151–160 of 186 posts
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We collectively benefit if you give me $1000 and I give you $1. That doesn't mean it's a good deal.
Your example is zero sum; there is no collective benefit. Investment in roads enable commerce. Investments in education enable future technology.
I am a big proponent and teach my children pay as little taxes as you possibly can. Use all means available that are not fraud. So this article is a delight. Our government in my generation failed me and my kids, they are busy in fighting wars, manufacturing crises abroad, and doing other nefarious things. Question: can I use the means in this article to avoid my last year's tax? What asset categories are available t…
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It's two sides of the same coin. Imagine a simple example: Mom and dad buy a house for $100,000. When they die it's worth $1,000,000. In Canada, you'd pay gains on the $900,000 difference. In America, you'd pay inheritance tax on the full $1,000,000 (but no capital gains). So in America you're paying tax on a little bit more (I'm of course ignoring the cap gains baseline exception). But the reason America does it the…
Easier than you'd think. The value of homes is very well known and assessed annually in many provinces (some have weirdly become laggards). So no real problem there. Any piece of art that is of any real value would have a provenance and it would be very well known what the value it was at any given time and at sale. If no one knows the artist or can determine the value it is very safe to say its value is nil.
On the other hand, cost basis in a house is not just the purchase price. Many improvements add to the cost basis, and good luck finding records to support that. Especially for a home owned by your parents since the 1970s.
That doesn't make it equitable to step-up on death; but it does make it very convenient.
> Loaned money isn't taxable income, so you can save/spend it without affecting your tax rate. > Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases. The article talks about taxes in the USA, and I think the treatment of taxes at death is unfair by giving a significant ta…
It's two sides of the same coin. Imagine a simple example: Mom and dad buy a house for $100,000. When they die it's worth $1,000,000. In Canada, you'd pay gains on the $900,000 difference. In America, you'd pay inheritance tax on the full $1,000,000 (but no capital gains). So in America you're paying tax on a little bit more (I'm of course ignoring the cap gains baseline exception). But the reason America does it the…
Easy stuff. If your benefactors care about taxes on their estate they will properly document capital assets. If not? Oh well. It was a windfall gain either way.
This is such a non-issue given the inheritance/gift tax limit being so high I don’t understand why it’s ever talked about.
It’s also not as onerous as people assume. I’ve established cost basis 15 years later on an asset I had no paperwork for by simply looking up the daily average price for said asset when I knew I acquired it. This can even be used for stuff like buying an expensive retail purchase - just use advertised retail cost. The IRS allows broad leeway so long as you are consistent and can explain your reasoning.
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What if I live for, say, decades before dying. Surely the lender expects some some amount of repayment before then.
I don't know how these specific loans are structured but in real estate it's relatively common for a loan to be interest only with a balloon payment (the principal) due some number of years in the future. So in theory you could just pay off the balloon payment with a new loan and repeat the process.
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What if I live for, say, decades before dying. Surely the lender expects some some amount of repayment before then.
I don't know how these specific loans are structured but in real estate it's relatively common for a loan to be interest only with a balloon payment (the principal) due some number of years in the future. So in theory you could just pay off the balloon payment with a new loan and repeat the process.
There is no balloon payment ever due if you simply pay off the interest indefinitely.
Of course there is always the possibility of a margin call against the loan where if you lose X% of value on the securing asset you may be liquidated of it and the proceeds used to pay off said line of credit.
There are a million caveats and different loan structures so I’m sure some finance bro will be along to correct me shortly. But overall for normalish folks this is more or less the correct mental model.
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Why should the government collect taxes on jewelery I pass down to my children? I already paid income taxes on the money I used to buy it and sales tax at the point of purchase. Why the hell are they entitled to more?
To prevent royalty. That is literally the reason. To prevent family dynasties.
They also pay for education and use networks and names to get their kids jobs and status.
This blogspam is advocating tax fraud.
Depreciation is permitted for business assets. In order to depreciate the lawnmower, you would need to claim it as a business expense. In order to claim a business expense, you also need to have some business income (net business losses are okay, but not having any income, or having only de minimis income, is a huge red flag). And importantly, you can't use the asset for personal use. Ever.
This type of tax fraud is the #1 cause of tax penalties. And because it's fraud, it also means the IRS has an unlimited time to audit and penalize you for it.
Rich people don't defer their U.S. taxes by buying depreciable property. They do so by buying investment property like stocks, and making charitable donations.