Seth Breidbart wrote:
- quote -

Just because a bill MAY be legal tender, doesn't mean it
HAS to be. In a private transaction parties have to agree
on means of payment.

ChEAr$,
Harlan Lunsford, EA n LA
Tue, 18 Jan 2005

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Seth Breidbart wrote:
- quote -

See the occassional discussion on misc.legal.moderated about
the legality of "no bills over $20 accepted" notices. The
consensus seems to be that any such notice is legal, and
that, even if there is no notice, payment in a legal form
of currency not accepted by the merchant only blocks late
fees and interest, but does not necessarily constitute
legal "payment".

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smithff33[at]aol.com says...
- quote -

About 15 years ago, we had a client who had this point of
view. There was some land for sale adjoining his business.
He said that he could borrow the $1 million from the bank,
buy the land and raise the value of the company by $1
million.

The partner tried to lead him through the accounting. He
asked the client about the other part of the journal entry.
The client's response was "There's no other part"

The client changed accountants. About two years later I
noticed that the gate to his parking lot was locked and had
a sign on it. The sign was courtesy of the IRS. The client
didn't remit payroll taxes. Bad choice of creditors!

Gary

--
E-mail to the above address is rarely read. If you want to
contact me directly, please send an e-mail to: gary at
gdgoodman dot com.

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Harlan Lunsford <hlunsford[at]bellsouth.net> wrote:
- quote -

Yes. Actually, the clerk didn't know that there were such
things, and called the police. The officer who arrived was
rather baffled.

- quote -

What about the fine print? You know, about "Legal tender
for all debts, public and private"?

Seth

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Seth Breidbart wrote:
- quote -

And is this a case whereby the store did not want to accept
any 2$ bill as payment?

In some areas of the country, particularly the South, maybe
elsewhere, I don't know, any such piece of currency is BAD
LUCK! And many merchants routinely refuse to accept them.

One of my clients years ago told me how one of his clerks
had taken one, and he had had three pieces of bad business
luck occur within 24 hours. And sure 'nough, I could
verify those three events.

ChEAr$,
Harlan Lunsford, EA n LA
Sat, 15 Jan 2005

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Christopher Green wrote:

- quote -

In general, I agree fully with Chris' position. However,
there seems to be a growing segment of our population with
the mental set that somehow the loan is "theirs" and they
have no responsibility to pay it back. The small claims
courts are full of such "loan defaults". If the debtor
cannot collect on his judgement (and they almost always
win,if they have a signed promissory note) I see no reason
not to consider the "loan" as TAXABLE INCOME to the debtee.
Let the IRS know of this income by preparing and sending a
1099-C for the outstanding balance. The debtor could also
claim the loss as a "nonbusiness bad debt" (short term
capital loss) on his return.

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Gene E. Utterback, EA <eagent[at]alliancetax.com> wrote:

- quote -

However, there's a rather famous story wandering around the
net about such a disagreement over a $2 bill. Upshot: the
store lost.

Seth

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"/brian" <codfish[at]cotse.net> wrote:

- quote -

I know the definition of accession and I definitely don't
agree with your usage of the word. While one usage does
include "something that had been acquired or added" the
normal usage of the word generally refers to the attainment
of a dignity or rank such as "the queen's accession to the
throne". The other primary usage is a legal one and refers
to the increase in value of property by means of improvement
or natural growth.

The gist of this little dissertation is that when one is in
Rome, one needs to understand Roman verbiage. This is a NG
dedicated to taxes and in the realm of taxation the word
income has a specific meaning - regardless of whether you
like, dislike, agree or disagree with it.

The assumption in this NG is that there is some tax basis to
questions posed, and in that vein income means income, not
loans. Additionally, simply by disagreeing with an accepted
and recognized definition you do nothing more than confound
the issue. Suppose I were to go to McD's and disagree with
their definition of what a $5.00 bill is? Does my
disagreement have any validity? Certainly not.

Hence, while it is certainly acceptable to pose questions
such as "why aren't loan proceeds income", disagreeing with
the answer serves no practical purpose. Additionally, such
arguments are the very basis of most tax protestor
arguments, which have failed over and over again.
Disagreeing with an accepted usage of a word lends no
validity to your position.

Gene E. Utterback, EA

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"/brian" <codfish[at]cotse.net> wrote:

- quote -

Fine. Then consider income to be a realized increase in
one's economic position. CLEARLY, proceeds from a loan do
not increase one's economic position.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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/brian wrote:

- quote -

For income tax purposes loans are not income because they
have to be paid back. On the other hand, if you invest the
loan in something, or even just put it in the bank, any
interest you earn on it is taxable income.

Stu

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I know the definition of income -- I don't necessarily agree
with it. Moreover, income has other definitions, which may
or may not be found in your dictionary. The student loan
question is always a nice segue into the question of why
loans are not included in income, when they could be if they
are treated as an accession to an income stream. At some
point, I need to go review the literature on the subject,
which has been proposed for businesses but not for
individuals. I'm just curious in practitioners' responses.

/brian

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Only if there is scholarship or grant money that isn't used
to pay qualified expenses (there are excruciatingly detailed
definitions of what are and aren't qualified expenses that I
won't go into here, but basically if everybody in your
situation who pursues your course of study *must* pay a
particular expense, it's qualified). Living expenses not
exceeding the university's room and board charges are
qualified for some purposes. Scholarship or grant money that
isn't used for qualified expenses is taxable.

Loan proceeds are never taxed, because that money isn't
yours to keep; you'll have to pay it back someday. To the
extent that the disbursement is of loan proceeds, there's no
income tax on that much of it.

--
Chris Green

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- quote -

If it's not yours to keep (you gotta pay it back, remember)
then is it really income in the first place? The tax system
takes the policy position that since you have to pay it
back, it's not income. A further policy justification is
that, if loans were income to the borrower, then repayment
would have to be deductible (otherwise you're overtaxed),
which leads to the possibility of annual income management
by the simple expedient of taking out loans when you are
otherwise in a low income position (e.g., when you have
deductions or credits that are about to expire) and paying
them back when you want to reduce your taxable income - too
much funny stuff would go on if loans were treated as income
- it'd make Enron look like a bunch of Sunday-schoolers.
Also, if a loan were income to the borrower at the time of
borrowing, what would it be to the lender, a deduction?
Again, too much potential to play fast & loose with your
annual taxable income.

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"/brian" <codfish[at]cotse.net> wrote:

- quote -

Funny a person uses a word like "heterodox" but can't look
up the definition of "income" in the dictionary...

Courtesy of American Heritage Dictionary:

Income: the amount of money or its equivalent received
during a period of time in exchange for labor or services,
from the sale of goods or property, or as profit from
financial investments.

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"/brian" <codfish[at]cotse.net> wrote:

- quote -

Well I know what bothers me. The fact that you consider
repayable debt as income. The reality of the situation is
that debt is not income unless it is forgiven. Last time I
checked, you couldn't even discharge these loans in
bankruptcy court. So forgive me if I find your analysis
somewhat....lacking and misguided.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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Stuart Bronstein wrote:

- quote -

You've got a point there, for life back then WAS an uphill
battle. Still is for some people. We are indeed fortunate,
and should remember that every day.

Oh, and thankful tax season begins anew tomorrow, bright and
early.

ChEAr$,
Harlan Lunsford

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David Woods, EA, ChFC, CLU wrote:

- quote -

Heck no. Just remember where I'm from. It's a cold day
in heck when it snows in Dixie! But I did used to have to
walk to school, yes. Everybody walked to school back then.

I trust you along with everyone else on this board will
happy a happy and sane New Year's Eve, and that the tax year
2005 will fulfill your every expectation. And then some.

Happy New ChEAr$,
Harlan

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I know, which is what bothers me. Maybe it's my heterodox
education, but a tax system that does not treat loans as
income does not seem to fit with the reality of the
situation. But that is purely academic.

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David Woods, EA, ChFC, CLU wrote:
- quote -

Both ways. Don't forget he had to walk uphill for three
miles in both directions.

Stu

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"Harlan Lunsford" <hnslunsford[at]bellsouth.net> wrote:
- quote -

Harlan,
Is this the point where you give the speech about having to
walk to school uphill for three miles in the snow?

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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