Gifts and Taxes

[OneFinger]

I'm trying to get creative and save on my taxes. Instead of "paying" an escort, can I gift him money (less than $10,000 per year) for his yearly services?

 

In order to deduct this gift from my taxes, do I have to be over 62 years old? Does the receiver of the money have to be a relative or can I gift money to just anyone (like my favorite escort)?

 

For the escorts, if this is legal, would you consider this type of relationship and payment?

[+ bigjoey]

sorry guy, a gift to a person is not deductable from your taxes unless he has qualified as a 501(3)©, non-profit corporation. i can not think of how any escort could get that designation.

 

you do not have to pay any gift tax on gifts to a person under $10,000; you can give more and use part of your lifetime exemption to keep from paying the gift tax.

[OneFinger]

>you do not have to pay any gift tax on gifts to a person under $10,000;

 

I routinely give gifts to 501(3)C organizations so I know how that works.

 

But, I thought I could also gift up to $10K/year to a person (usually a relative) and deduct that from my taxes. Doesn't this mean I can give a gift of $10k/year to an escort as an individual and not as an organization?

[Scorpio]

>But, I thought I could also gift up to $10K/year to a person

>(usually a relative) and deduct that from my taxes.

 

 

NO, gifts to any person (relative or otherwise) are NOT tax deductible. The $10K/year (now it's actually $11K/year) is an annual exclusion for GIFT tax purposes only. It does not entitle you to any sort of INCOME tax benefits or deductions. As bigjoey pointed out, the gift would have to be made to a 501©(3) organization to qualify as an income tax deduction.

 

>Doesn't

>this mean I can give a gift of $10k/year to an escort as an

>individual and not as an organization?

 

See above...you can give the gift but it does not entitle you to a tax deduction.

[Traveller]

I'm sorry Scorpio and bigjoey, but you're both wrong. As an estate planning attorney for a ntaional law firm, I can confidently advise OneFinger that of course you can deduct annual lump sum payments to escorts. The amount given must be more than $13,543.57, but less than $23,457.99, unless the Democrats control the White House, in which case you can flip out of base 10 altogether and the sky's the limit. You can only make the payments between Lincoln's and Washington's actual birthdays, so make sure to establish some kind of reliable tickler system. There are a couple of other limits to consider. Escorts that are tops and more than 9 inches enable you to DOUBLE you deduction, provided that penetration is deep, long and sustained. Deductions for bottoms, being a dime a dozen, are actually limited to amounts paid over 35% of adjusted gross income, so carefully think over any amounts you contemplate distributing to them. Finally, if at any time during the taxable year the escort takes the money and runs, your loss is limited an amount equal to a stack of one dollar bills up to and including the escort's full height. Obviously, think tall.

 

I hope this clears the air and helps you in making this important, yet fundamental, decision.

 

Later.

[Guest bighugbearphx]

>I'm sorry Scorpio and bigjoey, but you're both wrong. As an

>estate planning attorney for a ntaional law firm, I can

>confidently advise OneFinger that of course you can deduct

>annual lump sum payments to escorts. The amount given must

>be more than $13,543.57, but less than $23,457.99, unless

>the Democrats control the White House, in which case you can

>flip out of base 10 altogether and the sky's the limit. ...

 

As a career tax professional, used to lots of people (and, I have to admit, attorneys as a group are only #2 to "financial planners" in this respect) giving my clients erroneous tax advice, I have to admit this got me going for a second. The scary thing is that, since tax law is so bizarre and illogical to most people, what he is saying ALMOST sounds like it could be correct! If it weren't for the "double deductions for bottoms" part, I think a lot of people would have believed it!

 

Scorpio nailed it correctly, of course. You can't deduct personal gifts to individuals. Even business-related gifts (promotional for your business) are limited to $25 a year per person. And while giving more than $11,000 to someone in a year doesn't trigger an immediate actual *tax* on the giver, it does reduce the amount he is permitted to leave to heirs free of estate taxes on his death.

[Scorpio]

>I'm sorry Scorpio and bigjoey, but you're both wrong.

 

Traveller, I know you're just having fun, but some one is bound not to catch the humor and take you seriously...you really should give better tax advice. :-) By the way, I'm a tax professional myself (or at least that's what it says on my Masters' degree.)

[Guest Kevin 2]

>>Escorts that are tops and more than 9 inches enable you to DOUBLE you deduction, provided that penetration is deep, long and sustained.<<

 

Traveller, I bet you have a ZERO tax liability EVER year! :7

[OneFinger]

>...As an estate planning attorney for a ntaional law firm, I can

confidently advise OneFinger that of course you can deduct annual lump sum payments to escorts...

 

Traveller,

 

I was so happy to get your positive response that I immediately e-mailed it to my CPA (who is straight) so he could prepare the necessary paperwork. Needless to say, I'm now looking for a new CPA since he told me I needed more help and advise than he could offer. :'(

 

Next time I think I'll read your posts more carefully before believing everything you say.

 

For the rest that posted, thanks for your good information. I honestly didn't realize there was no tax advantage for me by gifting to family and individuals. Although the family is not happy about missing out on the cash, there are several organizations that are estatic about my donation.:-)

[Guest Jerry]

>I'm trying to get creative and save on my taxes. Instead of

>"paying" an escort, can I gift him money (less than $10,000

>per year) for his yearly services?

 

I agree with Scorpio about the 11k per year per recipient gift tax exclusion and about the unavailability of an income tax deduction. However, a payment in exchange for services is not a gift. It is taxable earned income to the recipient, and it is not deductible for you. (If it were a gift, it would not be taxable income to the escort.) Furthermore, the law requires you to send a 1099 form to an escort if you pay him more than $600 per year for his services.

 

I realize that no one who reads this board would send such a form. And I suspect that most escorts do not report their receipts. I'm just giving you the facts about the law, not judging how you should act.

[Guest bighugbearphx]

> Furthermore, the

>law requires you to send a 1099 form to an escort if you pay

>him more than $600 per year for his services.

 

To clarify the above, this is required ONLY if you pay someone more than $600 a year FOR SERVICES TO YOUR TRADE OR BUSINESS. That would obviously preclude an individual from having to issue a 1099-MISC to an escort in normal situations!

 

Of course, escorts might work for businesses too ... video work, print modeling, perhaps paid appearances at gay business events ... and those would indeed be reportable. And as long as the escort reports NO LESS THAN the total of such forms on his tax return (and, on Schedule C, may be allowed some deductions related to that income), there should not be a problem.