As far as socks are concerned, surely a really rich person would alway open a brand new pair and discard the old ones.
To continue the sock hijack (briefly), there is a commercial for the Amazon Echo, a small wireless device for the home that responds to voice commands (much like Siri on the iPhone). In the commercial, the actor Alec Baldwin notices that his socks have a hole in them, so he orders the device to order a new pair of “Brescianis.” I was curious, so I Googled the name. These are 100% Cashmere dress socks, for which a pair cost $200 at Amazon. So while I can imagine a rich person wearing a pair of Hanes athletic crew socks (costing perhaps $2 a pair) once and tossing them, I think you’d have to be really spendthrift to wear $200 socks only once.
I don’t understand what your issue is. It seems you are receiving the money, not trying to give it anonymously. You were not in the OP’s scenario. If someone tried to give you money anonymously, I don’t understand why you were consulting with tax attorneys and CPAs at all because, you know, you wouldn’t have known they were trying to give you money. I suspect your grantor’s concern was minimizing gift taxes or preserving his unified credit. He (or she, but I’ll just say he) picked a strategy to minimize his gift taxes, but that has nothing to do with the cost “to move significant amounts of money.” He could have moved as much money as he had in his checking account for the low price of writing a check. That’s free for most people who have the means to give away $42,000 per year. He may also have to use his unified credit or pay gift taxes, but that reflects a policy decision made by the government to tax gifts. It has nothing to do with the cost to move money. If he were moving money for any purpose other than giving a gift, the cost to move the money is trivial.
[QUOTE=sbunny8]
On the contrary, they want to prosecute you for trying to hide the fact that you are attempting to break the original rule, the one that says you have to pay taxes on large gifts. You want to get away with not paying the tax, so you decide to make multiple small gifts that no one will notice, instead of one big gift which would call attention to the fact that you didn’t pay the tax you were supposed to pay.
It’s not illegal to give someone $18,000. What’s illegal is for you to intentionally do it in a sneaky way (such as giving them $9,000 in October and another $9,000 in November) for the purpose of trying to hide your tracks so you can get away with tax evasion when you file your tax forms next April. OTOH, there’s nothing illegal about tax avoidance, i.e. arranging your affairs in such a way as to minimize your tax burden. For example, you could give them $9,000 in October and then wait and give them another $9,000 in January, so the two gifts fall in different tax years. I don’t see anything wrong with the “structuring” law you’re talking about.
[/QUOTE]
Structuring is an entirely different issue. There are currency transaction reporting requirements if you deposit currency (dollar bills or coins) into a bank in amounts over $10,000. This is to cut down on money laundering, but not necessarily tax evasion. In fact, if we made it easier for drug dealers to get their money into banks, they might be more inclined to pay the taxes they owe. The government prevents money laundering so drug dealers and mafia dons can’t easily deposit $10,000,000 for a day’s illegal proceeds into a bank and then wire to their numbered Cayman Islands account where it would be difficult or impossible for U.S. authorities to seize it. The currency transaction reporting requirement lets the government know when people are making big cash deposits that aren’t easily explained, so they can figure out if the guy depositing $10 million is a drug dealer or mafia don.
Structuring is making many small deposits instead of one big one solely to avoid the currency transaction reporting requirement. Structuring is a crime because, if it weren’t, our drug dealer or mafia don could just pay a flunky to stand in the teller line at the bank making $9,900 deposits all day until he finished depositing the $10 million. This would be a pretty small burden to the criminal mastermind but would entirely eliminate the effectiveness of the money laundering regulations.
In the U.S., people are required to self report their gifts and pay taxes on it. It doesn’t really matter if they give the gift in small batches or one big one, and it doesn’t matter if they do it in cash, by check or however else. The obligation to self-report is exactly the same. I doubt it’s any easier to catch someone for gift tax evasion if the giver uses one check or 100 because checks are not reported in currency transaction reports (which don’t go to the IRS in any event), the IRS doesn’t get a record of all the checks you write, and they don’t know why you wrote the check(s) in the first place.
Exactly. The feds want to track CASH coming into the system. So if you deposit more than $10,000 CASH, you must fill all sorts of forms explaining where the money came from. A hassle, but not a worry if it came from a legitimate source.
If you attempt to evade these requirements for large sums by breaking the transaction into less-than-$10,000 amounts, but the total exceeds $10,000, then the feds can charge you with structuring - evading requirements to report large transactions.
This is an attempt to prevent crooks from using their gains. Diamond Joe gets $100,00 a week from his drug dealing. he wants a Mercedes (or a Cadillac SUV with spinning lit up rims). He can pay cash, but then the car dealer has to report where the money came from. He wants a multi-million dollar mansion. How does he pay the real estate bill? Ultimately, these reports from him or from where he does business will lead to a money trail - now he has to explain his income to the IRS, and pay income tax on it. Even decades ago, Al Capone was taken down in the end for tax evasion.
Some jackpots nowadays are still cash, if they are trivial like $50,000 or $1,000,000; but those Powerball and MegaMillions are typically advertising the pre-tax value of a lifetime of regular payouts; if you opt for the one-time lump sum, IIRC that is typically 2/3 the advertised size, then you pay tax on it.
Structuring doesn’t really apply to gifts. If you give Aunt Hortense $9,000 in September and another $9,000 in November, when you do your tax return in April you have to declare that you gave her $18,000. Either you report that, or your lying on you’re return, which is evasion not structuring.
IIRC, you can, however, legitimately give $14,000 to Aunt Hortense and $14,000 to Uncle Bob, so between them they have $28,000 (each year) and you pay no gift tax.
Again, the authorities don’t care about the size of legit transactions, where money flows from A to B using bank transfer, cheques, etc. Any time they want to see what’s going on, they can get the necessary records from the sending and receiving banks. For the OP’s purpose, unless his brother-in-law is in law enforcement, odds are the recipient of the largesse does not have the same access to that information.
I guess the question is - if the paper trail stops at a lawyer’s office, what does the lawyer have to say, vs. keep quiet due to client confidentiality. A lawyer cannot take his client’s pallet of cash and deposit it without answering questions truthfully, and he is subject to the same reporting and structuring laws as anyone else.
Presumably (with a warrant) the police can look at the transaction records of the lawyer’s trust fund, so giving the lawyer the $500,000 cheque for Bob’s mortgage will not hide that transaction from the police if they choose to investigate… just hides it from Bob.
But then, the OP only wants to hide from Bob. If the police investigate, then tell Bob where the money came from, that sounds like a breach of ethics.
As an example of this, and how being rich and powerful isn’t a protection, former Speaker of the House Dennis Hastert has been in court for a couple years now over that exact issue. He will likely be going to jail for it.
He specifically told the investigators when asked, that he was avoiding the $10,000 cash transaction limit. Being rich and powerful can be trumped (sorry) by being stupid. Which he was.
Most of you may have forgotten this story. I remember it as clear as day. Quite topical too.
In the 90s i lived in Long Island. There was an accident on the main highway connecting NY city to Long Island around 1995. Prob the I95.
A driver of another car helped the driver of the car involved. Next week the man who helped heard from his bank that his mortgage had been paid off.
The man who paid it off was the person hurt in the accident. His name was Donald Trump.
Cant give you a cite. But it was in the papers and it stuck with me.
Well, a Google search that included the relevant terms in your anecdote returned numerous articles about a disaster involving Donald Trump and mortgages, but none of them mentioned anything about a car accident.:rolleyes:
In Canada, one Mike Duffy got his debts personally paid off by a friend … and it didn’t go so well for anyone involved.
Yeah, but they handed him the cheque. Not quite OP. I don’t know what’s more revealing, that the Canadian senator for Prince Edward Island did not have $90,000 lying around after having much of his cost of living expensed for years, or that the Prime Minister’s gopher had that in disposable funds. (Being a successful multimillionaire has its perks…)
I’m not saying that banks are bad people, but I’ve worked around banks, and they are big orgainisations that don’t automatically work the way strangers expect them too.
If I paid off your mortgage, I would expect the bank to continue accepting payments from you for as long as you kept making payments.
If, at some future point, you realized that you had over paid, asked for the money back, and asked to have the mortgage discharcharged, I would expect that you would eventually be able to get most of the money back.
But I wouldn’t expect any of it to happen automatically.
Annuity lotteries are extremely unusual in Australia.
In Australia, if you wanted an annuity, you could take the $30 million lump sum from the lottery, and invest it privately in an annuity.
It appears that Australia is highly unusual in that regard. I’m impressed.
If I don’t pay taxes on gifts, then charge me with not paying the gift tax. Don’t charge me for making $9,900 cash transactions. The reason why I am making $9,900 cash transactions is to comply with the law regarding reporting requirements. If I simply do not want a record of my cash transactions then that should not be against the law when I make them below the minimum outlined in the law.
It would be like outlawing driving exactly 68mph every day as some kind of scheme to avoid the speed limit.
Don’t forget to take your beneficiary’s profession into account. If your friend is a civil servant, an elected official, a member of the judiciary or the prosecutorial service, a sudden upsurge in their finances derived from an anonymous source could leave them vulnerable to charges of accepting bribes.
In my experience, a large cash deposit is not something that i would’ve done a SAR for. But if we noticed a pattern where you spread out large deposits, that would suggest structuring. How it usually worked:
Person: please deposit its $12,000
Me: certainly. May I ask some information (occupation etc. IIRC you don’t ask where the money is from as suggested upthread).
- why?
- it’s required over $10k
- ok then make it $9000
- sure (pulls up account for other information I need to file SAR instead of CTR)
Are you suggesting that Australia not having annuity lottery prizes is unusual? I think the vast majority of lotteries worldwide are paid as lump sums, often tax-free.
This is getting pretty close to sovereign citizens’ magic incantations. It can’t be more than $10,000, cuz right before I got to $10,000 I started counting over again!
There’s certainly abuse of the law, but the concept of structuring is obviously necessary if the law is going to exist at all. Otherwise people can just do an incantation when they get to dollar #9999 and claim that the next one is, like, totally a different thing entirely.
Canadian lotteries too (except for odd ones like “Cash for Life”) are lump sums. That’s because they started as “Win a million” and have grown with the jadedness of ticket buyers to up to as much as $60M. A few million is hardly “fantastic” if translated into monthly payments as an annuity.
I’m not an expert on US lotteries, but my impression is that the only ones that are annuity options are those that pay out in the tens of millions or more. And then, they use the full life payout as the advertised prize because it sounds better - i.e. the last big one in the USA was touted as something like $1.3B but the cash up front option was “only” $800M; then, of course, you pay taxes on it. In Canada there are no taxes on lottery winnings.