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Programbo
Guest
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 Posted: Sat May 24, 2008 10:27 pm Post subject: Tax question ala Shawshank Redemption |
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Hello all. I have an odd question. I am about ready to receive a check
from the sale of stock in my company. The company was 42% employee
owned and it was sold so the new company had to buy up all outstanding
shares of stock. I should receive about $36,000. If anyone is familar
with the movie "The Shawshank Redemption" the following conversation
takes place after one of the guards was complaining about how much tax
he was going to owe on an unexpected inheritence:
ANDY:Mr. Hadley. Do you trust your wife?
HADLEY: That's funny. You're gonna..(Obscenities removed)
ANDY: What I mean is, do you think she'd go behind your back? Try to
hamstring you?
HADLEY: That's it! Step aside, Mert. This ****'s havin' hisself an
accident.
ANDY: Because if you do trust her, there's no reason in the world you
can't keep every cent of that money.
HADLEY: You better start making sense.
ANDY: If you want to keep that money, all of it, just give it to your
wife. See, the IRS allows you a one-time- only gift to your spouse.
It's good up to sixty thousand dollars.
HADLEY: Naw, that ain't right! Tax free?
ANDY: Tax free. IRS can't touch one cent.
HADLEY: You're the smart banker what shot his wife. Why should I
believe a smart banker like you? So's I can wind up in here with you?
ANDY: It's perfectly legal. Go ask the IRS, they'll say the same
thing. Actually, I feel silly telling you all this. I'm sure you would
have investigated the matter yourself.
I think you can see where I`m going with this as far as my stock
money is concerned..Is this all just movie junk or is there any basis
for all this?
--
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joetaxpayer
Guest
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| Posted: Sun May 25, 2008 12:25 am Post subject: Re: Tax question ala Shawshank Redemption |
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Programbo wrote:
| Quote: |
ANDY: If you want to keep that money, all of it, just give it to your
wife. See, the IRS allows you a one-time- only gift to your spouse.
It's good up to sixty thousand dollars.
|
There are two transactions. Your receipt of the money, which is taxable,
and your gift to your wife, which is an unlimited amount (not the $60K
you quote). So, once you pay the tax, you should gift her what remains,
I'm sure she'll thank you for it.
Joe
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >> |
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Mark Bole
Guest
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| Posted: Sun May 25, 2008 4:04 pm Post subject: Re: Tax question ala Shawshank Redemption |
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joetaxpayer wrote:
| Quote: |
Programbo wrote:
ANDY: If you want to keep that money, all of it, just give it to your
wife. See, the IRS allows you a one-time- only gift to your spouse.
It's good up to sixty thousand dollars.
There are two transactions. Your receipt of the money, which is taxable,
and your gift to your wife, which is an unlimited amount (not the $60K
you quote). So, once you pay the tax, you should gift her what remains,
I'm sure she'll thank you for it.
|
As often as people mention that one should not rely on strangers on the
Internet for critical tax advice, I think using a movie based on a work
of fiction from Stephen King ranks even lower as a reliable source!
Interestingly, a quick search yielded up at least one serious attempt at
interpreting what the Shawshank conversation was based on.
(from www.taxgirl.com):
"I will admit to being a little hazy as to what Andy suggests - it is, I
guess a pre-1970s tax rule. Generally, inheritances of less than the
exemption (this inheritance was only $35,000) is federal estate tax
free. Many states, like Pennsylvania and New Jersey, where I practice,
have alternate death taxes. There are no income tax consequences for
inherited money unless the redemption of the inheritance is, itself, a
taxable event - meaning cashed in savings bonds with built-in interest,
IRA withdrawals, etc."
Further comments from this site also include [spoiler alert, but
really, who hasn't seen this great movie already?] the observation that
while Andy began as an innocent, falsely convicted of murder, he has now
become a criminal through aiding the warden's embezzlement and by
helping to prepare false tax returns for the guards. And finally, Red
and Andy "appear to live in Mexico (tax free) off of the spoils of the
warden’s wrongs".
-Mark Bole
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >> |
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removeps-groups@yahoo.com
Guest
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| Posted: Tue May 27, 2008 2:32 pm Post subject: Re: Tax question ala Shawshank Redemption |
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On May 24, 5:25 pm, joetaxpayer <joetaxpa...@nospam.com> wrote:
| Quote: |
There are two transactions. Your receipt of the money, which is taxable,
and your gift to your wife, which is an unlimited amount (not the $60K
you quote). So, once you pay the tax, you should gift her what remains,
I'm sure she'll thank you for it.
|
If your spouse is not a US citizen the maximum amount you can gift
without triggering the gift tax is now 128k (was 125k for 2007).
http://www.irs.gov/publications/p553/ch04.html
I suppose that if your spouse is a permanent resident, the rules are
the same as for US citizens -- namely the gift exclusion is infinity.
If your spouse has the same gender as you (say you got married in
another country, or California or Vermont which I think now recognize
same-sex marriages), then what happens?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >> |
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