"Gene E. Utterback, EA, RFC, ABA" <gene[at]alliancetax.com> wrote:

- quote -

I once worked for a law firm that had a client who had just been dinged
on what they called a $28 million (yeah, that's a lot) deemed dividend.
I suggested that they counterbalance that with an advance payment of
$28 million to us for future attorneys fees.

They didn't approve that idea.

Stu

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"steviekm3" <steviek2000[at]gmail.com> wrote in message
news:bdd13374-ccec-4167-8a3e-d474907249b4[at]t54g2000hsg.googlegroups.com...
- quote -

You've received more than a few accurate responses but I thought I'd add in
my observations as well.

To What End?

Creating a mortgage company, funding it, then using it to purchase your
current mortgage WILL indeed allow you to take a deduction on your Schedule
A for mortgage interest paid while paying yourself back. However doing so
will also result in a corresponding income item for the interest income
received - and no, there is no real legal way around that.

So you'd wind up in the same place as if you just paid off the mortgage. If
you get a deduction for an amount that matches income - one offsets the
other.

As an aside, I have NEVER understood the preoccupation some folks have with
tax deductions to start with. Remember a tax deduction reduces taxable
income it is NOT a tax credit. So if you're in the 28% Federal bracket and
a 7% state bracket, you'd save about 35% of what you can deduct - BUT you
are still out 65% of what you paid! It would be - and almost always IS -
better and cheaper to pay the tax and be done with it.

Now if you really want a great tax deduction you can pay me (or our esteemed
moderator for that matter) $50,000 or so for tax advice. This is also
deductible so you would not have to worry about paying any pesky tax on this
money.

Good luck,
Gene E. Utterback, EA, RFC, ABA

--
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In article <bdd13374-ccec-4167-8a3e-d474907249b4[at]t54g2000hsg.googlegroups.com> ,
steviekm3 <steviek2000[at]gmail.com> wrote:
- quote -

If it pays off half your mortgage, you don't owe it any money (unless
you create a new mortgage, and pay mortgage recording tax on that).
Also, your bank won't reduce your payments, so your total payment
would increase by 50%.

- quote -

Interest it receives is taxable income.

- quote -

Too bad.

Seth

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"steviekm3" <steviek2000[at]gmail.com> wrote in message
news:bdd13374-ccec-4167-8a3e-d474907249b4[at]t54g2000hsg.googlegroups.com...
- quote -

About the only thing you haven't mentioned is moving the company offshore to
a tax haven, perhaps the Cayman Islands. Then what I can say is you have
all the ingredients for free room and board for a few years courtesy of Club
Fed.

--
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steviekm3 <steviek2000[at]gmail.com> wrote:

- quote -

Not really. On audit, the IRS could disallow the
deduction of interest payments as self-dealing which
means penalties and interest. Plus let could still
tax your mortgage company on the payments received.

- quote -

There are many ways to do that, but it's just more
penalties and interest. And never forget that there's
no statute of limitations on tax fraud.

Dick

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

steviekm3 wrote:
- quote -

The company didn't loan you any money, so why would you be making
interest payments?

- quote -

You begin to see why the whole concept is deeply flawed and in any case
will not accomplish anything meaningful, or even be recognized as a
legitimate economic endeavor. If you tried to evade taxes via such a
scheme, you would almost certainly end up facing penalties.

Other non-tax related factors to consider: if typical, your mortgage
payments will not decrease simply because you pay off extra principal,
they'll simply end sooner than otherwise. Also, converting a liquid
asset (cash) into an illiquid one (equity in your residence) may not be
a wise move when taking your overall financial situation into account.

-Mark Bole

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In misc.taxes.moderated, steviekm3 wrote:

- quote -

Don't do it. Even if it were somehow legal, then the company would
have to declare those interest payments as taxable income. And if it
saves you money, be confident it is not legal. I am not a pro, but I
feel confident that the pros will agree.

--
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I have a mortgage and also have enough cash to pay off about half of
the mortgage.

What I want to do is do something where I create a mortgage company
and put my cash into it. Then the company pays the bank off half the
mortgage and gets interest payments from me.

Then I can still deduct the interest of the mortgage payments from my
income tax.

But the question is how would the company I own calculate profit. I
don't want it to show a profit or tax has to be paid by that profit.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >