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Posted by Haskel LaPort on April 19, 2008, 11:36 am
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> >While I'd like to find out I'm wrong, my conclusion from prior research
>>is that if you want to use a computer and you want to do it "right",
>>you've got to pay for it. Many firms advertise this service, just do an
>> Internet search.
>
> I do my own 1099 forms on a laser printer. I set them up in a word
> processor as large labels. It took a fair amount of fiddling the
> first time to get them to print in the right place (the smallest
> package of 1099 forms from Staples has far more than I ever use,
> fortunately) but the changes from year to year are petty minor.
The forms I buy at Staples comes with software that takes care of this
without any fuss.
>
> Regards,
> John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for
> Dummies",
> Information Superhighwayman wanna-be, http://www.johnlevine.com, ex-Mayor
> "More Wiener schnitzel, please", said Tom, revealingly.
--
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Posted by Ernie Klein on April 17, 2008, 7:20 pm
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> But regardless of business vs. residential, and regardless of what kind
> of 1099 was or was not issued, the tenants received $6K rental value for
> doing something they anticipated would cost them less than $6K to
> provide -- otherwise, why would they do it?
For the same reason my daughter has provided labor and materials in
exchange of forgiveness of rent - to have the advantage of the
"improved" property while they lived there. There might not be a
profit motive at all other than to enjoy the improvements.
--
-Ernie-
--
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<< 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. >>
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Posted by Mark Bole on April 17, 2008, 9:52 pm
Please log in for more thread options Ernie Klein wrote:
>> But regardless of business vs. residential, and regardless of what kind
>> of 1099 was or was not issued, the tenants received $6K rental value for
>> doing something they anticipated would cost them less than $6K to
>> provide -- otherwise, why would they do it?
>
> For the same reason my daughter has provided labor and materials in
> exchange of forgiveness of rent - to have the advantage of the
> "improved" property while they lived there. There might not be a
> profit motive at all other than to enjoy the improvements.
That's like saying I love my job and have no profit motive, only the
side effect of enjoyment of deposits into my bank account.
Remember, there has always been the assumption of an arm's-length
transaction between parties with adverse economic interest, at least in
my replies. Is your daughter renting a property you own?
Where is Paul Thomas when you need him? ;-) This is starting to sound
like some of the long threads I've seen over in the unmoderated group
regarding what constitutes taxable provision of services.
If you receive something of value in the open market in return for your
labor, it's taxable income. Rent is imputed at fair market value even if
it's not collected in cash.
Over in the Quickbooks group a while back, it seemed to come as a
surprise to some experienced CPA-types that if a self-employed chef, for
example, receives free nights at a Bed-and-Breakfast in exchange for
providing services in the kitchen (which benefit the owner through
publicity and such), it is a taxable bartering exchange -- even if the
chef has business travel expenses that offset the value of the free
lodging he received, and even if the B+B owner has contract labor
expenses that offset the income from the room rental.
While the net effect of a bartering exchange between two businesspersons
may be no taxable profit, the gross income test for required-to-file
must still include this income. The tenants, in our current example,
once they deduct legitimate business expenses for providing the service,
have left only non-deductible personal expenses for shelter (just like a
tenant who paid rent in cash). If they didn't have $6K out-of-pocket
expense for providing the service, they have taxable income which they
happened to spend on rent.
I don't need to be told that there are an incredibly high percentage of
people who mistakenly believe that since bartering transactions are
cashless, they somehow are not legally taxable. I'm sure it happens all
the time...
-Mark Bole
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<< 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. >>
<< ------------------------------------------------------- >>
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Posted by Ernie Klein on April 17, 2008, 10:44 pm
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> Ernie Klein wrote:
>
> >> But regardless of business vs. residential, and regardless of what kind
> >> of 1099 was or was not issued, the tenants received $6K rental value for
> >> doing something they anticipated would cost them less than $6K to
> >> provide -- otherwise, why would they do it?
> >
> > For the same reason my daughter has provided labor and materials in
> > exchange of forgiveness of rent - to have the advantage of the
> > "improved" property while they lived there. There might not be a
> > profit motive at all other than to enjoy the improvements.
>
> That's like saying I love my job and have no profit motive, only the
> side effect of enjoyment of deposits into my bank account.
Not the same at all. You work your job first and foremost for income,
the fact that you love your job is a side effect.
If you own your home and make improvements, are you implying that the
main motive is to increase the value of your home for profit when you
sell it? I think most people will install a patio or swimming pool
because it fits their life style, and while it may add to the property
when they sell, it is not the prime motive for doing so. Heck, I have
lived in my home for almost 40 years and have put in many thousands of
dollars in improvements, never once considering the increase in value to
my property. I only did it because I wanted the improvements for myself
- any increase in value is a side effect.
Why should renters be different. My daughter lived in a rented house
for several years and will probably continue to live there for a few
more years. If the landlady is willing to let her make improvements
that my daughter wants and the landlady is willing to pay for the
materials by forgiving rent, why does there have to be any other motive?
I am not questioning the rest of your fine post, only your assumption
that tenants would not be willing to make improvements to rental
property unless they had a profit motive in addition to the having the
improvements to enjoy during the remainder of their stay.
I find it absolutely plausible for a tenant to make $6000 of
improvements and receive $6000 in rent compensation in return and have
no profit at all to show for it.
--
-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. >>
<< ------------------------------------------------------- >>
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Posted by Mark Bole on April 17, 2008, 11:12 pm
Please log in for more thread options Ernie Klein wrote:
> If you own your home and make improvements, are you implying that the
> main motive is to increase the value of your home for profit when you
> sell it?
No. I own my home. I pay myself imputed rent (which is non-taxable,
thank goodness!) I am making a capital improvement and upping the
imputed rent to take that into account -- it's now a luxury rental!
This is from an economic perspective, not a tax perspective. This is
also why many people have a skewed perception of the economic value of
home ownership -- they don't take into account the imputed rent. Many
people live in homes they could not normally afford to rent, but they
can do it because they are paying the "opportunity cost" of their equity
and have government subsidies in the form of artificially lower property
tax.
> Why should renters be different.
Because they are not owners(1). They are not assuming any risk.
> I find it absolutely plausible for a tenant to make $6000 of
> improvements and receive $6000 in rent compensation in return and have
> no profit at all to show for it.
Sorry, that's not how I interpret the tax law, but disagreements welcome.
-Mark Bole
(1) in a limited case, California does try to make an equivalence
between owners and renters. Homeowners typically receive a homestead
exemption on their property tax, worth approximately $70 off their
annual property tax bill. California renters, below certain income
levels, receive a renters' credit of $60-120 to equate to this break to
homeowners, since the landlord does not get the exemption on a property
that is not his primary residence, and the legislature figured, someone
ought to get it.
--
<< ------------------------------------------------------- >>
<< 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. >>
<< ------------------------------------------------------- >>
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