MR deduction

[an]

Looks like CA will start enforcing MR deduction: http://www.trulia.com/blog/karen_parsons-fiddler/2012/03/california_mello_roos_not_tax_deductible_in_2012

[bearishgurl]

I guess Cali finally got their debacle of a “computer system” fixed!

http://piggington.com/state_tax_deductibility_of_all_melloroos_charges_threatened_begi

Hooray for MR debtors!

[Coronita]

Ummmm…

You do realize IRS already stated it is deductible…
And as such, CA follows IRS…

http://www.sfgate.com/business/article/Calif-drops-property-tax-deduction-campaign-3486711.php

https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/index.shtml

So CA wasted a bunch of money building systems before getting the requirements/information from the IRS…
Typical CA government wasting money…

We talked about this already…

http://piggington.com/deductibility_of_melloroos_on_taxes

[bearishgurl]

[quote=flu]Ummmm…

You do realize IRS already stated it is deductible…
And as such, CA follows IRS…

http://www.sfgate.com/business/article/Calif-drops-property-tax-deduction-campaign-3486711.php

https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/index.shtml

So CA wasted a bunch of money building systems before getting the requirements/information from the IRS…
Typical CA government wasting money…

We talked about this already…

http://piggington.com/deductibility_of_melloroos_on_taxes%5B/quote%5D

In November of 2011, FTB kicked off the Real Estate Tax Deduction Educational Campaign to help educate taxpayers and tax preparers on how to calculate the allowable real estate property tax deduction as an itemized deduction. . .

Under current law, the deductibility of real property taxes is generally a matter of federal law to which California conforms. As such, the FTB will be waiting to review the revisions to the IRS forms and publications to provide comparable revisions to California tax form instructions. The FTB does not anticipate that these revisions will be made prior to the due date for 2011 tax returns (April 17, 2012). We have removed material from our website that limits the deductibility of real property taxes to taxes imposed on an ad valorem basis. Once the IRS forms and instructions are revised, we will provide revised California forms and instructions that are consistent with the revisions made by the IRS.

At this time, we do not plan to add additional reporting requirements related to the real estate tax deduction beginning with the 2012 tax return.

https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/index.shtml

flu, the “fat lady” hasn’t left the stage yet.

Time to ask your local tax preparer/accountant what THEY would be willing to put their name on and research CA legislation still in the pipeline.

There’s something missing here … :=0

[Coronita]

[quote=bearishgurl][quote=flu]Ummmm…

You do realize IRS already stated it is deductible…
And as such, CA follows IRS…

http://www.sfgate.com/business/article/Calif-drops-property-tax-deduction-campaign-3486711.php

https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/index.shtml

So CA wasted a bunch of money building systems before getting the requirements/information from the IRS…
Typical CA government wasting money…

We talked about this already…

http://piggington.com/deductibility_of_melloroos_on_taxes%5B/quote%5D

In November of 2011, FTB kicked off the Real Estate Tax Deduction Educational Campaign to help educate taxpayers and tax preparers on how to calculate the allowable real estate property tax deduction as an itemized deduction. . .

Under current law, the deductibility of real property taxes is generally a matter of federal law to which California conforms. As such, the FTB will be waiting to review the revisions to the IRS forms and publications to provide comparable revisions to California tax form instructions. The FTB does not anticipate that these revisions will be made prior to the due date for 2011 tax returns (April 17, 2012). We have removed material from our website that limits the deductibility of real property taxes to taxes imposed on an ad valorem basis. Once the IRS forms and instructions are revised, we will provide revised California forms and instructions that are consistent with the revisions made by the IRS.

At this time, we do not plan to add additional reporting requirements related to the real estate tax deduction beginning with the 2012 tax return.

https://www.ftb.ca.gov/individuals/Real_Estate_Tax_Deduction/index.shtml

flu, the “fat lady” hasn’t left the stage yet.

Time to ask your local tax preparer/accountant what THEY would be willing to put their name on and research CA legislation still in the pipeline.

There’s something missing here … :=0[/quote]

Oh come on. BG… The fat lady has sung on this as much as the fat lady sung for Ron Paul on the 3rd inning.

CA FTB follows IRS. IRS rules basically states Mello Roos is deductible. FTB isn’t gonna deviate from it. They’d rather just pass Prop 30 or the likes to raise sales taxes for everyone, which is much easier.

You think maybe that the CA government workers would have gotten the confirmation from IRS before spending probably millions on IT/computer system that isn’t used…. But then again, this is CA where inefficiency is #1.

[Coronita]

FWIW:

Done deal… FTB fvcked up…
And no, I wasn’t kidding about FTB wasting money…. FTB wrote to the IRS on DECEMBER 8, to inquire about this…well AFTER the system was already built….

Well, depending on how you count, IRS already sent a note about this BACK IN 2003… Although I guess FTB didn’t really let people know did they.

So if any of you actually didnt’ claim Mello R, now would be a good time to modify all your past year’s taxes….

http://www.irs.gov/pub/irs-wd/12-0018.pdf

Number: 2012-0018
Release Date: 3/30/2012
GENIN-152082-11
UIL: 164.00-00

———————-
——————-
—————————————————–
——————————–
——————
—————————————
Dear ———–:
I am responding to your letter to the Chief Counsel dated December 8, 2011, in which
you asked for clarification of the Internal Revenue Service’s views on whether real
property taxes must be assessed on an ad valorem basis to be deductible for federal
income tax purposes.
You note that the 2011 instructions for the Form 1040 Schedule A, Itemized Deductions,
state that real property taxes are deductible “only if the taxes are based on the
assessed value of the property.” On the other hand, a 2003 Chief Counsel
memorandum dated November 24, 2003, regarding the deductibility of California MelloRoos and other assessments, concludes that those assessments may, depending on
the facts and circumstances, be deductible as real property taxes even though they are
not imposed on an ad valorem basis.
Section 164(a)(1) of the Internal Revenue Code permits a deduction for real property
taxes, but does not define what constitutes a real property tax. Personal property taxes
also may be deductible under § 164(a), but § 164(b)(1) requires a personal property tax
be an ad valorem tax to be deductible. The Code does not explicitly require the same
for real property taxes. Section 1.164-4(a) of the Income Tax Regulations explains that
to be deductible, a real property tax must be levied for the general public welfare at a
like rate against all real property in the taxing authority’s jurisdiction. In general, an GENIN-152082-11 2
amount that is assessed only on specific property benefitted by a local benefit (such as
for streets, sidewalks, and like improvements) cannot be deducted as a real property
tax. However, § 1.164-4(b)(1) permits a deduction for assessments to provide local
benefits to the extent that the taxpayer can show they were imposed to repair, maintain,
or meet interest charges for such benefits.
Revenue Ruling 80-121, 1980-1 C.B. 43, notes that a characteristic common to many
real property taxes is that the tax is measured by the value of the real property.
However, there is no statutory or regulatory requirement that a real property tax be an
ad valorem tax to be deductible for federal income tax purposes. Assessments on real
property owners, based other than on the assessed value of the property, may be
deductible if they are levied for the general public welfare by a proper taxing authority at
a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the
assessments are not for local benefits (unless for maintenance or interest charges).
We will recommend appropriate revisions to our forms and publications on this subject.
I hope this information is helpful. If you have any questions, please contact me or —
—————————-at ———————.
Sincerely,
Christopher F. Kane
Chief, Branch 3
Associate Chief Counsel
(Income Tax & Accounting)

[SK in CV]

Note the date of that article is March 17, 2012. It implies that beginning in 2012 that MR will not be deductible. But it links to the same FTB article that was discussed here a year ago, that explains essentially that the current IRS instructions make MR deductible, and that enforcement would not change for 2012. The conclusion reached in the article is wrong.

[bearishgurl]

[quote=SK in CV]Note the date of that article is March 17, 2012. It implies that beginning in 2012 that MR will not be deductible. But it links to the same FTB article that was discussed here a year ago, that explains essentially that the current IRS instructions make MR deductible, and that enforcement would not change for 2012. The conclusion reached in the article is wrong.[/quote]

SK, by your post, I take you mean enforcement for the (2011) returns due 4/17/12, NOT the 2012 tax year returns (due 4/15/13)?

I am unclear as to which “article” it is that you believe came to the wrong conclusion.

Was it’s link posted on this thread?

…. maybe I better go clean my magnifying glass :=0

[SK in CV]

[quote=bearishgurl][quote=SK in CV]Note the date of that article is March 17, 2012. It implies that beginning in 2012 that MR will not be deductible. But it links to the same FTB article that was discussed here a year ago, that explains essentially that the current IRS instructions make MR deductible, and that enforcement would not change for 2012. The conclusion reached in the article is wrong.[/quote]

SK, by your post, I take you mean enforcement for the (2011) returns due 4/17/12, NOT the 2012 tax year returns (due 4/15/13)?

I am unclear as to which “article” it is that you believe came to the wrong conclusion.

Was it’s link posted on this thread?

…. maybe I better go clean my magnifying glass :=0[/quote]

I was referring to the trulia article in the original post which comes to the wrong conclusion. It says one thing, then links to an FTB article that says another.

If I remember correctly the FTB had a grand plan to cross check tax deductions with tax collectors records that was partially supposed to be in effect for 2011 and become fully functional in 2012. (I could be wrong on the years.) (which has been discussed here over the last few hours.)

But in the trulia article, it refers to the tax deduction for the 2012 tax year.

[bearishgurl]

[quote=flu] . . .
http://www.irs.gov/pub/irs-wd/12-0018.pdf

Number: 2012-0018
Release Date: 3/30/2012
GENIN-152082-11
UIL: 164.00-00

———————-
——————-
—————————————————–
——————————–
——————
—————————————
Dear ———–:
I am responding to your letter to the Chief Counsel dated December 8, 2011, in which
you asked for clarification of the Internal Revenue Service’s views on whether real
property taxes must be assessed on an ad valorem basis to be deductible for federal
income tax purposes.
You note that the 2011 instructions for the Form 1040 Schedule A, Itemized Deductions,
state that real property taxes are deductible “only if the taxes are based on the
assessed value of the property.” On the other hand, a 2003 Chief Counsel
memorandum dated November 24, 2003, regarding the deductibility of California MelloRoos and other assessments, concludes that those assessments may, depending on
the facts and circumstances, be deductible as real property taxes even though they are
not imposed on an ad valorem basis.
Section 164(a)(1) of the Internal Revenue Code permits a deduction for real property
taxes, but does not define what constitutes a real property tax. Personal property taxes
also may be deductible under § 164(a), but § 164(b)(1) requires a personal property tax
be an ad valorem tax to be deductible. The Code does not explicitly require the same
for real property taxes. Section 1.164-4(a) of the Income Tax Regulations explains that
to be deductible, a real property tax must be levied for the general public welfare at a
like rate against all real property in the taxing authority’s jurisdiction. In general, an GENIN-152082-11 2
amount that is assessed only on specific property benefitted by a local benefit (such as
for streets, sidewalks, and like improvements) cannot be deducted as a real property
tax. However, § 1.164-4(b)(1) permits a deduction for assessments to provide local
benefits to the extent that the taxpayer can show they were imposed to repair, maintain,
or meet interest charges for such benefits.
Revenue Ruling 80-121, 1980-1 C.B. 43, notes that a characteristic common to many
real property taxes is that the tax is measured by the value of the real property.
However, there is no statutory or regulatory requirement that a real property tax be an
ad valorem tax to be deductible for federal income tax purposes. Assessments on real
property owners, based other than on the assessed value of the property, may be
deductible if they are levied for the general public welfare by a proper taxing authority at
a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the
assessments are not for local benefits (unless for maintenance or interest charges).
We will recommend appropriate revisions to our forms and publications on this subject.
I hope this information is helpful. If you have any questions, please contact me or —
—————————-at ———————.
Sincerely,
Christopher F. Kane
Chief, Branch 3
Associate Chief Counsel
(Income Tax & Accounting)
[/quote](emphasis added)

The Chief Counsel seems to be stating here that (MR) assessments may be deductible IF

… they are levied for the general public welfare by a proper taxing authority at a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the assessments are not for local benefits (unless for maintenance or interest charges)…

MR isn’t levied “on all properties in the taxing authority’s jurisdiction.” It’s only levied on the properties within CFD’s in which the bonds have not yet been retired.

In addition, MR assessments in CA ARE for local benefits, not “maintenance” because the local jurisdictions (city/county) maintain the public lands within the CFD’s.

However, some of the MR payments service interest charges.

Without further direction from the IRS/FTB, this issue seems like it could be a quagmire for affected taxpayers.

[bearishgurl]

[quote=SK in CV][quote=bearishgurl][quote=SK in CV]Note the date of that article is March 17, 2012. It implies that beginning in 2012 that MR will not be deductible. But it links to the same FTB article that was discussed here a year ago, that explains essentially that the current IRS instructions make MR deductible, and that enforcement would not change for 2012. The conclusion reached in the article is wrong.[/quote]

SK, by your post, I take you mean enforcement for the (2011) returns due 4/17/12, NOT the 2012 tax year returns (due 4/15/13)?

I am unclear as to which “article” it is that you believe came to the wrong conclusion.

Was it’s link posted on this thread?

…. maybe I better go clean my magnifying glass :=0[/quote]

I was referring to the trulia article in the original post which comes to the wrong conclusion. It says one thing, then links to an FTB article that says another.

If I remember correctly the FTB had a grand plan to cross check tax deductions with tax collectors records that was partially supposed to be in effect for 2011 and become fully functional in 2012. (I could be wrong on the years.) (which has been discussed here over the last few hours.)

But in the trulia article, it refers to the tax deduction for the 2012 tax year.[/quote]

So, in your opinion, do you believe MR is allowed to be deducted for tax year 2012 … or not?

And, do you believe my interpretation of the Chief Counsel’s letter is correct?

Perhaps the MR “interest” portion (as I discussed directly above) is immaterial because that interest is tied to the infrastructure money used to build the goodies inside the CFDs . . . I don’t know.

[SK in CV]

[quote=bearishgurl](emphasis added)

The Chief Counsel seems to be stating here that (MR) assessments may be deductible IF

… they are levied for the general public welfare by a proper taxing authority at a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the assessments are not for local benefits (unless for maintenance or interest charges)…

MR isn’t levied “on all properties in the taxing authority’s jurisdiction.” It’s only levied on the properties within CFD’s in which the bonds have not yet been retired.

In addition, MR assessments in CA ARE for local benefits, not “maintenance” because the local jurisdictions (city/county) maintain the public lands within the CFD’s.

However, some of the MR payments service interest charges.

Without further direction from the IRS/FTB, this issue seems like it could be a quagmire for affected taxpayers.[/quote]

The FTB concluded:

“We have removed material from our website that limits the deductibility of real property taxes to taxes imposed on an ad valorem basis.”

Essentially they conceded that based on the IRS letter, MR is deductible.

[Coronita]

[quote=bearishgurl](emphasis added)

The Chief Counsel seems to be stating here that (MR) assessments may be deductible IF

… they are levied for the general public welfare by a proper taxing authority at a like rate on owners of all properties in the taxing authority’s jurisdiction, and if the assessments are not for local benefits (unless for maintenance or interest charges)…

MR isn’t levied “on all properties in the taxing authority’s jurisdiction.” It’s only levied on the properties within CFD’s in which the bonds have not yet been retired.

In addition, MR assessments in CA ARE for local benefits, not “maintenance” because the local jurisdictions (city/county) maintain the public lands within the CFD’s.

However, some of the MR payments service interest charges.

Without further direction from the IRS/FTB, this issue seems like it could be a quagmire for affected taxpayers.[/quote]

BG, you really don’t like to be wrong do you?

Come on. You’re trying argue you are right despite the facts to the contrary and trying to pick a minute wording in the document when clearly it indicates that Mello R is deductible and will be deductible until the forseeable future. You’re not an accountant (neither and I) but I’ve definitely have checked with many accountants who have also confirmed this…

“might” is a loosey goosey word. Hell, I *might* win the Powerball lottery….

I think you missed this statement from the IRS.. Here it is again bold and emphasize for you too…

However, § 1.164-4(b)(1) permits a deduction for assessments to provide local
benefits to the extent that the taxpayer can show they were imposed to repair, maintain,
or meet interest charges for such benefits.

Seriously, it’s ok to be wrong sometimes…We’re all wrong sometimes…

[bearishgurl]

[quote=flu]BG, you really don’t like to be wrong do you?

Come on. You’re trying argue you are right despite the facts to the contrary and trying to pick a minute wording in every document that clearly indicates that Mello R is deductible and will be deductible until the forseeable future. You’re not an accountant (neither and I) but I’ve definitely have checked with many accountants who have also confirmed this…

“might” is a loosey goosey word. Hell, I *might* win the Powerball lottery….

I think you missed this statement from the IRS.. Let me bold and emphasize for you too…

However, § 1.164-4(b)(1) permits a deduction for assessments to provide local
benefits to the extent that the taxpayer can show they were imposed to repair, maintain,
or meet interest charges for such benefits.

Seriously, it’s ok to be wrong sometimes…We’re all wrong sometimes…[/quote]

I don’t care one way or the other, flu as I won’t be affected. I’m trying to interpret the source document you provided.

What does your tax preparer tell you in this regard? That is … if you have spoken to him/her in 2013 …

[Coronita]

[quote=bearishgurl][quote=flu]BG, you really don’t like to be wrong do you?

Come on. You’re trying argue you are right despite the facts to the contrary and trying to pick a minute wording in every document that clearly indicates that Mello R is deductible and will be deductible until the forseeable future. You’re not an accountant (neither and I) but I’ve definitely have checked with many accountants who have also confirmed this…

“might” is a loosey goosey word. Hell, I *might* win the Powerball lottery….

I think you missed this statement from the IRS.. Let me bold and emphasize for you too…

However, § 1.164-4(b)(1) permits a deduction for assessments to provide local
benefits to the extent that the taxpayer can show they were imposed to repair, maintain,
or meet interest charges for such benefits.

Seriously, it’s ok to be wrong sometimes…We’re all wrong sometimes…[/quote]

I don’t care one way or the other, flu as I won’t be affected. I’m trying to interpret the source document you provided.

What does your tax preparer tell you in this regard? That is … if you have spoken to him/her in 2013 …[/quote]

Which tax preparer are you referring to? The one that charged me $250/hr or the other one that charged me $150 to answer an email? In both cases, yes I spoke to both of them about recently, and in the brief 1 question 6 word sentence, I did manage to squeeze in the MR question without being unduly billed… 🙂

(Clearly, I’m in the wrong business)…

[Author]

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