3abn Confirms Real Estate Transaction, & Hints of Piano Sale Besides Options

[Shiny Penny]

SP: You correctly tell us that gift taxes are paid by the donor, and not the one who recieved the gift. However, you neglected to remind us of the restrictions that the IRS places on what constitutes a gift that does not need to be declared by the one who recieved it. If I am the pastor of a local chruch, and one of my members gives me a vaulable gift, the IRS is going to tell me that I am required to declare it as it does not qualify as a gift that does not need to be declared. Rather, the IRS will tell me that it is actually compensation recievd due to my ministry in the congregation, and to that member.

Therefore, it is likely that vaulable gifts recieved by officers of 3-ABN from contributors to 3-ABN, and/or members of the listening audience, must be declared as income to those officers as they do not qualify as gifts which do not need to be declared.

Of course, I do not have the knowledge of the specifics to know if this is true in the issues mentioned here. In addition, I do not imply that any such people did not properly delcare such gifts that they may have recieved.

I am posting here due to your failure to tell us the whole truth.

Excuse me...get your facts straight before you say that I am failing to tell the whole truth. The recipient of the gift does NOT pay tax on the gift and neither does he/she have to report the gift.

This is what the IRS says:

If you gave any one person gifts in 2006 that valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts.

The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

Gifts include money and property, including the use of property without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions to the tax rules on gifts. The following gifts do not count against the annual limit:

*
Tuition or Medical Expenses that you pay directly to an educational or medical institution for someone's benefit
*
Gifts to your Spouse
*
Gifts to a Political Organization for its use
*
Gifts to Charities

If you are married, both you and your spouse can give separate gifts of up to the annual limit to the same person without making a taxable gift.

For more information, get the IRS Publication 950, Introduction to Estate and Gift Taxes, IRS Form 709, United States Gift Tax Return, and Instructions for Form 709. They are available at the IRS Web site at IRS.gov in the Forms and Publications section or by calling 800-TAX-FORM (800-829-3676).

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

[calvin]

Great points lurker.

If Danny was making 50 grand a year that works out, based on 40 hour work weeks to about $25 an hour. How many of the donors are making 1/4 that amount and supporting their families? How many of the members on here are making $25 per hour? Rhetorical question of course but the point it that a donor supported ministry should not be paying a worldly amount to their officials. Their reward should not be of this world.

Richard

I disagree. You have to pay a competitive salary or else you won't attract the best and the brightest to your profession.

[princessdi]

This is the area inwhich I have no problem with Danny. 50K is peanuts for his job. Whether we believe he severely abused his privilege or not, it doesnt' erase the good that is being done on his watch. he is he head of a network. it is not worldly or sinful to get well paid for their effrots. iI don't know where we get that from. Especially when it comes to independent ministries where the people srtat out pouring in all they have to get it started.

Great points lurker.

If Danny was making 50 grand a year that works out, based on 40 hour work weeks to about $25 an hour. How many of the donors are making 1/4 that amount and supporting their families? How many of the members on here are making $25 per hour? Rhetorical question of course but the point it that a donor supported ministry should not be paying a worldly amount to their officials. Their reward should not be of this world.

Richard

[Richard Sherwin]

But are those who work for the Lord not to take the example of Jesus? He lived a simple life. Should we be paying our workers in spreading the gospel beyond a comfortable living wage? If Danny and Linda together were making somewhere around the 100 grand per year mark I'd say that's pretty comfortable for where they were living. And also lets not forget that allegedly they did try to hide their income from the public by saying one thing and receiving another. Notice the word allegedly because IMO this has not yet been proven.

I feel that when it comes to spreading the gospel with donated funds the competitive salary idea is not a valid point. If people are truly being led by God they will work for wages that will house them and take care of their families financial obligations and not much more. JMHO you understand

Richard

I disagree. You have to pay a competitive salary or else you won't attract the best and the brightest to your profession.

[lurker]

And Elisha said unto him, Whence [comest thou], Gehazi? And he said, Thy servant went no whither. And he said unto him, Went not mine heart [with thee], when the man turned again from his chariot to meet thee? [Is it] a time to receive money, and to receive garments, and oliveyards, and vineyards, and sheep, and oxen, and menservants, and maidservants? The leprosy therefore of Naaman shall cleave unto thee, and unto thy seed for ever. And he went out from his presence a leper [as white] as snow.

(2Ki 5:1-27)

[Snoopy]

This is the area inwhich I have no problem with Danny. 50K is peanuts for his job. Whether we believe he severely abused his privilege or not, it doesnt' erase the good that is being done on his watch. he is he head of a network. it is not worldly or sinful to get well paid for their effrots. iI don't know where we get that from. Especially when it comes to independent ministries where the people srtat out pouring in all they have to get it started.

I agree, Di, but I think we also need to consider executive salaries in comparison with that of the "rank and file". Most employees are paid a mere pittance and are NOT provided with a pension plan. I have heard the lack of a pension plan is because Danny thinks the employees should rely on the Lord for their retirement!! Yet, he gets a sweet real estate deal and it's OK??

Excuse me...get your facts straight before you say that I am failing to tell the whole truth. The recipient of the gift does NOT pay tax on the gift and neither does he/she have to report the gift.

This is what the IRS says:

If you gave any one person gifts in 2006 that valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts.

The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

Gifts include money and property, including the use of property without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions to the tax rules on gifts. The following gifts do not count against the annual limit:

*
Tuition or Medical Expenses that you pay directly to an educational or medical institution for someone's benefit
*
Gifts to your Spouse
*
Gifts to a Political Organization for its use
*
Gifts to Charities

If you are married, both you and your spouse can give separate gifts of up to the annual limit to the same person without making a taxable gift.

For more information, get the IRS Publication 950, Introduction to Estate and Gift Taxes, IRS Form 709, United States Gift Tax Return, and Instructions for Form 709. They are available at the IRS Web site at IRS.gov in the Forms and Publications section or by calling 800-TAX-FORM (800-829-3676).

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

EXCUSE ME, Shiny Penny, but could you please respond to my question about the piano??? What was the "major defect"??

Two random thoughts on the recent comments on this thread.

1) One has to wonder how a supposedly "conservative Adventist" environment could be built with such a total disregard of basic business ethics that even after being out of it for three full years, Linda seemingly can still not see even the illegalness of their actions... much less the ethical issues concerned.

2) Has it occurred to anyone that when Shiny Penny gives her interesting "speculations" about what "could have happened" that she just might be giving us glimpes into the stories that were told to the board.... which caused the board to accept Danny's course of action?

.................. .................

Regarding #2, Watchbird, I believe you have hit that nail squarely on the head, which is why I would like to hear more about that piano and its "major defect"!!

[PeacefulBe]

There is another posibility: Perhaps she had been decieved, and with the passage of time learns the truth and so changes her testimony.

Folks, the bottom line is that the idea that these issues need settlement in a court of law, where people are compelled to testify, under oath.

If that can happen, it just may be that Linda will be vindicated on some issues.

And if may be that on others she will be seen to be complicit and to trusting for her own good.

Linda's postition is: Let the truth come out, in full. Her reputation can not be damaged by the truth more than ithas been damaged by falsehood. That is true even if she is shown to be imperfect.

Gregory,

This is good news indeed! At least one person who was in leadership believes in the truth!

[Shiny Penny]

I agree, Di, but I think we also need to consider executive salaries in comparison with that of the "rank and file". Most employees are paid a mere pittance and are NOT provided with a pension plan. I have heard the lack of a pension plan is because Danny thinks the employees should rely on the Lord for their retirement!! Yet, he gets a sweet real estate deal and it's OK??
EXCUSE ME, Shiny Penny, but could you please respond to my question about the piano??? What was the "major defect"??
Regarding #2, Watchbird, I believe you have hit that nail squarely on the head, which is why I would like to hear more about that piano and its "major defect"!!

I don't know what was exactly wrong with the piano, just that it was far from perfect. Perhaps someone else knows something.

[Observer]

Excuse me...get your facts straight before you say that I am failing to tell the whole truth. The recipient of the gift does NOT pay tax on the gift and neither does he/she have to report the gift.

This is what the IRS says:

If you gave any one person gifts in 2006 that valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts.

The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

Gifts include money and property, including the use of property without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions to the tax rules on gifts. The following gifts do not count against the annual limit:

*
Tuition or Medical Expenses that you pay directly to an educational or medical institution for someone's benefit
*
Gifts to your Spouse
*
Gifts to a Political Organization for its use
*
Gifts to Charities

If you are married, both you and your spouse can give separate gifts of up to the annual limit to the same person without making a taxable gift.

For more information, get the IRS Publication 950, Introduction to Estate and Gift Taxes, IRS Form 709, United States Gift Tax Return, and Instructions for Form 709. They are available at the IRS Web site at IRS.gov in the Forms and Publications section or by calling 800-TAX-FORM (800-829-3676).

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

SP:

I do have my facts straight.

You are correct in what you say.

The issue is that you have not told the whole truth.

What you say is correct as it applies to what the IRS allows to be a qualified gift. Your failure to tell the whole truth applies to what the IRS does not allow to qualify for the gift provisions thatyou cite.

I clearly do not have the facts to be able to say whether or not the transaction in question qualified under IRS rules as a gift. I do not have the facts to make any statement in regard to whether or not either Danny or Linda should have declard such as taxable income on their 1040s.

But, I do have the knowledge to say that based upon your statement that a 3-ABN supported had made them a gift you have raised the issue that such may not have qualified as a gift under IRS rules and that it might have been, under IRS rules taxable income to them.

Again, I do do know. But, it is of interest that one of the reasons we appreciate you comming here and defending 3-ABN is due to the information that you give us that we can use.

Thank you for your insightful comment.

[Shiny Penny]

SP:

I do have my facts straight.

You are correct in what you say.

The issue is that you have not told the whole truth.

What you say is correct as it applies to what the IRS allows to be a qualified gift. Your failure to tell the whole truth applies to what the IRS does not allow to qualify for the gift provisions thatyou cite.

I clearly do not have the facts to be able to say whether or not the transaction in question qualified under IRS rules as a gift. I do not have the facts to make any statement in regard to whether or not either Danny or Linda should have declard such as taxable income on their 1040s.

But, I do have the knowledge to say that based upon your statement that a 3-ABN supported had made them a gift you have raised the issue that such may not have qualified as a gift under IRS rules and that it might have been, under IRS rules taxable income to them.

Again, I do do know. But, it is of interest that one of the reasons we appreciate you comming here and defending 3-ABN is due to the information that you give us that we can use.

Thank you for your insightful comment.

Please cite your sources - giving the whole truth as you call it.

[Observer]

Please cite your sources - giving the whole truth as you call it.

SP:

There are two reasons why I cannot comply with your request:

1) Your question is so closely related to specific issues which involve Danny and Linda Shelton, and 3-ABN that people would tend to apply my response to them.

I cannot speak specificly to the specific issues raised regarding certain transactions involving 3-ABN, Danny and Linda. I do not have enough knowledge of the specific facts to make specific statements about such transactions and their taxability. Any attempt to do so would not be fair to anyone.

2) The issues regarding the taxability of "gifts" by the one who recieved the gift involves case law of the appropriate Federal court, rulings of the IRS, and Federal law. The extent and complexity of all of those is much more than I could ever produce to simpley satisfy your interest. I do not have the time for all of that, if I did have the ability to produce it.

The fact remains, the IRS does not consider something to be a gift simply because it is called a gift. It must be a qualified gift. That reains a fact.

While I am not attempting to give you any kind of a comprehensive responee to your questions, let me stimulate your thinking in one area:

Do some research in what the IRS calls a "Related Party Transaction."

You will note that under IRS rules some of the profits recieved in a Related Party Transaction may be taxable to the person who recieved those profits. It is true that the profits may only be partially taxable. That is determined by the specific circumstances.

As you study Related Party Transactions, you will note that the property transaction that you have referenced between Danny, Linda, and 3-ABN appears on the surface to be a Related Party Transaction, if it occured as it has been described.

Again, I do not know if it actually took place as it has been desribed. Since some of the profits may not be taxable to the one who recieved them, I do not have the knowledge to say specificly whether or not the profits from that transaction were taxable to Danny and Linda, or to what extent they may or may not have been taxable to them.

You have asked me to support my comment. Your study of Related Party Transactions should convnce you that the potential exists for Danny and Linda to have assumed a tax liability for some (or all) of the profits from that sale of property. Agan, I do not know if that liability actually occured.

There are other aspects of this issue. But, I cannot begin to give a comprehensive resposne.

[beartrap]

I called an accountant and asked about the gift issue. I was told that what SP says is true regarding the giver having to pay the taxes on the gift. However, if you recieve a gift from your employer then you are responsible for the taxes.

http://www.completetax.com/taxguide/news/06-290goodietax.asp



This post has been edited by beartrap: Jun 18 2007, 09:04 AM

[Observer]

I called an accountant and asked about the gift issue. I was told that what SP says is true regarding the giver having to pay the taxes on the gift. However, if you recieve a gift from your employer then you are responsible for the taxes.

Beartrap:

Again, your comment in regard to gifts from an employer is simplistic. Generally one must pay taxes on gifts of value provided by an employeer, but not always. Your employeer may be able to pay your taxi fare to go home from work under certain conditions, but not others. You do not have to pay tax on a $15 Christmas turkey that you are given at Christmas, but if you are given a $15 Christmas check you must pay the tax on it.

Further, some gifts of value are tax exempt only based upon their value not exceeding a stated limit. Your employeer may provide your with a $50,000 group life insurance policy with no tax liability to you. But, if that same employeer gives you a $55,000 group life insurance policy you will assume some tax liabiliaty. In addition, if you work for two employeers, and each gives you a $30,000 group life insurance policy, your will have a tax liability.

NOTE: IRS rules change so rapidly that it may be that the dollar limits listed above have been raised.

Getting to other issues:

The IRS decides whether or not someting is a qualified gift. Just because it is called a gift does not mean that it will qualify as a gift undr IRS rules.

Related Party Transactions are often a substantial issue.

The IRS looks closely at gifts that may stem from a service that was provided. As a pastor, I must declare gifts that comes from members of my congregation.

The IRS will look closely at so-called gifts that go to a corporate officer from that corporation. The same is true when the gift is comming from a donor to a charitable organization that solicits funds.


Again, the complexities of this issue are such that I do not intend to imply that specific gifts discussed her either were or were not taxabable to any specific person or persons.

[PeacefulBe]

Sigh...

Seems it might be helpful to recruit a corporate tax specialist from the IRS into BSDA membership.

[beartrap]

Beartrap:

Again, your comment in regard to gifts from an employer is simplistic. Generally one must pay taxes on gifts of value provided by an employeer, but not always. Your employeer may be able to pay your taxi fare to go home from work under certain conditions, but not others. You do not have to pay tax on a $15 Christmas turkey that you are given at Christmas, but if you are given a $15 Christmas check you must pay the tax on it.

I googled it and found a number of sites explaining what you are saying, so I posted a link to one of them.

This post has been edited by beartrap: Jun 18 2007, 10:39 AM