > for half the normal rental. He wants to know how the church > should validate the arrangement so he has a charitable > deduction. I am thinking..... > If his normal rental is $12,000 and he rents for $6,000, I > would think the lesser rent and his normal deductions on Sch > E would be all the "charity" allowable. He is > thinking.....he needs some statement from the church so he > can take a $6000 charitable deduction. > The more I think about it, the more that looks like double dipping. > Any ideas out there? The church would have to first pay the full rent. The client could then contribute the $6,000 back to the church but that wouln't make much sense since the contributor would have to report the income. If he didn't receive the income, there is no expense to deduct. If the church paid him, and he gave it back, he would not have a Schedule E deduction. Instead, it would be reported, less favorably, on Schedule A. "Jack" - John H. Fisher - TaxService[at]aol.com Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html Where Ignorance is bliss, 'tis folly to be wise!=  << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
11-20-2003, 04:35 PM
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| Charitable? Check my thinking........ Client just called. Genuinely religious man. Also owns 10 single family rentals. He wants to rent one to his church for half the normal rental. He wants to know how the church should validate the arrangement so he has a charitable deduction. I am thinking..... If his normal rental is $12,000 and he rents for $6,000, I would think the lesser rent and his normal deductions on Sch E would be all the "charity" allowable. He is thinking.....he needs some statement from the church so he can take a $6000 charitable deduction. The more I think about it, the more that looks like double dipping. Any ideas out there? Nan, EA in LA << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| charitable, check, thinking |
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