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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsRegarding Hannity's purchase of foreclosed homes...
I was just thinking about the last minute addition to the tax break...something to do with people in real estate receiving a huge break. I know it was partly put in to get a vote they needed to pass the Bill, but I'm also wondering if it could have helped Hannity and his ilk in owning foreclosed homes? I didn't understand it at the time and don't understand it now. Could someone explain? I seem to remember something about passive income...whatever that is.
I understand most of the tax laws for us common folk, but when it comes to loopholes, I'm lost. I thought that maybe Trump helped out his friend with that addition. Just sayin'.
kentuck
(111,110 posts)Did he sell any of the properties after purchase? And were any of them Russians? And for how much? Was there any money-laundering involved. That is something we should look for.
Frustratedlady
(16,254 posts)I think it had something to do with carrying over losses or gains. Since it didn't affect any of my income, I didn't pay that much attention to it, but seeing Hannity involved in so much real estate, I thought it might be something he benefitted from even though he had purchased them awhile ago. I read somewhere that they purchased them and then rented the properties out at horrendous rents.
Yes, I'm sure you are right on the money-laundering. I think most of his friends have been involved in Tide abuse. It's too bad we can't return this ill-gotten gain back into the treasury and pay off our national debt.
C_U_L8R
(45,020 posts)Its the Republican way. Yeehaw.
Frustratedlady
(16,254 posts)ability to hide assets. If all those money-launderers are exposed, we should confiscate their assets and teach them all a lesson. The middle class can't support this country much longer.
unblock
(52,317 posts)not sure what made it into the final bill, i think it was a deduction of up to 20% for many pass-through companies, which would likely include hannity's real estate investment partnership. depends on how it was set up and what restrictions were in the final bill.
it seems clear that donnie personally benefited, and likely, especially if hannity asked cohen, that hannity would have gotten the benefit as well.
Frustratedlady
(16,254 posts)I think Corker greatly benefited from it. He had originally refused to vote for the bill and they added it at the last minute.
unblock
(52,317 posts)to its owners.
a law partnership is an example. the partnership figures out its taxable income for the year, then gives a statement to each partner saying (long story short), "we had a total of $5 million in profit, you have a 10% share of the partnership, so there's $500,000 of taxable income that you will have to report on your personal income taxes.
this is unlike traditional corporations (technically "c" corporations) that pay their own corporate taxes and then their owners have to pay taxes on any dividends and/or capital gains.
Frustratedlady
(16,254 posts)individual houses. So, if he had 10%, he would only pay taxes on 10% of the profit of all the houses?
I don't think it was a corporation if it was LLC - D or whatever there is available. I understand your example, though. Thanks!
Well, he didn't lie about his connection to Cohen. "I may have given him $10 or so for advice on real estate." You can forget the $10 amount and if there are no invoices, Cohen might be lying at his end. Hiding income...among other things. Maybe Cohen was in the group?
I don't think a spider could find his way around this web. It should be patented.
unblock
(52,317 posts)has hired a few of them. these things can be unraveled, and i highly doubt donnie and his gang of idiots spun their web particularly cleverly. they seem to rely on very low-iq, thuggish tactics rather than any cleverness. they left many breadcrumbs, i'm sure.
just to be clear, hannity only reports 10% of the profits as taxable income because he's only a 10% partner in my example, and then he's only entitled to 10% of the profit anyway. had he been an 80% partner, he would have 80% of the profits and have to report 80% of the taxable income. that part is not a tax break, it's just an allocation of the profit and the reportable taxable income.
Frustratedlady
(16,254 posts)they only pay their percentage of ownership. What was it before? Corker saved something like $2M?
unblock
(52,317 posts)basically, you can deduct up to 20% of the profit you're allocated. so in my example, if your share of the law partnership profit was $500,000, you could deduct up to $100,000 off your taxes.
there are restriction for rich people -- the deduction is capped at $315,000 for a married couple.
but the key provision is a huge loophole for real-estate partnerships. you can get a bigger deduction under certain circumstances, and those certain circumstances are ideally suited for real estate:
https://www.cnbc.com/2017/12/20/tax-bills-pass-through-rule-will-aid-wealthy-not-workers-critics-say.html
Republicans also capped the income eligible for the full 20-percent deduction at $315,000 for married couples and $157,500 for individuals. But they included a "capital element" in the formula for determining eligibility beyond those thresholds, presenting a lucrative tax break for some, including wealthy owners of commercial property, said tax experts.
"This seems ideally suited for commercial property businesses, where there aren't a lot of workers, but there is a lot of valuable property around," said Steven Rosenthal, senior fellow at the nonpartisan Tax Policy Center, a think tank.
Income above the pass-through caps can be eligible for the 20-percent deduction based on a formula: 50 percent of employee wages paid; or 25 percent of wages plus 2.5 percent of the value of qualified property at purchase, whichever is greater.
"The idea is to use the sum of the '2.5 percent rule' plus 25 percent of wages ... to get the full 20-percent deduction" on more income, said New York University School of Law Professor Daniel Shaviro, a tax law specialist, in an email.
Frustratedlady
(16,254 posts)unblock
(52,317 posts)apparently you can lower your tax rate by 10 percentage points.
if you're rich, that is. from 39.6% to 29.6%. a bit more than a 25% tax break.
https://thinkprogress.org/wealthy-are-poised-to-take-advantage-of-tax-loophole-6ee3c93fc0bc/
The final version of the GOP tax bill transformed the pass-through tax break into a deduction against taxable income, effectively cutting the top rate on pass-through income down from 39.6 percent to 29.6 percent.
This provides top pass-through earners such as hedge fund owners and lawyers with an enormous loophole, allowing them to effectively re-characterize parts of their income to pay taxes at a rate 10 points lower than what they are currently paying.
Frustratedlady
(16,254 posts)That's one heck of a deal. No wonder they were smiling so much.
About time for another housing crisis.
Thanks for all your help.
NCTraveler
(30,481 posts)There are almost no tax incentives when it comes to running real property investments through your real name or through an LLC. Running them through an LLC provides limited liability to the individual. Any additional tax benefits from the tax scam would be secondary.
Our recommendations to our clients is four or more properties and you should set up an LLC. That in itself is not a golden rule.
There are some ways to benefit by setting up multiple LLC's if you have many properties. It would be very difficult to manage those benefits as certain expenses would have to be pushed around from one LLC to the other. Very time consuming compounded by time constraints on the tax end.
Frustratedlady
(16,254 posts)understand.
I guess in today's world/country, we are now conditioned to look for fraud. Unfortunately, we seem to be finding a high percentage in what we are allowed to see. I'm sure fraud has always been there, but not to this extent.
I'd say that when the Democrats take over both sides of congress, a lot of these little inserts into tax laws and Bills in general should be examined closely. Also, the practice of lobbyists writing our laws should be abandoned. Let those elected to do a job do the job. They have office staff qualified to work on the paperwork.
The Kochs and their ilk have infiltrated too much of our government.
kentuck
(111,110 posts)He is connected to the seized documents of Michael Cohen. Why would he need that connection if everything was above board?
Frustratedlady
(16,254 posts)I hope I live long enough to see this whole web unravel.
Thanks for your info.
FakeNoose
(32,748 posts)... so there's no attorney-client privilege coming into play on this.
The documents (pertaining to Hannity) that were seized wouldn't be covered.
I'm pretty sure that's how the judge would rule on it. Documents pertaining to Trump might be handled differently.