Chay, my mood has changed. I no longer mean this. I admire your persistence.
Your hypothetical was flawed, as Nilodop pointed out way back at the beginning, making your analogy flawed as well.. Maybe even earlier, but #45 for sure.
Jeff-Ohio wrote:That’s because you refuse to listen.
You provided a hypothetical about “lending real estate.” Your hypothetical was flawed, as Nilodop pointed out way back at the beginning, making your analogy flawed as well.
Forget about accrued interest. That’s an accrual. We’re talking about principal.
No mention of cash vs. non-cash in any of those sources. So they deserve zero consideration. And one of them involved the low level at the IRS, which I’ve already addressed.
How is it a straw man argument? My donation of clothing worth $200 is “equal in force, amount AND value” of $200 in cash.
Your argument is ridiculous.
Here, let me argue in circles again: The donation of a Receivable isn’t a cash donation. Removing a Liability from a charity’s Balance Sheet, without the payment of cash “within the taxable year,” is not a cash contribution.
You can’t have it both ways. Either you are saying that the Note is Cash or you are denying the existence of the Note as a separate, distinct and identifiable asset for all purposes and are merely using the Note to the peg the value of the deduction and also, the timing of the deduction.
The charity already had the cash.
I know, though, that you would like to nuance this and say, “The Note isn’t the Cash. The cash simply becomes unencumbered when the note is forgiven. As a result, it is the cash that is given within the current taxable year.” Fair enough. But wrong nonetheless. If the Note isn’t the cash, then the Note is a separate, distince and identifiable asset. The unencumbered cash is simply a fallout of the current year transaction that involves a separate, distinct and identifiable asset. You’d like to ignore the current year transaction and base your conclusion on the fallout.
I just want to know how to report it. That is the relevant part. And as the lawyer showed, it gets reported as a non-cash gift.
That’s not my implication. There’s no “either” involved. Both of these things happen (although I take issue with your word “control”). One (releasing control of the cash) is the result of the other (transferring the debt).
I’ve already shown how they’re controlling. No cash was transferred to the charity in the current year. We account for things accordingly.
There is nothing abstract about it.
There is no contradictory precedent.
That is the thrust of the issue. It’s a point you conveniently bypass to get to end result of your theory. Again, if your equivalency theory is true, and I give $200 worth of clothes to a charity, then I’ve given $200 in cash.
Here we go. Back to Story. Peripheral comments.
Moreover, inconsistent comments by the judge, as I have pointed out with the language preceding Footnote #3.
when I present cases involving the forgiveness of a Note and the courts directly and clearly state that it was a transfer of property other than money, somehow those cases are irrelevant.
Those sources say nothing of the sort.
Jeff-Ohio wrote:But I would agree that my clothes are identical to cash in effect, since they’re worth $200.
Please tell us, specifically, about the constructive transfers that your theory would entail.
The constructive transfers would be along the lines of the following:
Your assertion is firmly rooted in an accounting mindset where the only assets that matter are the ones that show up in the books.
and making jokes about it.
Jeff-Ohio wrote:I want to know the specifics of your constructive transfers in the charitable situation at hand, not a bunch of references to cases.
Prior to forgiveness, taxpayer has a Receivable, charity has a Payable. There’s nothing improper about that. I think you’d agree with that accounting starting point.
My clothing donation equals a cash donation under your dominion/control/cash equivalency theory. It meets all the requirements.
What is your goal here? Does repeating something make it seem more believable to you?
only to have you ignore the responses and re-state the ideas
One may have “complete dominion” over money but it does not become income until it is an “accession to wealth.” That is why borrowed money is not income, even though the borrower has “complete dominion” over the cash.11 “Because of this [repayment] obligation, the loan proceeds do not qualify as income to the taxpayer.” 12
As a result, the borrower has no accession to wealth, but does have dominion over the cash that it borrowed.
Even though the entire note is discharged, there never was, nor could there have been, a constructive transfer of cash, because the actual transfer occurred when the loan was made and the charity got dominion and control of the cash.
But my property is not any less my property no matter how greatly I subject it to a risk of loss
Jeff-Ohio wrote:My goal is to get you to explain the constructive aspect of your theory to us, specifically and in detail, which you still haven’t done.
We just need you to lay out the constructive transfers in the OP’s case.
Nilodop wrote:First, I point out that, so far as I remember, none of the authorities cited so far have involved facts in which the borrower is unable to repay all (or any) of the loan at the point where a contribution is made by the lender.
the actual transfer occurred when the loan was made and the charity got dominion and control of the cash
Jeff-Ohio wrote:But my property is not any less my property no matter how greatly I subject it to a risk of loss
Fascinating. You lend $10k out and claim the cash is still your property. Now you have $20k of assets, the cash of $10k and the $10k value of the Note.
I fully expect you to object to the application of this same analysis to OP's facts on the grounds that this case dealt with accrued liabilities rather than a loan and did not involve a situation where doubt as to collectibility may have arisen.
I only argue that the transaction is as possible in a section 170 context as it is in all of these other contexts.
Do they have complete dominion and control?
The title secures your ownership of the property no matter who has physical possession of it, so presumably the value will be the same as the value of the property itself.
Holding title means holding partial dominion over the property.
The other piece required for complete dominion is actual possession of the property
Jeff-Ohio wrote:Why don’t you do it – why don’t you take the facts as the OP gave them to us and then tell us about the constructive cash transfers?
Now you’re altering your argument.
What allows him to collect it are the rights afforded him by the asset he does now own, which is the Receivable.
A title is just evidence of ownership. A note isn’t.
No it doesn’t. You either own the property or you don’t. Title is just evidence of ownership. It’s not an asset in and of itself. If you retain the title in your deed-for-contract sale, as security in case you don’t receive full payment, guess what: You still have a sale for income tax purposes. You don’t keep the real property on your books and that’s because you sold it. Instead, you book up a Receivable. This “partial dominion” you speak of doesn’t hold back the transfer of property for income tax purposes…as much as you’d like to believe it does.
In the case of a loan, or a utility deposit, the other piece required for complete dominion is for the debtor to also hold the Receivable.
The “right to collect” was only “forfeited” by the customer when the customer had an overdue, unpaid utility bill. In that case, the deposit would be applied to the overdue utility bill.
No cash changed hands, but a constructive cash transfer for sure, in satisfaction of the overdue utility bill. But I digress, because OP’s situation involved forgiveness, not satisfaction.
It sure does seem that Chay, why provided us with a dictionary definition of lending, understands it this way: If I lend you $10k in cash, but retain just enough partial dominion over the money, then it is still my money. I own it. I haven’t transferred it. Therefore, I say to myself, if I own it, and haven’t transferred it, why don’t I just make it real clear and just create a Note for the loan, but I’ll keep the money in my own bank account for safe keeping. I don’t trust the debtor. Nonetheless, since we have a valid loan here, I’ll forward this repayment schedule to the “debtor” with respect to the money he never got.
j3cpa wrote:Rev proc 2019-3 section 3 item 35. I think in addition to Story. I guess we can do whatever we want.
When they write “amounts” I equate it to cash. When they write it as value, I tend to think property.
Rev proc 2019-3 section 3 item 35.
I think in addition to Story. I guess we can do whatever we want.
When they write “amounts” I equate it to cash. When they write it as value, I tend to think property.
I agree that "amounts" translates to cash.
The source you quoted, I believe, shows that the question isn't fully settled
I did tell you about the constructive transfer.
If you declare victory again due to my refusal to continue indulging your absurd line of reasoning
Even though the entire note is discharged, there never was, nor could there have been, a constructive transfer of cash, because the actual transfer occurred when the loan was made and the charity got dominion and control of the cash.
A distinction without a difference.
This is an example of the fallacy of equivocation.
Jeff-Ohio wrote:not sure why you’d equate the word “amount” with cash only. Are you saying that if I donate my stock to a charity, I don’t get to deduct any “amount?” And are you saying that if I donate $100 in cash to a charity, I get no deduction for the value of my contribution?
#35 of the Rev Proc is speaking about the arrangement and deductions in general. It is not speaking to cash and/or non-cash specifically.
I cannot even tell where you’d start your analysis. Presumably, it would start with you transferring cash to the charity, but arguing that you never transferred the cash. And then, if we pretend the charity spends all the money, you’d use some fungible theory to support the notion that it really is the charity’s money that has spent, so that charity should account for its spending on its books, even though you just told us that you didn’t initially transfer any money to the charity, owing to strings attached (i.e. retained partial dominion). I’m just guessing this is how you’d start your analysis
When someone argues that constructive cash transfers have taken place, it is not absurd, whatsoever, for someone to say, “Please explain yourself – specifically and in detailed fashion – with a specific tracing of the constructive cash funds.” That is not absurd. It is not too much to ask.
A distinction without a difference.
Rather, a highly important distinction that reflects your knowledge of property law.
This is an example of the fallacy of equivocation.
No, Chay. The only fallacy here is your idea that you retain ownership over the cash, even when it has been transferred. That is the equivalent of not transferring it at all. Ownership hasn’t changed.
what is the amount of the car you donated? or what is the value of the car you donated?
what is the amount of the stocks you donated? or what is the value of the stocks you donated?
I said we can do whatever we want because of the no ruling.
In OP's case, I'd treat it as cash and hash it out with the auditor if it gets to that stage.
Not sure why you have to go through a lot of lengths to prove your point further?
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