Author Topic: any accountants out there that i can ask a question?  (Read 490489 times)

Offline Menachem613

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Re: any accountants out there that i can ask a question?
« Reply #860 on: March 21, 2016, 11:14:34 AM »

This is cross posted. I moved it here per a member's suggestion.

I've asked this question on different forums but have yet to get an answer. My husband and I retired this year. With current CC apps we can use 2015 tax income. What do we use for next year besides the 3 months my husband has worked in 2016? He's waiting until age 70 for SS, RMDs aren't required yet, dividend income is minimal as most of it is reinvested in Roths or IRAs. We have other money set aside to live on until the SS years start. We live below our means which affects how much we need to withdraw from our portfolio not how much we can withdraw. Feel free to PM me.

Isn't this really a question for the CC companies rather than an accountant?

Offline GettingReady

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Re: any accountants out there that i can ask a question?
« Reply #861 on: March 21, 2016, 08:51:08 PM »
Isn't this really a question for the CC companies rather than an accountant?

Should I move it again? Lol. I'm beginning to think no one answers the question because maybe people just make up numbers. I just want to be prepared if I get a FR like I did with Amex this year..

Offline churnbabychurn

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Re: any accountants out there that i can ask a question?
« Reply #862 on: March 21, 2016, 09:01:08 PM »
Should I move it again? Lol. I'm beginning to think no one answers the question because maybe people just make up numbers. I just want to be prepared if I get a FR like I did with Amex this year..
FYI, it could be me, but I can't understand your questions.
Maybe try breaking them up or something..

Offline Menachem613

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Re: any accountants out there that i can ask a question?
« Reply #863 on: March 21, 2016, 10:04:45 PM »

Should I move it again? Lol. I'm beginning to think no one answers the question because maybe people just make up numbers. I just want to be prepared if I get a FR like I did with Amex this year..

No one is answering because your question is in the wrong thread. This isn't a tax or accounting question. It's a CC application question.

Offline Tzadik Nistar

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Re: any accountants out there that i can ask a question?
« Reply #864 on: March 22, 2016, 04:07:43 PM »
Could a business borrow money to a private person? If yes what's the process, is there any tax on it etc?

Offline MarkS

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Re: any accountants out there that i can ask a question?
« Reply #865 on: March 22, 2016, 04:16:01 PM »
Could a business borrow money to a private person? If yes what's the process, is there any tax on it etc?
Borrow money TO someone? Do you mean borrow FROM someone? Or LEND to someone?

Offline Tzadik Nistar

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Re: any accountants out there that i can ask a question?
« Reply #866 on: March 22, 2016, 04:16:44 PM »
Borrow money TO someone? Do you mean borrow FROM someone? Or LEND to someone?
Lend to a private person

Offline MarkS

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Re: any accountants out there that i can ask a question?
« Reply #867 on: March 22, 2016, 04:17:33 PM »
Lend to a private person
Sure. They can lend someone and then they'll pay tax on the interest income that they receive. That's what a bank does :)

Offline Tzadik Nistar

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Re: any accountants out there that i can ask a question?
« Reply #868 on: March 22, 2016, 04:21:54 PM »
Sure. They can lend someone and then they'll pay tax on the interest income that they receive. That's what a bank does :)
And if it's interest free?
And does the receiver of the loan file anything with the irs or pay any taxes?

Offline MarkS

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Re: any accountants out there that i can ask a question?
« Reply #869 on: March 22, 2016, 04:27:11 PM »
And if it's interest free?
And does the receiver of the loan file anything with the irs or pay any taxes?
The lender would have to pay tax on imputed interest.

What that means is if a company lends someone $100 and says that they aren't charging interest. The IRS says - we think that;'s crazy. There's no sane person that lends money and doesn't charge interest! Therefore, they say, that since the market rate right now is 5% (for example) really the borrower should be paying you $5 and you should pay taxes on the $5 (if their rate is 35% they'll pay $1.75). Even though you claim it's an interest free loan, the IRS will charge you taxes as if you earned $5 assuming that you really are getting something for the loan and just not telling them.

The borrower has no tax implication. He borrowed money and he owes it back. If it was a mortgage or student loan then the interest may be deductible.


Offline Tzadik Nistar

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Re: any accountants out there that i can ask a question?
« Reply #870 on: March 22, 2016, 04:34:08 PM »
The lender would have to pay tax on imputed interest.

What that means is if a company lends someone $100 and says that they aren't charging interest. The IRS says - we think that;'s crazy. There's no sane person that lends money and doesn't charge interest! Therefore, they say, that since the market rate right now is 5% (for example) really the borrower should be paying you $5 and you should pay taxes on the $5 (if their rate is 35% they'll pay $1.75). Even though you claim it's an interest free loan, the IRS will charge you taxes as if you earned $5 assuming that you really are getting something for the loan and just not telling them.

The borrower has no tax implication. He borrowed money and he owes it back. If it was a mortgage or student loan then the interest may be deductible.
So is there a minimum of what percentage they need to charge?
Could they claim they only charged 1%?

Offline churnbabychurn

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Re: any accountants out there that i can ask a question?
« Reply #871 on: March 22, 2016, 04:34:54 PM »
The corporate officer may be shirking his fiduciary duties to the shareholders if he's making personal loans with the corporate assets.

Not saying it applies here, but may be relevant.

Offline ExGingi

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Re: any accountants out there that i can ask a question?
« Reply #872 on: March 22, 2016, 04:35:42 PM »
So is there a minimum of what percentage they need to charge?
Could they claim they only charged 1%?
Depending on the term, see http://www.raymondjames.com/taxcreditfunds/hist_app_fed.htm for current and historical rates.

It's best to have a promissory note.
« Last Edit: March 22, 2016, 04:41:07 PM by ExGingi »
I've been waiting over 5 years with bated breath for someone to say that!
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Offline ExGingi

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Re: any accountants out there that i can ask a question?
« Reply #873 on: March 22, 2016, 04:38:19 PM »
The corporate officer may be shirking his fiduciary duties to the shareholders if he's making personal loans with the corporate assets.

Not saying it applies here, but may be relevant.
+1
Can also lead to additional implications in "piercing the corporate vail" if one treats company money as his own.

A formalized document (promissory note) can go a long way in protecting from various issues. Obviously, it needs to make sense as far as size of loan, collateral or lack thereof, and interest rate charged.
I've been waiting over 5 years with bated breath for someone to say that!
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Offline MarkS

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Re: any accountants out there that i can ask a question?
« Reply #874 on: March 22, 2016, 04:39:55 PM »
So is there a minimum of what percentage they need to charge?
Could they claim they only charged 1%?
On any loan below market interest rates (Fed rates) you would pay taxes on the imputed interest rate.

If the Fed rate is 2.25 for a long term loan compounded annually ( https://www.irs.gov/pub/irs-drop/rr-16-09.pdf ) and you are paying 1.25, the imputed interest would be 1% ($1) and you would pay tax on $1 (say 35 cents)

Offline Tzadik Nistar

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Re: any accountants out there that i can ask a question?
« Reply #875 on: March 22, 2016, 04:47:54 PM »
On any loan below market interest rates (Fed rates) you would pay taxes on the imputed interest rate.

If the Fed rate is 2.25 for a long term loan compounded annually ( https://www.irs.gov/pub/irs-drop/rr-16-09.pdf ) and you are paying 1.25, the imputed interest would be 1% ($1) and you would pay tax on $1 (say 35 cents)
Thanks for your help

Offline Ephcc90

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Re: any accountants out there that i can ask a question?
« Reply #876 on: March 22, 2016, 05:47:55 PM »

On any loan below market interest rates (Fed rates) you would pay taxes on the imputed interest rate.

If the Fed rate is 2.25 for a long term loan compounded annually ( https://www.irs.gov/pub/irs-drop/rr-16-09.pdf ) and you are paying 1.25, the imputed interest would be 1% ($1) and you would pay tax on $1 (say 35 cents)
Cmiiw but i think that is only for loans above $10,000(with certain exceptions) and limited to the borrower's net investment income if that makes a difference in your case.

Offline MarkS

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Re: any accountants out there that i can ask a question?
« Reply #877 on: March 22, 2016, 06:05:03 PM »
Cmiiw but i think that is only for loans above $10,000(with certain exceptions) and limited to the borrower's net investment income if that makes a difference in your case.
Sounds like you are right! Interesting to know.

Imputed interest rules also do not apply to:

>Gift loans of $10,000 or less (aka de minimis loans), unless it is used to purchase income producing property, in which case, the following $100,000 rule applies.
>Loans of $100,000 or less. If the loan is used to purchase investment property, then imputed interest rules do not apply if the net investment income from the property does not exceed $1,000.

If net investment income is greater than $1,000, then the gross investment income is the lesser of the imputed interest, as calculated by using the AFR, or the actual gross income earned, since the objective of the imputed interest rules was to prevent income shifting. Net investment income is gross income from all investments minus related expenses.

Net Investment Income = Gross Investment Income – Investment Expenses

If Net Investment Income ≤ $1,000 then Imputed Interest = 0

Else: Net Investment Income = Lesser of (Imputed Interest Computation or Actual Gross Investment Income) – Investment Expenses

However, if the primary purpose of the $100,000 loan was tax avoidance, then the interest is imputed and not limited by the borrower's net investment income, since the purpose of the imputed interest rules was to prevent high tax-bracket taxpayers from shifting income to lower bracket relatives.

Offline avrumy

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Re: any accountants out there that i can ask a question?
« Reply #878 on: March 27, 2016, 05:02:52 PM »
can i take expense of lunches in school which is paid separately and is not tuition, for a first grader on 2441?

Online Dawie

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Re: any accountants out there that i can ask a question?
« Reply #879 on: March 27, 2016, 07:07:11 PM »
can i take expense of lunches in school which is paid separately and is not tuition, for a first grader on 2441?
based on what svara? after school expense?