Advent Talk
Issues & Concerns Category => 3ABN => Topic started by: Stan on March 31, 2009, 06:46:26 PM
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Did anyone explain about paid $7,000 for a home and then selling it for market value?
I am going through a similar type of event, not my home, wish it was.
It could very well be that the CPA's here explained that, but I can not find it..
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It's a good question.
Simpson personally told me, from what I recall, that the auditors believed there was nothing wrong with the transaction. But I made the point in a court filing, from what I recall, that those auditors wouldn't dare put that in writing and jeopardize their careers.
This much is certain: Even though we have been filing about this issue since I think Dec. 2007 or Jan. 2008, the plaintiffs never once filed any proof that the transaction was totally above board.
If you were a party to a suit like this, wouldn't you want proof of such in the record? Now that the case is in appeal, they have nothing to point to in the record to show that there was nothing wrong with the transaction. Not even an affidavit from the auditor, Alan Lovejoy.
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Now I think I misunderstood your question. Were you wanting to know how it allegedly worked in Danny's situation?
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When we spoke before, I really did not have any experience in this kind of thing in trust work, I took it in school, but have never had hands on. Please keep in mind I am not an Attorney, Barrister or Solicitor, nor do I have a professional accountant designation. I do not know tax laws in which ever state this happened in.
Here is a situation I am dealing with, and it is far from completion. The numbers I am about to give are in the ballpark, but not close enough to identify this transaction. Because of lack of Death Tax in Canada, things like this never happen to prevent taxes. With that understanding I will explain, and this shed light to me on what happened.
A nice property, was gifted to us, not fully appraised but more than likely about a million dollars. It has a life tenancy with the property, that person is far from retirement.
So what kind of tax receipt to we give?
It would be the same amount of that we would sell the property for.
Well, under 100,000.
WHY?
We have to take the net prevent value (NPV) of the projected actuarian study of the projected life span of this person who can live in it until she passes, if it is a couple, it ends up being the projected life span of the second to die, usually the female.
Perhaps a CPA could clarify that more.
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I hope that did not sound hostile or sarcastic..
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See http://www.irs.ustreas.gov/pub/irs-pdf/f8283.pdf (http://www.irs.ustreas.gov/pub/irs-pdf/f8283.pdf) and http://www.irs.ustreas.gov/pub/irs-pdf/i8283.pdf (http://www.irs.ustreas.gov/pub/irs-pdf/i8283.pdf).
This form says it must be filled out if donations of property are more than $500. If more than $5,000, it says an appraisal must be obtained by the donor. The donee specifically must say, "This acknowledgment does not represent agreement with the claimed fair market value." Thus, it would appear, any receipt the donee gives cannot have a dollar amount on it, which, I think, is what Fran said somewhere.
And all this raises another question: Was the property 3ABN sold to Danny ever donated to 3ABN? If so, when was that? If it was sold less than 3 years after being donated to 3ABN, Form 8282 would have to be filed. Was it?
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I doubt if it was donated.. (To Danny I mean - Just edited to add that for clairification)
What did he pay for that "IF" he had life tenancy, 2 things
1 - The $7,000 or whatever it was
and
2 - Lifetime living in it at no charge, based on actuarial studies and based on second to die in the marriage, or in a few cases a designated child, or in some cases, and I think this is just in Canada, 20 years past the date of the second to die, of a designated child or other beneficery. (That last one about 20 years is from memory from a class 8 years ago, so it may not be correct.)
TOTAL of 1 and 2 = Value of home = No gift.
As I said earlier, I am not practicing law, or as a CPA, nor do I know the tax laws there.
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Please keep in mind, that I had no one from 3ABN give me any info on this, but because of a recent transaction I am involved in, I gained a lot more understanding of this.
If this is what I think it is, I would have wished someone would have explained it to your earlier.
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ALSO that is about the only way someone can change homes, without walking away from free rent, and move into home ownership.
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See http://www.irs.ustreas.gov/pub/irs-pdf/f8283.pdf (http://www.irs.ustreas.gov/pub/irs-pdf/f8283.pdf) and http://www.irs.ustreas.gov/pub/irs-pdf/i8283.pdf (http://www.irs.ustreas.gov/pub/irs-pdf/i8283.pdf).
This form says it must be filled out if donations of property are more than $500. If more than $5,000, it says an appraisal must be obtained by the donor. The donee specifically must say, "This acknowledgment does not represent agreement with the claimed fair market value." Thus, it would appear, any receipt the donee gives cannot have a dollar amount on it, which, I think, is what Fran said somewhere.
And all this raises another question: Was the property 3ABN sold to Danny ever donated to 3ABN? If so, when was that? If it was sold less than 3 years after being donated to 3ABN, Form 8282 would have to be filed. Was it?
Bob
that link is for when you donated to a Charity, not from a Charity to a person. (edited after I reread your original post, I missread form for a persons name..
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So are you saying it is corban?
Seems like some of these elderly donors should have had someone looking out for their best interests.
How did 3ABN get the property? Did they buy it at full value? If so from whom? If it was donated to 3ABN wasn't the property supposed to revert to the owner (3ABN) when those with a life tenancy were to die? Was it originally donated to 3ABN with this in mind? That should Danny and Linda pass away, the other life tenant would have use of the property during her lifetime and at her death 3ABN could then sell it and put the money into spreading the gospel? Who talked the other life tenant into giving back her life tenancy?
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So are you saying it is corban?
Seems like some of these elderly donors should have had someone looking out for their best interests.
How did 3ABN get the property? Did they buy it at full value? If so from whom? If it was donated to 3ABN wasn't the property supposed to revert to the owner (3ABN) when those with a life tenancy were to die? Was it originally donated to 3ABN with this in mind? That should Danny and Linda pass away, the other life tenant would have use of the property during her lifetime and at her death 3ABN could then sell it and put the money into spreading the gospel? Who talked the other life tenant into giving back her life tenancy?
Come on now. No, it was not a sacrifice or offering made to God, and May Chung is hardly an elderly woman being taken advantage of. She is a smart an savvy business woman with a good head on her shoulders.
The Three angels broadcasting network chairman of the board explained this himself in a letter which Robert Pickle filed in court, so Mr Pickle is well aware of the explanation and people involved.
The Property transfer was overseen by an Attorney who was on the 3abn board at the time and had worked for the NAD conference writing the same kind of documents.
The property in question was a gift to 3abn, from May Chung with a life interest for herself and for Danny and Linda Shelton. In other words, the house was theirs to use as long as any of them should live.
Danny and Linda asked the board if they could purchase the remainder interest which was 3abn's and the board agreed.
The amount was determined by legal statistical tables calculated to determine the worth of the property at the statistical time of their death.
3Abn has to account for all trusts they handle or which are gifted to them, if a lifetime trust is revoked, or as in this case, the remainder interest was purchased from them, then they also have to account for the loss, as it is no longer in their possession.
Mr Pickle along with his financial advisors looked at the partial documents they had and came to the erroneous conclusion that this was an excess benefit, paid retirement, and a purchase of a property for below the market price.
The Attorneys involved, the accountants, the auditors and even the IRS who this was all properly reported to did not come to the same conclusions.
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And what is her age? Seems like I read on Blacksda about someone falling asleep. And she isn't the only older lady involved in the house swap or sales. Just sayin' ya know. Wouldn't want anyone to be accused of being greedy at the expense of our senior citizens. What benefit was there in the deal for the ladies then? These sharp business dealers. Or Whom did the deal benefit? Who thought it up? Was it for the benefit of 3ABN? Did the deal help spread the gospel? Did it glorify God? Would Jesus have done it? Remember I said elderly donors (plural).
Edited to add two lines.
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Bob
that link is for when you donated to a Charity, not from a Charity to a person. (edited after I reread your original post, I missread form for a persons name..
In the case of a charity giving property to a founder/director/officer for less than fair market value, that's called a section 4958 excess benefit transaction, and can get the charity and those involved in serious trouble.
It's reported on IRS Form 990.
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When we spoke before,.....(edited for emphasis)
When you spoke before? Stan are you the person Bob kept claiming he talked to about this transaction even though it was clear that when he did Bob did not have all the relevant information to present to the individual for consideration?
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Bob
that link is for when you donated to a Charity, not from a Charity to a person. (edited after I reread your original post, I missread form for a persons name..
In the case of a charity giving property to a founder/director/officer for less than fair market value, that's called a section 4958 excess benefit transaction, and can get the charity and those involved in serious trouble.
It's reported on IRS Form 990.
Bob.
Do you understand what Stan is talking about here? It does not seem that 3abn gave DS AND LS anything at all in 1998. They sold them something. Have you at any time determined what the value of the remainder of the life estate would have been when it was sold and if it exceeded significantly the price paid by DS AND LS?
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When we spoke before,.....(edited for emphasis)
When you spoke before? Stan are you the person Bob kept claiming he talked to about this transaction even though it was clear that when he did Bob did not have all the relevant information to present to the individual for consideration?
No. The fellow I mentioned speaking to was an trust services expert who was giving a seminar. While Stan may also be a trust services expert, he was not the one I was referring to.
I also spoke with an attorney about the transaction. In both cases, I believe I mentioned the life estate part of the transaction.
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Bob
that link is for when you donated to a Charity, not from a Charity to a person. (edited after I reread your original post, I missread form for a persons name..
In the case of a charity giving property to a founder/director/officer for less than fair market value, that's called a section 4958 excess benefit transaction, and can get the charity and those involved in serious trouble.
It's reported on IRS Form 990.
Bob.
Do you understand what Stan is talking about here? It does not seem that 3abn gave DS AND LS anything at all in 1998. They sold them something. Have you at any time determined what the value of the remainder of the life estate would have been when it was sold and if it exceeded significantly the price paid by DS AND LS?
The book value of the property as reported by 3ABN/Danny to the IRS greatly exceeded the price paid by Danny and Linda. That point has been clear from the get go, and is indisputable.
Just common sense shows that there is something shady here. Otherwise, 3ABN could give Jody and Trinity a life estate in a piece of property they never owned, and then sell the little girls next year what the remainder interest would be at the time the little girls are 90 years old.
If it is permissible to sell the remainder interest like this, and I do not know if it is, then shouldn't that interest be calculated at the age they are now, not at the age they will be 20 or 30 or 40 or 50 years in the future?
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Bob
that link is for when you donated to a Charity, not from a Charity to a person. (edited after I reread your original post, I missread form for a persons name..
In the case of a charity giving property to a founder/director/officer for less than fair market value, that's called a section 4958 excess benefit transaction, and can get the charity and those involved in serious trouble.
It's reported on IRS Form 990.
Bob.
Do you understand what Stan is talking about here? It does not seem that 3abn gave DS AND LS anything at all in 1998. They sold them something. Have you at any time determined what the value of the remainder of the life estate would have been when it was sold and if it exceeded significantly the price paid by DS AND LS?
The book value of the property as reported by 3ABN/Danny to the IRS greatly exceeded the price paid by Danny and Linda. That point has been clear from the get go, and is indisputable.
Just common sense shows that there is something shady here. Otherwise, 3ABN could give Jody and Trinity a life estate in a piece of property they never owned, and then sell the little girls next year what the remainder interest would be at the time the little girls are 90 years old.
If it is permissible to sell the remainder interest like this, and I do not know if it is, then shouldn't that interest be calculated at the age they are now, not at the age they will be 20 or 30 or 40 or 50 years in the future?
I do not think it necessary to keep throwing children's names into these topics. Especially when they have nothing to do with this subject.
Maybe this will make it easier.
The trustee is in charge of the total.
Lifetime interest plus remainder interest equals total.
Total minus lifetime interest (already given to LS and DS by a donor) equals remainder interest (and the price paid by LS and DS to 3abn, for what the donor had given to 3abn)
And yes it is legal that is why their are legal charts to determine the amounts.
The remainder interest which was gifted to 3abn, is what would have been left after the life trust was over with. That would not have been until after the deaths of Linda or Danny. That is why the statistical time of their deaths had to be used.
To date that in 1998 would have made Danny and Linda buy what already was theirs. They did not die in 1998.
Perhaps Stan can explain how this works better than myself, or correct me if I am wrong?
Or a CPA or accountant here can do so?
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I do not think it necessary to keep throwing children's names into these topics. Especially when they have nothing to do with this subject.
Maybe this will make it easier.
The trustee is in charge of the total.
Lifetime interest plus remainder interest equals total.
Total minus lifetime interest (already owned by LS and DS) equals remainder interest (and the price paid by LS and DS.)
And yes it is legal that is why their are legal charts to determine the amounts.
The remainder interest which was gifted to 3abn, is what would have been left after the life trust was over with. That would not have been until after the deaths of Linda or Danny. That is why the statistical time of their deaths had to be used.
To date that in 1998 would have made Danny and Linda buy what already was theirs. They did not die in 1998.
Perhaps Stan can explain how this works better than myself, or correct me if I am wrong?
Or a CPA or accountant here can do so?
Cindy, what makes you think anybody here wants to answer your accounting questions after you make comments like this:
Mr Pickle along with his financial advisors looked at the partial documents they had and came to the erroneous conclusion that this was an excess benefit, paid retirement, and a purchase of a property for below the market price.
Besides, folks have been trying for years now to correct you when you are wrong, but you pay no attention...sigh...
Edited to fix typo
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The donee specifically must say, "This acknowledgment does not represent agreement with the claimed fair market value." Thus, it would appear, any receipt the donee gives cannot have a dollar amount on it, which, I think, is what Fran said somewhere.
Bob, what i was trying to show was that price WAS the fair market value of the home. I do regret still, that I did not have any 'hands on' experience when you and I first talked about this, months or years ago.
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No. The fellow I mentioned speaking to was an trust services expert who was giving a seminar. While Stan may also be a trust services expert, he was not the one I was referring to.
YIKES, please don't confuse me with being an expert, every state province seems to have different rules and regulations.
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The donee specifically must say, "This acknowledgment does not represent agreement with the claimed fair market value." Thus, it would appear, any receipt the donee gives cannot have a dollar amount on it, which, I think, is what Fran said somewhere.
Bob, what i was trying to show was that price WAS the fair market value of the home. I do regret still, that I did not have any 'hands on' experience when you and I first talked about this, months or years ago.
I do not see how anyone will agree that $6,139 was the FMV of a home sold one week later for $135,000. But, do you have any links or quotes that define FMV in the way that you suggest?
Remember, 3ABN essentially admitted that the home was worth far more than $6,139 when they reported its book value at more than $50,000.
No. The fellow I mentioned speaking to was an trust services expert who was giving a seminar. While Stan may also be a trust services expert, he was not the one I was referring to.
YIKES, please don't confuse me with being an expert, every state province seems to have different rules and regulations.
I was trying to avoid sounding as if I was saying that you weren't an expert. :)
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I do not think it necessary to keep throwing children's names into these topics. Especially when they have nothing to do with this subject.
I disagree. To make the point that I am trying to make, I have to pick the youngest individuals possible that are members of Danny's family.
Don't you see that in this way 3ABN could transfer millions of dollars of its assets to Danny, getting paid next to nothing? And don't you see that it appears that you don't care, and that you would justify such an unrighteous transfer by claiming that there wasn't anything illegal about it, all the time avoiding the question of whether it was ethical or proper?
Again, what if 3ABN gave Jody and Trinity a life estate in a property valued at $100 million, and then a year later sold them the remainder interest at its value when they would be 90 years of age. Anything wrong with that?
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Thanks for your kind remarks about me being an expert, I understand now what you meant.
Let me repackage this, and my numbers are just an example.
I believe you could once by $100 Education savings bonds for something like $25.00. They did not mature for $20 years or something like that.
The NPV (Net Present Value) was only $25.00 even the they were $100.00 savings bonds.
I would sell you my little humble abode, today's value is about $150,000 or something, I would sell you that for $30,000 cash today, you can take possession of it in 50-60 years. Make sure you pay the insurance and taxes. Similar thing. (I think the agreement could be made that I would pay the insurance etc, not to sure)
My initial example was we are being gifted, via an estate, a nice house given to the conference, it may well be worth over $1,000,000.00 the estate tax accountant wants a charitable receipt, to close up the estate.
What is going to be the figure on the receipt? $1,000,000 or the current appraised value? NOPE, it will likely be under $100,000, the same price we would sell it to the person who has the life tenancy. I can expect some well meaning folks to will say "WHAT the conference GAVE AWAY a million dollar house for $100,000"
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Did what I say seem understandable to those who had another position?
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I had thought that I had put this on the more private section, it was not my intent to review this and dialog with Bob on this where it might embarrass him or have it so publicly he would admin errors on his judgement call.
I have been well known to make a lot of mistakes, just ask my kids, wondering if someone move it out here or if I originally posted in the wrong place..
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I had thought that I had put this on the more private section, it was not my intent to review this and dialog with Bob on this where it might embarrass him or have it so publicly he would admin errors on his judgement call.
I have been well known to make a lot of mistakes, just ask my kids, wondering if someone move it out here or if I originally posted in the wrong place..
Stan,
It is the "3ABN Other" forum that is restricted from public viewing. I would be happy to move your comments there for you. However, my experience with Bob has been that if he has made a mistake or if other facts come to light that cause him to change his position on an issue, he prefers to have it out in the open so that the record can be set straight.
So I'll leave it up to you two - just send me a PM if somebody wants this moved elsewhere.
Thanks,
Snoopy
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Nah, leave it here.
Stan, your example doesn't quite fit the situation, on several counts.
First of all, I can't find anywhere where a 501(c)(3) in the U.S. would give a receipt to a donor for donated property that has a dollar value on it. I just can't find it.
Secondly, your example suggests that the conference would sell the $1 million home for $100,000 to the donor. In this case, Danny wasn't the donor, from all I've seen. If he was the donor he could have proven so almost two years ago, and saved everyone a lot of grief IF that makes a difference.
Thirdly, don't you have to take into consideration the present value of the property when you sell it? I've seen some examples by the IRS of sales of remainder interest of stocks that take present value into consideration.
Fourthly, we still have to remember that 3ABN's books said that the book value of the property was more than $50,000. In your example above, what value would be on the conference's books? $100,000 or $1 million?
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You obviously have never taken clothing (which is considered property) to Goodwill. When you drop it off they ask the estimated dollar value, write it on an official Goodwill reciept (yes, it is a 501(c)(3)) and hand it to you.
anyman
Nah, leave it here.
Stan, your example doesn't quite fit the situation, on several counts.
First of all, I can't find anywhere where a 501(c)(3) in the U.S. would give a receipt to a donor for donated property that has a dollar value on it. I just can't find it.
Secondly, your example suggests that the conference would sell the $1 million home for $100,000 to the donor. In this case, Danny wasn't the donor, from all I've seen. If he was the donor he could have proven so almost two years ago, and saved everyone a lot of grief IF that makes a difference.
Thirdly, don't you have to take into consideration the present value of the property when you sell it? I've seen some examples by the IRS of sales of remainder interest of stocks that take present value into consideration.
Fourthly, we still have to remember that 3ABN's books said that the book value of the property was more than $50,000. In your example above, what value would be on the conference's books? $100,000 or $1 million?
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anyman,
Actually, I recall a place like that refusing to put a dollar value on the receipt.
If you go to http://Goodwill.org/ (http://Goodwill.org/) and search for "receipt," you'll end up with four listings. http://www.goodwill.org/page/guest/about/howweoperate/donations/aboutdonatingvehicles (http://www.goodwill.org/page/guest/about/howweoperate/donations/aboutdonatingvehicles) says, "The charity is not permitted to determine your vehicle's fair market value; the tax receipt is proof that you made the donation."
Seems that if I told them to put $1 million on a receipt for a teddy bear I gave them, it could be problematic if they complied.
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Nah, leave it here.
Stan, your example doesn't quite fit the situation, on several counts.
First of all, I can't find anywhere where a 501(c)(3) in the U.S. would give a receipt to a donor for donated property that has a dollar value on it. I just can't find it.
Secondly, your example suggests that the conference would sell the $1 million home for $100,000 to the donor. In this case, Danny wasn't the donor, from all I've seen. If he was the donor he could have proven so almost two years ago, and saved everyone a lot of grief IF that makes a difference.
Thirdly, don't you have to take into consideration the present value of the property when you sell it? I've seen some examples by the IRS of sales of remainder interest of stocks that take present value into consideration.
Fourthly, we still have to remember that 3ABN's books said that the book value of the property was more than $50,000. In your example above, what value would be on the conference's books? $100,000 or $1 million?
OK, what was the PV of the home before Danny bought the remainder? AND how much with the life tenancy worth?
I do not know who gives the receipt for property in that state. I suspect the donor would have to have it appraised. I don't know if she/he gave it to Danny with the remainder to go to 3ABN. or how the gift was done.
In our case, the gift of the $1,000,000 or so home, would be on our books for the 100,000 figure, we issue the receipt for that. It would be the same price we would sell the home to the 'tenant' for.
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Correction...
- - Secondly, your example suggests that the conference would sell the $1 million home for $100,000 to the donor
I should have been $100,000 to the tenant, she/he was not the donor...
Sorry about that...
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OK, what was the PV of the home before Danny bought the remainder? AND how much with the life tenancy worth?
Obviously, if the home sold for $135,000 one week later, and if that price was an open market price, then that is the FMV of the home.
I do not know who gives the receipt for property in that state. I suspect the donor would have to have it appraised.
It's a federal thing, not a state thing. IRS Form 8283 indicates that the donor must get an appraisal if the donated property has a claimed value of more than $5000.
In our case, the gift of the $1,000,000 or so home, would be on our books for the 100,000 figure, we issue the receipt for that. It would be the same price we would sell the home to the 'tenant' for.
In this case, 3ABN had a book value on the house of over $50,000, and sold it to Danny for just $6,139. So the figures don't jive.
Correction...
- - Secondly, your example suggests that the conference would sell the $1 million home for $100,000 to the donor
I should have been $100,000 to the tenant, she/he was not the donor...
Sorry about that...
To my knowledge, May Chung never owned the property in question.
In your example, if neither the donor or the tenant had ever owned the property in question, can they be given a life estate in it?
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Also from the Goodwill site, "Taxpayers who donate used clothing and household items in good condition can qualify for a tax deduction."
What you are avoiding is your claim that, "I can't find anywhere where a 501(c)(3) in the US would give a receipt to a donor for donated property that has a dollar value on it." Goodwill does, I and friends of mine, have experienced just that. Receipts from Goodwill with dollar figures written on them. It appears you remain unwilling to every be wrong.
anyman
anyman,
Actually, I recall a place like that refusing to put a dollar value on the receipt.
If you go to http://Goodwill.org/ (http://Goodwill.org/) and search for "receipt," you'll end up with four listings. http://www.goodwill.org/page/guest/about/howweoperate/donations/aboutdonatingvehicles (http://www.goodwill.org/page/guest/about/howweoperate/donations/aboutdonatingvehicles) says, "The charity is not permitted to determine your vehicle's fair market value; the tax receipt is proof that you made the donation."
Seems that if I told them to put $1 million on a receipt for a teddy bear I gave them, it could be problematic if they complied.
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Life tenacy has a value, it is like prepaid rent, and possibly other expenses for what ever there projected date of death would be, based on actuarial studies.
In the other case, the donor passed away, leaving it to us, but providing a lifetime free occupancy for the designated person..
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Also from the Goodwill site, "Taxpayers who donate used clothing and household items in good condition can qualify for a tax deduction."
So? No one has disputed that.
What you are avoiding is your claim that, "I can't find anywhere where a 501(c)(3) in the US would give a receipt to a donor for donated property that has a dollar value on it." Goodwill does, I and friends of mine, have experienced just that. Receipts from Goodwill with dollar figures written on them.
Maybe I can call Goodwill tomorrow.
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Life tenacy has a value, it is like prepaid rent, and possibly other expenses for what ever there projected date of death would be, based on actuarial studies.
In the other case, the donor passed away, leaving it to us, but providing a lifetime free occupancy for the designated person..
What if the donor never actually owned the property?
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I made a donation to Goodwill yesterday and was given a blank receipt.
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I made a donation to Goodwill yesterday and was given a blank receipt.
The Goodwill in San Diego doesn't put a value on the receipt either: http://www.sdgoodwill.org/donation_values.shtml (http://www.sdgoodwill.org/donation_values.shtml).
Same in Boston: http://www.goodwillmass.org/donation_tax.html (http://www.goodwillmass.org/donation_tax.html).
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I made a donation to Goodwill yesterday and was given a blank receipt.
The Goodwill in San Diego doesn't put a value on the receipt either: http://www.sdgoodwill.org/donation_values.shtml (http://www.sdgoodwill.org/donation_values.shtml).
Same in Boston: http://www.goodwillmass.org/donation_tax.html (http://www.goodwillmass.org/donation_tax.html).
Let's back up the train. You seem to be arguing about oranges when you need to talk about apples.
Are you saying you have never been made aware of May Chung having any interest in the property to convey to 3abn or anyone (for example LS and DS)? Have you ever discussed the matter with LS as one would think she would know whether she was given a life estate in the property and who gave it to her and DS and when.
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I have two Goodwill receipts. On the bottom under attendant's signature it says: Goodwill has not provided any goods or services in consideration, in whole or part, for this contribution. Federal law provides that clothing and household goods must be in "good used condition or better" for tax deductions. Donor is responsible for written verification of value for any single item charitable deduction of $500 or more. This one dated 12-08. The one dated 4-08 says $250 or more. Both say this donation is not appraised. I have never had a charity give me a receipt with a dollar amount on it.
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What if the donor never actually owned the property?
??
How could they donate something they never owned??
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The point being argued is mostly moot. A former 3ABN board member has said that the board did this deal with the house to provide a retirement benefit for the Sheltons. But didn't I read some where in a court case involving the State of Illinois and 3ABN that the Sheltons claimed they got no housing or retirement benefits from 3ABN?
SDAminister
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The residual value of a home to the person who have life tenancy is simply not the current market value.
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The point being argued is mostly moot. A former 3ABN board member has said that the board did this deal with the house to provide a retirement benefit for the Sheltons. But didn't I read some where in a court case involving the State of Illinois and 3ABN that the Sheltons claimed they got no housing or retirement benefits from 3ABN?
SDAminister
I had also wondered that about the retirement at one time, but not sure that was the case now.
Regarding not getting housing/retirement benefits provided by 3ABN I thought you had said this property was donated by a lady, with the remainder going to 3ABN after the life tenancy was done?
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The point being argued is mostly moot. A former 3ABN board member has said that the board did this deal with the house to provide a retirement benefit for the Sheltons. But didn't I read some where in a court case involving the State of Illinois and 3ABN that the Sheltons claimed they got no housing or retirement benefits from 3ABN?
SDAminister
I had also wondered that about the retirement at one time, but not sure that was the case now.
Regarding not getting housing/retirement benefits provided by 3ABN I thought you had said this property was donated by a lady, with the remainder going to 3ABN after the life tenancy was done?
If a lady had donated the house directly to the Sheltons, that would be one thing. But for 3ABN to be in the middle of it and then to practically gift boards members something worth over $130K would seem to be a bit out of order.
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Are you saying you have never been made aware of May Chung having any interest in the property to convey to 3abn or anyone (for example LS and DS)? Have you ever discussed the matter with LS as one would think she would know whether she was given a life estate in the property and who gave it to her and DS and when.
The deed says the life estate was given by 3ABN to May, Danny, and Linda.
What if the donor never actually owned the property?
??
How could they donate something they never owned??
That's my point. My understanding, which could be wrong, is that May never owned the property.
The residual value of a home to the person who have life tenancy is simply not the current market value.
It would appear from http://www.irs.gov/charities/charitable/article/0,,id=123303,00.html (http://www.irs.gov/charities/charitable/article/0,,id=123303,00.html) that FMV must be used:
Intermediate Sanctions - Excess Benefit Transactions
An excess benefit transaction is a transaction in which an economic benefit is provided by an applicable tax-exempt organization, directly or indirectly, to or for the use of a disqualified person, and the value of the economic benefit provided by the organization exceeds the value of the consideration received by the organization.
To determine if an excess benefit transaction occurred, include all consideration and benefits exchanged between or among the disqualified person and the applicable tax-exempt organization and all entities it controls.
In addition, if a supporting organization makes a grant, loan, payment of compensation, or similar payment to a substantial contributor of the organization, the arrangement is an excess benefit transaction. The entire amount of the payment is taxable as an excess benefit.
In an excess benefit transaction, the general rule for the valuation of property, including the right to use property, is fair market value. Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of all relevant facts.
An excess benefit can occur in an exchange of compensation and other compensatory benefits in return for the services of a disqualified person, or in an exchange of property between a disqualified person and the applicable tax-exempt organization.
Based on the above, it appears that the question is whether Danny paid FMV for the property in question. It is clear that he did not.
Another vital question is whether Danny paid 3ABN full price for the life estate 3ABN gave him. Did he? If not, then that would appear to also be a section 4958 excess benefit transaction.
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Two questions...
If May never owned it how could she give it? Then how is her name even involved?
AND
How could Danny pay 3ABN full price for the life estate 3ABN gave him? If he paid for it then it was not given to him.
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Bob I can not find anything about life tenancy in what you posted..
The residual value of a home to the person who have life tenancy is simply not the current market value.
It would appear from http://www.irs.gov/charities/charitable/article/0,,id=123303,00.html that FMV must be used:The residual value of a home to the person who have life tenancy is simply not the current market value.
It would appear from http://www.irs.gov/charities/charitable/article/0,,id=123303,00.html that FMV must be used:
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The other quote says including the right to use property.
In an excess benefit transaction, the general rule for the valuation of property, including the right to use property, is fair market value. Fair market value is the price at which property, or the right to use property, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy, sell, or transfer property or the right to use property, and both having reasonable knowledge of all relevant facts.
In other words, the value at the time of the gift of the life lease would be the amount that a willing buyer would pay to use the property for that amount of time (to buy a lease or to rent it).
3ABN gave them the right to use the property as long as they would live. There was a dollar value to that gift even if it was not stated at that time.
It would seem that if as Nosir Myzing said May donated it to 3ABN, it would be reasonable that she could request to be given a life lease as a condition of the donation and thus reserve a life lease during her lifetime. But 3ABN gave it to the Sheltons also and we do not know if she required it. But whether or not she requested it, the Sheltons were disqualfied persons.
What did the Sheltons give in return for the value of the life lease? If they did not give fair market value for the life lease. It was an excess benefit transaction. Their position as founders and officers made them subject to rules of law that an ordinary person would not have to obey.
Edited for correction of grammar and for formatting.
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I know there are a lot of ways to give.
I suspect more and more, that she just gave the remainder value of the property to 3ABN.
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Two questions...
If May never owned it how could she give it? Then how is her name even involved?
That's my question exactly.
On August 4, 1988, Charles and Helen Davis sold the property in question to 3ABN, not May Chung. The deed was recorded on Oct. 17, 1988. Transfer tax appears to be $66.00, which gives an idea of the value of the property.
Supposedly, 8 years later, 3ABN gave May, Danny, and Linda a life estate in that property.
So if may never owned it, how could she be given a life estate in it? And, why was it deeded in May, Danny, and Linda's names in Feb. 1998?
Stan, do you know of anyone who has a life estate in a property who also has the deed in their name?
AND
How could Danny pay 3ABN full price for the life estate 3ABN gave him? If he paid for it then it was not given to him.
If Danny didn't pay full FMV for things that 3ABN gave him, that's called a section 4958 excess benefit transaction.
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I have very limited experience, jut what I am going through, the one i mentioned earlier.
Did May buy it from 3ABN, have it in the name of all three, with the residual to go back to 3ABN?
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I have no record of May ever buying the property from 3ABN. I believe the mortgage that was released on August 1, 1991, was released in the name of 3ABN, Danny, and Linda. The next deed concerning the property appears to be in Feb. 1998.
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What do you think it would have cost to buy out Danny's Life Tenancy? If they would have done it that way?
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What do you think it would have cost to buy out Danny's Life Tenancy? If they would have done it that way?
What difference would it make since you are only saying "If they would have done it that way?"
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Stan - Maybe I am totally missing something but in your example who gets the difference between the 1 million minus the $100,000? :scratch:
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It is the current estimated value of a future gift, which more than likely not transfer to the Conference for 50 or so years.
Those figures are not exact, and details still need to be worked out.
In Canada we issue the Charitable Receipt to the estate, based on actuarial life expectancy studies.
We would offer to sell the person the residual value of the gift for the same amount we issue the receipt for. (plus transfer taxes etc)
Inflationary prices of home are not taken into consideration.
IF we are able to liquidate the residual value, I can already here 'the saints' ranting on and on that we gave away a 1,000,000 home for 100,000..
Does that make sense GRAT?
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Stan - Maybe I am totally missing something but in your example who gets the difference between the 1 million minus the $100,000? :scratch:
MAYBE a better answer would have been, that is the est value of living there for the est lifetime of that one who was gifted with life tenancy.
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What do you think it would have cost to buy out Danny's Life Tenancy? If they would have done it that way?
Perhaps there wouldn't be any problem if 3ABN bought Danny's life tenancy for the same price that Danny bought the life tenancy for from 3ABN.
Did Danny ever report the life tenancy as income if he didn't pay FMV for it? Why not ask him that question and report back?
If he says that he did report it to the IRS, or did pay 3ABN FMV for it, see if you can get adequate documentation from him to prove it, and then post it here. That should about settle it.
EXCEPT that 3ABN in 1998 reported selling a house with a book value of over $50,000 for only $6,129. That right there indicates that the 1998 house deal was a section 4958 excess benefit transaction, in violation of the Internal Revenue Code, and/or IRS regulations.
If 3ABN's interest in the house was only worth what Danny paid for it, if he paid anything at all, then 3ABN would not have reported a loss on the sale in their Form 990.
Correct?
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Stan,
If three people have a life estate instead of just one, how does that affect the home's value as far as the charitable organization goes? Is the value of the remainder interest about the same, or is it one-third?
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Stan - Sorry but I guess I just don't get it. Thanks for trying but the whole thing is very confusing and makes no sense to me. :puppykisses:
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http://www.startribune.com/templates/Print_This_Story?sid=27251534
This sounds so familiar to me. Just click on cancel when the print option comes up.
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What do you think it would have cost to buy out Danny's Life Tenancy? If they would have done it that way?
Perhaps there wouldn't be any problem if 3ABN bought Danny's life tenancy for the same price that Danny bought the life tenancy for from 3ABN.
Did Danny ever report the life tenancy as income if he didn't pay FMV for it? Why not ask him that question and report back?
If he says that he did report it to the IRS, or did pay 3ABN FMV for it, see if you can get adequate documentation from him to prove it, and then post it here. That should about settle it.
EXCEPT that 3ABN in 1998 reported selling a house with a book value of over $50,000 for only $6,129. That right there indicates that the 1998 house deal was a section 4958 excess benefit transaction, in violation of the Internal Revenue Code, and/or IRS regulations.
If 3ABN's interest in the house was only worth what Danny paid for it, if he paid anything at all, then 3ABN would not have reported a loss on the sale in their Form 990.
Correct?
First of all, I am not a lawyer nor a CA/CPA - reread this line as needed.
In the US, at that point, people could be gifted via a donor for $10,000 a year tax free, or more if the DONOR pays taxes on it, so both of the people who benefited from the live Tenancy would qualify for $20,000 per year from the single donor, under some circumstances, it could be $40,000 per year if both husband and wife gave. ( I think it is $11,00 per year now)
So if that is the avenue they took, they would not have to claim income on this if they were given this house with a life tenancy with the proceeds to be transfered to 3ABN.
In another thread, Fran rambled on about auditing issues with the Trust Accounting, I had explained that by saying board have a right to make judgement calls on what they deem to be unnecessary ongoing expenses. Then the auditors, have a duty to make note of that. It is neither bad nor good, it is a statement for the record. The valuation on that house could have well been one of those. I do not know, nor do I want to, nor is the 3ABN board responsible to me, nor do they have a duty to explain it to me, nor you.
We just got audited, and there were several comments made by the auditors where there was deviation from policy. All of these deviations had board actions approving them BEFORE THE AUDIT, it is the auditors duty to write those up.
There is a problem, putting trust in someone who is a book keeper who gives accounting type of opinions on things that they really are not fully understanding.
How will you ever be able to undo the lack of confidence you have places in thousands of folks around the world in the accounting department of 3ABN?
Your comments were like newspaper headline news, any retraction of them, and you do need to do so, will be like on page 67 on the bottom left hand page.
Just because a leader divorces his wife, be that just or unjust, does not make the accounting department incompetent.
As one person said, "Stories spread about 3ABN do not have to be true, they just have to be told"
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In another thread, Fran rambled on about auditing issues with the Trust Accounting, I had explained that by saying board have a right to make judgement calls on what they deem to be unnecessary ongoing expenses. Then the auditors, have a duty to make note of that. It is neither bad nor good, it is a statement for the record. The valuation on that house could have well been one of those. I do not know, nor do I want to, nor is the 3ABN board responsible to me, nor do they have a duty to explain it to me, nor you.
As a former donor, I EXPECT the 3ABN Board to be responsible to me and all other donors.
There is a problem, putting trust in someone who is a book keeper who gives accounting type of opinions on things that they really are not fully understanding.
How will you ever be able to undo the lack of confidence you have places in thousands of folks around the world in the accounting department of 3ABN?
Just because a leader divorces his wife, be that just or unjust, does not make the accounting department incompetent.
Chuckle. No, BIG chuckle. Apparently you haven't been reading here as long as I thought...:wave:
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Just because a leader divorces his wife, be that just or unjust, does not make the accounting department incompetent.
Stan,
The accounting department has become incompetent-----because a leader divorced his wife!!
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In the US, at that point, people could be gifted via a donor for $10,000 a year tax free, or more if the DONOR pays taxes on it, so both of the people who benefited from the live Tenancy would qualify for $20,000 per year from the single donor, under some circumstances, it could be $40,000 per year if both husband and wife gave. ( I think it is $11,00 per year now)
So if that is the avenue they took, they would not have to claim income on this if they were given this house with a life tenancy with the proceeds to be transfered to 3ABN.
Since there is no deed saying that May Chung ever owned the house in question, we can safely say that May never gifted the house to Danny.
Since the IRS specifically prohibits 3ABN from gifting a house to Danny since he is an officer, founder, and director, without reporting such as a section 4958 excess benefit transaction, your reference to gift tax doesn't help.
In another thread, Fran rambled on about auditing issues with the Trust Accounting, I had explained that by saying board have a right to make judgement calls on what they deem to be unnecessary ongoing expenses. Then the auditors, have a duty to make note of that. It is neither bad nor good, it is a statement for the record. The valuation on that house could have well been one of those. I do not know, nor do I want to, nor is the 3ABN board responsible to me, nor do they have a duty to explain it to me, nor you.
The valuation on the house reported by 3ABN on their Form 990 was over $50,000. I haven't raised a big issue about that figure, though 3ABN, thanks to the lawsuit, did have an obligation to explain it to me, the court, and the general public.
The problem has always been that 3ABN sold the house in question to Danny for far less than what they had valued the house as being worth. They valued it at over $50,000, and sold it to Danny for a measly $6,129.
How will you ever be able to undo the lack of confidence you have places in thousands of folks around the world in the accounting department of 3ABN?
Your comments were like newspaper headline news, any retraction of them, and you do need to do so, will be like on page 67 on the bottom left hand page.
Thus far no one, not anyone, has demonstrated what retractions need to be made. I'm certainly not going to lie by retracting something that is in fact true.
Just because a leader divorces his wife, be that just or unjust, does not make the accounting department incompetent.
I don't recall suggesting that anyone in that department was incompetent. I do recall that it sounded strange to put Emma Lou into that department after she was allegedly let loose from a bank for alleged embezzlement.
3ABN possibly covering Danny's personal, private expenses in this lawsuit, which could be $1 million or more at this point, without reporting this benefit as part of Danny's compensation, that doesn't mean that anyone in the accounting department is necessarily incompetent.
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That question has been clarified in the past.