Toooooo much money

[comsnark]

Wow. . .go to one xmas party and the bilge starts to overflow!

Impressive.

The quality of facts presented in this thread is not quite as impressive.

I was curious about Gary's 75% tax rates. . the math seemed a bit off.
Not sure I understood Pack's point about the rich paying less in taxes than the poor.

Hmm. I wonder how many "ignore" lists I am on?

 

[wish2fish]

Could be, but I'm going to have it raised this spring.......... so I can attach a boat like yours for a dinghy. :lol:

:thumbsup:

if the price is right I will sell it to ya!

 

[comsnark]

You should be uncomfortable then, 56% of folks favor repeal of health care reform.

http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/health_care_law

I don't know where you get your liberal wack job material, but it's incorrect.

You counter liberal wack job material with a Rasmussen poll? Now THAT is a good one.

 

[wish2fish]

Could be, but I'm going to have it raised this spring.......... so I can attach a boat like yours for a dinghy. :lol:

Lets not act like a 30' is a Sea Ray 60' though! :huh:

 

[comsnark]

Hey, if you can't beat 'em.....

Although I was under the impression that Rasmussen polls were highly regarded as being accurate, was I mistaken?

Yes.

Rasmussen is well known for publishing polls with, shall we say, "outlier results". The polls seem consistently to "swing right" relative to other polls taken by other organisations.

Some say this is a bias; others fault the methodology Rasmussen uses regarding not doing "call backs" and such to save money on the expense of doing the polls.

In terms of accuracy, in the last election cycle (If I recall correctly) the "other polls" were fairly accurate in predicting the "red swing" of 2010. Rasmussen predicted a much stronger Republican pickup. I don't want to talk about the polling on healthcare per se; because as I am sure you are aware, there are forces that want to push the result both to right and to the left.

Regardless, the poll results make good headlines and are frequently featured by Fox, Instapundit, and the Drudge Report. Some left-of-center websites have taken to aggregating poll results and occassionally explicitly exclude Rasmussen in the results.

 

[Pack66Dad]

Lets not act like a 30' is a Sea Ray 60' though! :huh:

I was just ribbing you.....

To be honest I was going to get a bigger boat but I'm not much of a captain yet (still working on my first year of boating). I bought my 2010 Glastron at the first of the year (just always wanted a boat but didn't know a thing about them) and we used it most of the summer but my wife was uncomfortable in it (just as I really got the hang of driving a single screw outdrive :smt009). She wanted me to upgrade to something bigger. My buddies at the marina talked me into buying the boat I have instead of a new Silverton Convertible 42. I'm actually very happy with the Sea-Ray, its big enough for her to feel comfortable but not so big its tough to maneuver. It didn't cost me much even after all the upgrades are done. I think it will work great for me to learn how to drive a boat with twins.

The boat show is in January though and I'm very intrigued by the new Sea-Ray with POD drives. I'm going to take a close look and talk to the local dealer, see if I can test drive one. Seems like those POD drives would make it maneuver as well as a tug boat :thumbsup:

oops, is talking about boats allowed in the holding tank? :huh:

 

[Jack F]

This is what CLASS WARFARE gets you.

This is from my local paper

In both cases, the arsonist left a calling card, the message, "(expletive) the rich" at the scene.

 

[MaddyDean]

Pack, I love you man--talking boats is, I am sure, allowed in the holding tank. Good luck on your next purchase.

I am happy for your success in being able to purchase a new boat--I could not dream of it and destined to buy 20 year old boats pretty much going forward but would never think about taking your hard earned earnings away just so I can buy newer.

I do have a question, you cited that the estate tax is now on the table for worth at 1-million. If a home is worth 700-k and a boat is worth 200-k and misc worth 300-k and an owned business worth 500-k, that puts that person's Worth at 1.7m

now at the time of death, that family owes 50% on 700k ($350k). They are not going to sell their home--the can sell the boat but still owe 150K, maybe sell off some of the misc now owing 100K leaving their business to sell--why put this family through this hardship, they are not the Kennedy's or some other dynasty. they are a hardworking middle class family and now after a lifetime of hard work are subject to this burden. meanwhile, like others have said, they have already paid their taxes on all they have earned.

to me, it makes no sense what so ever to have an estate tax--what i work for is my family. If I am ever fortunate enough to be worth over a million, that is for my family--that's who I work for. my goal is to take away as much burden from them as possible but upon my death, the government just comes an rips it away. make no sense.

 

[Four Suns]

...maybe sell off some of the misc now owing 100K leaving their business to sell

What most people don't get on the selling of assets such as a business to cover the estate tax is that the estate still has to pay the income taxes for the cash conversion then the estate tax.

For example, if you have a business worth 500K and you need to pay estate taxes on it, you may have to sell it. Let's say there is a 25% capital gains tax and the cost basis of the business is $0 (built the business up from scratch). You would have to pay 25% of the $500K in capital gains tax leaving you with $375K after paying the $125K in capital gains. Then... you get to pay the government the 50% of the $500K ($250K in estate taxes) so you actually only end up with $125K out of the $500K... An effective tax rate of 75% for a 50% estate tax. And it's an 80-85% effective tax rate if you include state taxes. The government values the estate before you convert it to cash and any asset converted to cash to pay taxes has to pay those taxes as well..

It's basic theft...

There is a way around it though... set up irrevocable trust accounts for your heirs... That's what the "rich" do...

 

[Vince_nj1]

Nice explanation of the estate tax issue.


[youtube]http://www.youtube.com/watch?v=H80c0Zopbbo&feature=player_detailpage[/youtube]

 

[MaddyDean]

What most people don't get on the selling of assets such as a business to cover the estate tax is that the estate still has to pay the income taxes for the cash conversion then the estate tax.

For example, if you have a business worth 500K and you need to pay estate taxes on it, you may have to sell it. Let's say there is a 25% capital gains tax and the cost basis of the business is $0 (built the business up from scratch). You would have to pay 25% of the $500K in capital gains tax leaving you with $375K after paying the $125K in capital gains. Then... you get to pay the government the 50% of the $500K ($250K in estate taxes) so you actually only end up with $125K out of the $500K... An effective tax rate of 75% for a 50% estate tax. And it's an 80-85% effective tax rate if you include state taxes. The government values the estate before you convert it to cash and any asset converted to cash to pay taxes has to pay those taxes as well..

It's basic theft...

There is a way around it though... set up irrevocable trust accounts for your heirs... That's what the "rich" do...

I knew I was over-simplifying the estate tax. at my numbers it make no sense, at your numbers, it should put the nail in the coffin to anyones argument who favors an estate tax. there is simply no justification in an estate tax.

 

[Four Suns]

The numbers get even worse if you put in the percentages that leeches like packerhead and cornoil want.

If you go to a 55% estate tax and tax capital gains at ordinary income rates and boost that to 39% over $250K (both are well known items democrats want) , this is what you end up with.

Let's go back to your example...

$500K converted to cash - pay $195K in federal and probably $25K in state. hmm.. that's $220K in taxes to convert the asset to cash (a realized gain) leaving you with $280K.

Now you have to pay 55% in estate taxes on the original value of the asset.. so that's another $275K in estate taxes you owe. Leaving your kids with... drum roll... $5K.

Where do you think the sh!tbags came up with the 55% for estate taxes and 39% for ordinary income and wanting to nuke capital gains rates? That's the magic number and deal you need to confiscate 100% of an estate...

Wake up America... Packerhead wants ALL YOUR $$$ when you die. That's paying your fair share...

Oh.. and if you live in states like NY... Not only does the federal government and state take 100% at those rates, the estate will be in debt to the government regardless of how much value is in there...

 

[Turtlesboat]

Screw that. I'm going to spend all of my money, have a stroke and lie lifeless in a bed drooling on myself for 30 years on the states dime.

 

[comsnark]

I do have a question, you cited that the estate tax is now on the table for worth at 1-million. If a home is worth 700-k and a boat is worth 200-k and misc worth 300-k and an owned business worth 500-k, that puts that person's Worth at 1.7m

now at the time of death, that family owes 50% on 700k ($350k). They are not going to sell their home--the can sell the boat but still owe 150K, maybe sell off some of the misc now owing 100K leaving their business to sell--why put this family through this hardship, they are not the Kennedy's or some other dynasty. they are a hardworking middle class family and now after a lifetime of hard work are subject to this burden. meanwhile, like others have said, they have already paid their taxes on all they have earned.

I do not believe it works this way.

If the home (or any other asset) is in joint name with a spouse; the asset has generally been excluded from estate taxes.

If the home (or any other asset) is in joint name with a non-spouse (say, title shows one parent and one child); then potentially only 1/2 the value of the home (or any other asset) is counted towards tax.

Note that joint tenancy supercedes a will. Say Bob is married to Susan, and they own a house (both names on deed). If Bob leaves everything to Sally from next door; Susan gets the house.

What most people don't get on the selling of assets such as a business to cover the estate tax is that the estate still has to pay the income taxes for the cash conversion then the estate tax.

True up to this point.

For example, if you have a business worth 500K and you need to pay estate taxes on it, you may have to sell it. Let's say there is a 25% capital gains tax and the cost basis of the business is $0 (built the business up from scratch). You would have to pay 25% of the $500K in capital gains tax leaving you with $375K after paying the $125K in capital gains. Then... you get to pay the government the 50% of the $500K ($250K in estate taxes) so you actually only end up with $125K out of the $500K... An effective tax rate of 75% for a 50% estate tax. And it's an 80-85% effective tax rate if you include state taxes. The government values the estate before you convert it to cash and any asset converted to cash to pay taxes has to pay those taxes as well..

It's basic theft...

That is really unfair!

Fortunately, it does not work that way.

First, there is generally a federal exclusion for state estate taxes up to a certain amount. In other words. . the taxes are not additive.

Second, estate taxes are based on total assets AND liabilities. If you sell a buisness, the proceeds go to the estate. If there is a resulting tax liability as a result; that reduces the net value of the estate.

So from your example: You sell the buisness for $500K and pay 25% capital gains. That is $125K. The amount subject to estate tax $375.

To broaden out the example:
Let's say the Federal Estate tax limit is worth $1 million (changes every year lately). If Bob and Sally are married and jointly own a house worth $1 million. Bob has a buisness worth $1 million.

Bob kicks the bucket.
Sally sells the house and the buisness and moves to Key West with Tim.
Sally gets the house free and clear. Pockets $1MM minus real estate costs.
Sally takes title for the buisness, has a cost basis of $1MM on the buisness (that was the value when she inherited), sells for $1MM and has no tax.
Sally takes a $50,000 fee from the estate for settling the estate.

The net estate is $1M-$50,000K; (house doesn't count, remember?) and is now not subject to Federal Estate tax. In many states, you are not subject to state tax if you don't pay federal tax (not sure how the rules work in all states, or how people have monkeyed with this recently).

Take another example: Bob has a house worth $1 million, buisness worth $2 million. He has no wife; has two kids, and owns the house jointly with one of those two kids.

Let's say the limit for federal estate tax is $1 million.

Let's say the will splits the estate between the two kids evenly.

The kids sell the business for $2 million and proceeds go to the estate. The estate pays 25% capital gains, for a net of $1.5 million.

The house goes to the first kid directly (right of survivor); but because the kid and parent aren't married, half the house is in the estate ($500K).

State takes a cut of $500K estate tax (I made up that number).

Kids take a $50K fee for dealing with the estate.

Kids splurge and the funeral costs $50K.

The federal estate is $1.5 million for the buisness, $500K for house, minus $500K for state taxes, minus $100K for "expenses". Net is $1.4 million. Therefore, with the $1 million exclusion, the estate tax applies to $400k.

Note that the child with the name on the house gets more than the other child, because the house passes to that child outside the will.

I knew I was over-simplifying the estate tax. at my numbers it make no sense, at your numbers, it should put the nail in the coffin to anyones argument who favors an estate tax. there is simply no justification in an estate tax.

I will say I know more than most on this topic, BUT I AM NOT A TAX GUY. I recommend everyone get professional advice.

I will leave the merits of estate tax to others. . . I am just saying it does not work as simply (and as unfairly) as many make it out to be.

Estate planning is no joke. Seek professional help.

 

[floriduramax1]

I do not believe it works this way.

If the home (or any other asset) is in joint name with a spouse; the asset has generally been excluded from estate taxes.

If the home (or any other asset) is in joint name with a non-spouse (say, title shows one parent and one child); then potentially only 1/2 the value of the home (or any other asset) is counted towards tax.

Note that joint tenancy supercedes a will. Say Bob is married to Susan, and they own a house (both names on deed). If Bob leaves everything to Sally from next door; Susan gets the house.



True up to this point.



That is really unfair!

Fortunately, it does not work that way.

First, there is generally a federal exclusion for state estate taxes up to a certain amount. In other words. . the taxes are not additive.

Second, estate taxes are based on total assets AND liabilities. If you sell a buisness, the proceeds go to the estate. If there is a resulting tax liability as a result; that reduces the net value of the estate.

So from your example: You sell the buisness for $500K and pay 25% capital gains. That is $125K. The amount subject to estate tax $375.

To broaden out the example:
Let's say the Federal Estate tax limit is worth $1 million (changes every year lately). If Bob and Sally are married and jointly own a house worth $1 million. Bob has a buisness worth $1 million.

Bob kicks the bucket.
Sally sells the house and the buisness and moves to Key West with Tim.
Sally gets the house free and clear. Pockets $1MM minus real estate costs.
Sally takes title for the buisness, has a cost basis of $1MM on the buisness (that was the value when she inherited), sells for $1MM and has no tax.
Sally takes a $50,000 fee from the estate for settling the estate.

The net estate is $1M-$50,000K; (house doesn't count, remember?) and is now not subject to Federal Estate tax. In many states, you are not subject to state tax if you don't pay federal tax (not sure how the rules work in all states, or how people have monkeyed with this recently).

Take another example: Bob has a house worth $1 million, buisness worth $2 million. He has no wife; has two kids, and owns the house jointly with one of those two kids.

Let's say the limit for federal estate tax is $1 million.

Let's say the will splits the estate between the two kids evenly.

The kids sell the business for $2 million and proceeds go to the estate. The estate pays 25% capital gains, for a net of $1.5 million.

The house goes to the first kid directly (right of survivor); but because the kid and parent aren't married, half the house is in the estate ($500K).

State takes a cut of $500K estate tax (I made up that number).

Kids take a $50K fee for dealing with the estate.

Kids splurge and the funeral costs $50K.

The federal estate is $1.5 million for the buisness, $500K for house, minus $500K for state taxes, minus $100K for "expenses". Net is $1.4 million. Therefore, with the $1 million exclusion, the estate tax applies to $400k.

Note that the child with the name on the house gets more than the other child, because the house passes to that child outside the will.



I will say I know more than most on this topic, BUT I AM NOT A TAX GUY. I recommend everyone get professional advice.

I will leave the merits of estate tax to others. . . I am just saying it does not work as simply (and as unfairly) as many make it out to be.

Estate planning is no joke. Seek professional help.

I think ANY tax on an estate is UNFAIR if the estate is going to family members...PERIOD:smt013:smt013

 

[comsnark]

I see I misspelled "buisness" a bunch of times. Opps. I need a better spell checker.

The numbers get even worse if you put in the percentages that leeches like packerhead and cornoil want.

You can call me all the names you like.
And don't pretend you know my position on this.

BTW: I like cornmuffin better than cornoil.

<snip>
That's the magic number and deal you need to confiscate 100% of an estate...

Wake up America... Packerhead wants ALL YOUR $$$ when you die. That's paying your fair share...

Oh.. and if you live in states like NY... Not only does the federal government and state take 100% at those rates, the estate will be in debt to the government regardless of how much value is in there...

The 55% number quoted was the Pre-Bush estate tax rate. Clinton and the current batch of democrats had no input for that number.

I advise everyone to get professional tax and estate planning help. The "facts" presented in the last several posts are VERY, VERY, VERY wrong.

I advise Gary to get professional help for more than mere tax and estate planning.

((Gary: PS -> I am still carrying capital gains losses forward like you swore I wouldn't be able to do once the democrats came into office. . .)

 

[MaddyDean]

I see I misspelled "buisness" a bunch of times. Opps. I need a better spell checker.




You can call me all the names you like.
And don't pretend you know my position on this.

BTW: I like cornmuffin better than cornoil.



The 55% number quoted was the Pre-Bush estate tax rate. Clinton and the current batch of democrats had no input for that number.

I advise everyone to get professional tax and estate planning help. The "facts" presented in the last several posts are VERY, VERY, VERY wrong.

I advise Gary to get professional help for more than mere tax and estate planning.

((Gary: PS -> I am still carrying capital gains losses forward like you swore I wouldn't be able to do once the democrats came into office. . .)

The numbers realy make no difference. That fact that one would have to "estate plan" or get screwed is an issue. We can go back and forth all day figuring out this scenerio and we can all create other scenerios backing up our points but the bottom line is, it is an unfair tax no matter how much you are worth.

There should be no estate tax period.

I will call you comsnark

 

[comsnark]

The numbers realy make no difference. That fact that one would have to "estate plan" or get screwed is an issue. We can go back and forth all day figuring out this scenerio and we can all create other scenerios backing up our points but the bottom line is, it is an unfair tax no matter how much you are worth.

There should be no estate tax period.

I will call you comsnark

Estate planning is important for more than "tax purposes". For example, if you go into a nursing home -> the nursing home will lay claim to whatever they can get their hands on.

Often, parents sell houses to their children for this reason alone. Of course. . once the children have the title, if they go bankrupt, or get sued, or divorced guess what happens to that house!

- - - - -
As to the merits of the estate tax; I don't want to go into that aspect.

I am merely pointing out the highly misleading, very incorrect, and very scary distortions of someone trying to make a point.

 

[comsnark]

I know. . quoting yourself is bad form.

As to the merits of the estate tax; I don't want to go into that aspect.

I will say one thing:

Reducing tax rates and not cutting spending is very dishonest.

You can argue which party is better or worse for the country, but in my view no major political party (Democratic, Republican, or Tea) has shown any seriousness regarding cost control.

 

[320Bob]

Estate planning is important for more than "tax purposes". For example, if you go into a nursing home -> the nursing home will lay claim to whatever they can get their hands on...

This usually only applies to religious nursing homes. The one my father was in did not have a religious affiliation and made no claim to his estate but required an up front payment then a monthly charge. My maternal grandmother on the other hand went into a Lutheran home and had to give over her entire estate.