Alan wrote:
- quote -

It hasn't been "announced", but the California State Controller (the
state's CFO) has published remarks on the public web site (link I
provided in first message in this thread) that clearly indicated it is
under serious consideration as of December 2008. This same official has
already butted heads with the Governator over various payment issues
during the current budget mess.

Is it probably going to happen? I think not (and as a California
taxpayer, hope not!). Is there enough likelihood of it happening that
one should not needlessly delay filing for a refund? I think so.

Awareness of the issue among the citizenry is certainly increasing, with
comments mostly along the lines of "I guess this means I can pay them
with IOU's too!" (or something more pithy).

-Mark Bole

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

"Ernie Klein" <ecklein[at]pacbell.net> wrote in message
news:ecklein-C2E2A5.20183013012009[at]news.newsguy.com...
- quote -

Line 46 (both the 540 and 540A).

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <NEfbl.18392$ZP4.4782[at]nlpi067.nbdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:


- quote -

OK, got it - line 46. Must have read right past that.

--
-Ernie-

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Ernie Klein wrote:
- quote -

a line under the computation of the overpayment that asks how
much you want to apply to the next year's estimated tax.
You must be looking at the end of the return where it asks for
the direct deposit info. You have to look at the section where
the overpayment is computed. That section is before the Use Tax
and voluntary contribution section.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <7ecbl.13112$yr3.2586[at]nlpi068.nbdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

I see nowhere on the CA tax form to even allow you to apply a refund to
next years taxes. You can do that on federal but not CA. Even if they
changed the law to allow that, the forms (and tax programs) are already
out and people are filing as we speak.

--
-Ernie-

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Steve Pope wrote:
- quote -


--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

I do not think California plans to let you use the warrants
to pay estimated taxes, until the warrants are declared good.
That is my recollection from the last time they did this.

I could be wrong though.

Steve

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Seth wrote:
- quote -


A state issues you an IOU instead of a check for a refund of
state income taxes. You can't cash it. But, you can use it to pay
the state if you owe them any money or want to buy something from
the state. Upon receiving the IOU, you are not in constructive
receipt because there is a substantial limitation and
restriction. You endorse the IOU and give it to the state to pay
estimated taxes. Once the state accepts it, you are in
constructive receipt of the refund because the IOU became
negotiable for the purpose you used it for. It was accepted for
payment. If you owed the state money (not a tax debt) and you
endorsed the IOU and gave it to the state for payment and they
accepted it, constructive receipt of the IOU happens. If you turn
down the IOU and just say use my refund for my 2009 taxes.. you
have effectively accepted the IOU.. endorsed it.. and made a
payment of income tax. I don't see any difference.

If you hold unto the IOU until the State announces it is freely
negotiable and you can then cash it at the bank.. you would have
constructive receipt then.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <9P4bl.1107$PE4.246[at]nlpi061.nbdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:
- quote -

Why? You'd received a *credit to your state tax account*. Since, by
hypothesis, that credit is *not convertible into cash* I don't see why
constructive receipt applies.

- quote -

But that's not a cash account, it's the same sort of maybe-will-be
-money-sooner-or-later as the warrants.

- quote -

Because it's not a cash account.

Another interesting case: the state says that the warrants are
transferable, and may be used by anyone to pay state taxes. A market
immediately springs up, with the warrants trading around $.98/$1.00
(98% of face). If Joe Taxpayer sells his $1,000 warrant for $980, how
is that treated for Federal Income Tax purposes?

Seth

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

One clear situation in which you would not have constructive
receipt would be if that state stated, "These credits are
unfunded until some future budgetary event, at which point we
will let you know we have funded them." If that event does not occur
until 2010, then there is no constructive receipt in 2009. After all,
if the state declares bankruptcy (something no state has done
since the late 1800's), those tax credits become worthless and
you will still owe new taxes to the reorganised state.

However the more likely scenario is that the state will act
as though the credit is there all along, and will never go
bankrupt, in which case non-receipt is not as certain. This is
why I'm proposing that it may be advantageous for TP to ask for
the refund (i.e. the warrant), to clear this uncertainty.

Steve

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Seth <sethb[at]panix.com> wrote:

- quote -

Right, that was my question. Is that latter situation constructive
receipt if everyone else is getting warrants?

- quote -

I would say an unfunded bookeeping entry is never income.
It's analogous to deferred compensation.

Steve

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Seth wrote:
[snip]
- quote -

I disagree. When you ask a state to apply a 2008 refund to next
year's taxes, it is treated the same as you having received the
refund and then made an estimated payment. Upon filing your 2009
return, you would have to report the refund (even though you
never received any cash) as federal taxable income if you
received the full tax benefit for deducting state income taxes on
your 2008 tax return. This is true whether you remain a resident
or don't remain a resident of the state in question. It is true
whether you have a new tax liability to that state or not.

If under the hypothetical situation we have created (CA issues
registered warrants (IOUs) for refunds), there is no constructive
receipt until such time that the IOU becomes negotiable and there
would not be any refund to report on the 2009 federal return if
the IOU was still not negotiable by year-end 2009. If one elects
not to receive the IOU but asks the state to apply the refund
against 2009 taxes and the state credits your account. You have
effectively made a 2009 state income tax payment to the state and
you have a taxable refund that must be declared on the federal
return. It doesn't matter whether you left the state or have no
tax liability to that state. You could file a 2009 nonresident
return to obtain a refund of your tax payment.

I don't see how you would not have constructive receipt of a
refund if the state credits your account with a tax payment.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <vUVal.18262$ZP4.5498[at]nlpi067.nbdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:
- quote -

I should have written early 2010.

- quote -

I know that.

Taxpayer overpays during 2008.

In 2009 he files.

Case 1: He asks for a cash refund, gets a non-negotiable note. That's
not constructive receipt.

Case 2: He asks to have the overpayment applied to his 2009 taxes
(2010 filing). There's a claim that's constructive receipt because it
covers a debt he'd otherwise have to pay. My point is that there is
no such debt and might not be (e.g. in January 2009 he moved out of
state), hence that doesn't automatically cause constructive receipt.

Since there's no automatic constructive receipt in Case 2, choosing
Case 1 does not cause constructive receipt.

For the person who stays in California and files for lower
withholding, I agree, there's constructive receipt.

Seth

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Seth wrote:
- quote -

"refund" of previously deducted 2008 state income taxes generates
taxable gross income in 2009 if the state is out of cash.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

In article <ixQal.13553$YU2.11424[at]nlpi066.nbdc.sbc.com> ,
Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

What 2009 taxes? Since I don't owe any yet, all I can do in 2009 (if
I continue not to owe any) is to ask for a refund. Oops, again, no
cash.

Seth

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Steve Pope wrote:
- quote -

received the refund and then making an estimated payment. As
such, even though you never received any cash, you still have a
state tax refund you would have to declare if you received the
tax benefit for deducting state income taxes in the prior year.

If the St. of CA, is out of money and is sending IOUs for
refunds, there is no constructive receipt. If you elect to apply
a refund to next year's taxes, it seems to me it is no different
different then if you received the refund and sent an estimated
tax payment or received a negotiable IOU, endorsed it and paid
your estimated taxes with it. As the State is crediting your
account for the amount, I believe you would have constructive
receipt of the refund even though you have not received any cash
and there is no cash. The amount was made available to you for
paying your 2009 taxes.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

On Jan 12, 8:10*am, spop...[at]speedymail.org (Steve Pope) wrote:
- quote -


There was a time, years ago, when California state employees were paid
on IOUs rather than salary warrants because of a budget holdup. I
can't remember for sure whether this was during my time as a
California state employee (late 1970s-early 1980s) or perhaps during
the budget crunch of the early 1990s. In any case, what I do remember
is that one or two of the banks or credit unions announced that they
would cash the IOUs, and the other banks quickly fell into line. The
impasse did not last long, as I recall, but the banks took the risk
that it would be prolonged.

I'm not sure what the banks would do today.

Katie in San Diego

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

I was not being clear.

What I meant is, under the scenario in which cash from the
State is not an option, the TP has a choice of applying the refund
to their 2009 taxes, or requesting what will likely be a warrant.
Perhaps the former option would represent constructive receipt
but the latter option would not.

Steve

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Steve Pope wrote:
- quote -

warrants or offer taxpayers the option to receive warrants in
lieu of cash. I don't care to speculate on what CA may or may not
do. All that being said, I don't think any state that finds
itself out of cash would offer any taxpayer an option. Either
you get your refund or you get an IOU.

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

So if a California TP has a refund coming from the state, and
requests a warrant rather than applying it to next year's taxes,
this might push out the taxable income associated with
the refund to a future date. Is that a correct understanding?

Steve

--
<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >