Comments on: The deliciousness of Rolling Jubilee A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: Dennis85 Sun, 22 Sep 2013 21:35:57 +0000 Almost a year later, they raised money but what have they done?

By: SteveHamlin Thu, 15 Nov 2012 15:04:07 +0000 @alea: It seems like you are bothered by the fact that the IRS doesn’t tax, as income to the beneficiary, transfers motivated by love & kindness (due to public policy decisions vis a vis economic substance of the transactions). If so, your concern is unrelated to RJ in particular.

If I gave a random person with troubling debt some money, because I’m rich and that’s what I like to do and my motivation was love kindness and charity, then I don’t issue a 1099 and the recipient doesn’t recognize taxable income.

If a previously-established charity gave people in financial distress money, they don’t issue a 1099 and the recipient doesn’t have taxable income.

If RJ gives people in financial distress money, they don’t issue a 1099 and the recipient doesn’t have taxable income.

If RJ has an asset, and gives that asset to a person in financial distress , then RJ doesn’t issue a 1099 (for the FMV of that asset) and the recipient doesn’t have taxable income on the FMV of that asset.

Which one of those bothers you, and which not?

By: MrRFox Thu, 15 Nov 2012 11:26:46 +0000 @FS – Re: this – v v –

“felixsalmon @asymmetricinfo What happens if all the amounts forgiven are less than $13k? Then does the problem go away?”

Gift tax is payable (by the DONOR) on all gifts to a single donee in excess of $13/14k per year by a single donor. Single-year gifts of less than this amount are home free IF, IF, IF – the IRS accepts that the transactions are truly “gifts”, not the commercial write-off of debt. If they don’t – the whole load is taxable to the donee as income. It’s the IRS’s call on the characterization question – unless the Congress or the USSC decide to overrule IRS. (Kind of ‘Twilight Zone’ stuff to imagine an OWS-type lawyer arguing a tax case to the USSC.)

IMO OWS should operate this thing as a Not-For-Profit business, collecting something more than cost from debtors who want to clear their records, the mark-up to cover losses on those who can’t or won’t contribute. Good for the program and better for OWS types – they need to learn some things about business reality; this would do that.

By: alea Thu, 15 Nov 2012 05:40:48 +0000 @SteveHamlin:
No, that’s not what I complain about.
I mentioned [7:35 pm utc] that there is a taxable loss when the bank sells the debt. What I complain about is that there won’t be an offsetting taxable “cancellation of debt” [COD] income [to the debtor] because of the RF scanmming/hiding/non-reporting of the cancellation.

By: DanMarshall Thu, 15 Nov 2012 04:20:48 +0000 Hi Admin,

I am Dan, a financial writer. Today I came across your site and enjoyed reading some of your articles.

I just want to know do you allow guest posts? I would like to write for your blog on some relevant topics that is still to cover on your blog.

I will make sure that my articles will be completely unique and free to serve the purpose of your website. I do believe your readers will enjoy reading it.

It will be a thrilling experience for me if my article finds a place in your blog.

Please let me know about your decision.

Dan Marshall

By: SteveHamlin Thu, 15 Nov 2012 02:48:31 +0000 @alea: the lost taxable income for the IRS happens when the selling bank books a capital loss on the sale to any market bid, or when they wrote the account down on its OWN books from 100 (paying debtor) to 5 (non-responsive judgement-proof non-payer).

That is the 95 tax loss you complain about.

No different than the same tax loss incurred from a bank selling the debt to a real debt collector for 5.

By: MaxUtil Wed, 14 Nov 2012 23:43:27 +0000 @alea – Well I can’t read the mind of the people who wrote it. But I will say, if a debt cost 5 cents on the dollar, the chances of the IRS ever collecting the tax is pretty nill anyway. The pricing indicates that this debt is considered essentially never going to be paid. Adding a tax burden on it probably just means that person has swapped an old unpayable debt for a new one and will probably end up in bankruptcy (no taxes are going to get paid).

I understand that there is a moral/fairness issue here of why should someone who knowingly took on debt just getting it wiped out. And I’m 100% positive that some of the debt wiped out by RJ will be for people who don’t deserve the break, will just run up more debt, etc. But if you look at the reasons most people have debts like this, it’s really not all welfare queens who bought flat screen TVs on credit. Its mostly unpaid medical bills from someone who got sick and got hit with massive expenses they can’t pay, people who made a mistake and got pushed deeper and deeper into debt by a system can easily turn a missed payment into fees multiple times higher than the original amount, etc.

I think it’s OK to say, you know what, things are pretty heavily stacked against the little guy in this country. We routinely let large powerful individuals and institutions get away with stuff in terms of the common good. Here’s a way to do that for individuals and pretty much zero cost to anyone except the people who voluntarily give their money. I’m OK with the fact that somewhere, someone who I don’t approve of will get a small break.

By: alea Wed, 14 Nov 2012 22:41:18 +0000 @MaxUtil:
I doubt that the intent of the law is for a 5 cent purchase of distressed debt to result in 95 cent of lost taxable income for the IRS.

By: MaxUtil Wed, 14 Nov 2012 22:05:17 +0000 @alea – If I understand you correctly, following the letter and intent of the tax code is an “artificial scam”. It’s not clear to me if you think that this is a scam because that’s not really the tax code and RJ is somehow tricking the IRS or if you think it’s a scam because the debtor “should” owe tax regardless of whether the law says they do or not.

If it’s the former, this is a debate about legal facts, but you are offering up nothing to support your contention. If it’s the latter, you at least have an argument. But then you should be explaining why you think the laws as written are a scam and not just throwing around accusations. If it’s OK to wipe out debt under bankruptcy, why is it not OK when it is done as charity?

By: alea Wed, 14 Nov 2012 21:43:29 +0000 @SteveHamlin:
I understand your point. Just minor issue of semantics.
If that’s clearer, the 5 cent gift results in a cancellation of debt income for the debtor of 95 cents, and that would normally be taxable except if the debtor is bankrupt or if an artificial scam is in place to avoid it.
I agree with @streeteye comment above.