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  • Is this life estate taxable?

    From Rodney Farber@21:1/5 to All on Sat Jul 29 12:05:03 2023
    Mister M was a member of the Jehovah Witness Governing Body. He was one of ten in that most senior position. In February, it was announced that he was no longer a member of that group. Was he fired? Did he quit? Nobody knew, but speculation ran
    rampant. In 100 years, he was only the fourth(?) person to leave the Governing Body without dying.
    Well, it's been discovered that the Jehovah Witness organization has bought a condo in North Carolina and M and his wife have a life estate in that property. Effectively, they own it until their death and then the property reverts to the "remainder
    interest", in this case the Jehovah Witness organization of Walkill, NY.
    I consider that life estate to be part of a severance package. How taxable is it? If we assume the value of that life estate to be $150k, is that all taxable NOW, or say $10k per year while they live there?

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  • From Stuart O. Bronstein@21:1/5 to Rodney Farber on Sat Jul 29 12:53:51 2023
    Rodney Farber <[email protected]> wrote:

    Mister M was a member of the Jehovah Witness Governing Body. He
    was one of ten in that most senior position. In February, it was
    announced that he was no longer a member of that group. Was he
    fired? Did he quit? Nobody knew, but speculation ran rampant.
    In 100 years, he was only the fourth(?) person to leave the
    Governing Body without dying. Well, it's been discovered that the
    Jehovah Witness organization has bought a condo in North Carolina
    and M and his wife have a life estate in that property.
    Effectively, they own it until their death and then the property
    reverts to the "remainder interest", in this case the Jehovah
    Witness organization of Walkill, NY. I consider that life estate
    to be part of a severance package. How taxable is it? If we
    assume the value of that life estate to be $150k, is that all
    taxable NOW, or say $10k per year while they live there?

    Assuming the life estate was given as compensation, then yes, it's
    taxable - probably subject to withholding/self-employment tax as well.
    I'd think it's value should be all taxed in the year the life estate
    was created. In the past there was a way to stretch large sums of
    income out over a number of years (income averaging). But that no
    longer exists. So it's unlikely they'd be allowed to recognize it as
    income a bit at a time.


    --
    Stu
    http://DownToEarthLawyer.com


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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. >>
    << >>
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    << to this newsgroup as well as our anti-spamming policy >>
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    << Copyright (2011) - All rights reserved. >>
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  • From John Levine@21:1/5 to All on Sat Jul 29 23:39:47 2023
    According to Rodney Farber <[email protected]>:
    Well, it's been discovered that the Jehovah Witness organization has bought a condo in
    North Carolina and M and his wife have a life estate in that property. Effectively, they
    own it until their death and then the property reverts to the "remainder interest", in
    this case the Jehovah Witness organization of Walkill, NY.
    I consider that life estate to be part of a severance package.

    Do they still consider him to be clergy? If so, I'd expect it to
    be non-taxable per the parsonage allowance.

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    Regards,
    John Levine, [email protected], Primary Perpetrator of "The Internet for Dummies",
    Please consider the environment before reading this e-mail. https://jl.ly

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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 (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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  • From ira smilovitz@21:1/5 to John Levine on Sun Jul 30 16:17:11 2023
    On Saturday, July 29, 2023 at 11:40:11 PM UTC-4, John Levine wrote:
    According to Rodney Farber <[email protected]>:
    Well, it's been discovered that the Jehovah Witness organization has bought a condo in
    North Carolina and M and his wife have a life estate in that property. Effectively, they
    own it until their death and then the property reverts to the "remainder interest", in
    this case the Jehovah Witness organization of Walkill, NY.
    I consider that life estate to be part of a severance package.
    Do they still consider him to be clergy? If so, I'd expect it to
    be non-taxable per the parsonage allowance.

    --
    Regards,
    John Levine, [email protected], Primary Perpetrator of "The Internet for Dummies",
    Please consider the environment before reading this e-mail. https://jl.ly
    --

    While I agree with John, just to be clear = parsonage allowance is non-taxable for income tax purposes, but it remains taxable for Self-Employment tax purposes.

    Ira Smilovitz, EA
    Leonia, NJ

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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 (2011) - All rights reserved. >>
    << ------------------------------------------------------- >>

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