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April 15 2019

Welcome. Rod's Homepage. This is a Homepage and 7-page Passive Private NonForProfit Website. Now it's time to Tune out the noise back to 70s 80s 90s.

Updated: 10/23/2018

Now, April 15, 2019, Rod will have to submit a similar letter and documents something similar to this to the IRS when Rod file his taxes. Rod is no accountant. Rod tried that minor at UNLV until Rod got to that one Accounting class and, Rod thinks Rod got a D+, D-, or F; but whatever Rod had to repeat that class. Rod started one more semester, but turned it into an audit after that first mid-term. Then Rod tried it again, turned it again into an audit. Rod changed that minor to Law and passed. So, Rod is no CPA or CFO caliber in doing accounting, book keeping, or taxes, in the area. But, Rod has common knowledge of what you can find on the internet. Rod uses the two Websites to support his common knowledge position to the IRS at tax time next year.

     Of course, Rod will add a list of the text books that Rod used to complete studies. 

     2017-2018 Cost of Attendance Estimates for Graduate Students (Tuition Not Included of $6,158, Total Estimate per year, $27,752). College is not cheap; Students doing school studies handles quite a few expenses each year and this is on the cheap estimate for Las Vegas. So, students doing studies, many need some help from you family members, even if it is small amounts here and there. For example according to UNLV Tuition calculator:

Living Off Campus

Rent & Utility Expenses           $10,342

Food Expenses                       $4,044

Books & Supplies Expenses     $1,298

Transportation Expenses         $2,730

Misc. Personal Expenses          $3,180

“U-N-L-V.” Tuition and College Costs | Apply | University of Nevada, Las Vegas, www.unlv.edu/apply/college-costs

     In contract law, two people can agree to anything. But it does not mean the IRS will agree in accounting law. You have to submit it to them and see. Let’s say an agreement was made to make an accruing loan for over a couple years, but the amount was not predetermined, to be determined at the end of the loan period, for doing independent college studies between a parent (mom, personal loan) and a child. It agreed to be at 0% since the loan would be so small, and treated, treatment, like a student loan, to be paid off at a determined date depending on the balance of the loan at end. Intermediate payments could be paid between the beginning and end of the determination of the lump sum to be paid at the end, before five years. The son, Rod, agreed to handle the accounting part. He has to draw up a contract at the end of such period. At the end of the study completion, the loan amount was determined to be xxx at % interest payable in a lump sum in five years or less. The period ended xxx. This will be considered a long-term loan, maybe.

     However, Rod will probable run this by an accountant for submitting it to the IRS. The IRS may want to argue the loan is a gift because there is no interest, but the loan is not over the $15,000 (or $10,000 talked about below, "You lend a child $10,000 or less, and the child does not use the money for investments, such as stocks or bonds to consider to be taxable for 2018.")

     Rod will considers this agreement to be a loan because Rod does not know if it makes since to gift someone a Student Loan. It is a loan to be used for cost involved in studies, accrued over-time like his Student Loans from Navient, ECSI, Department of Education, but differently with no interest, because the loan amount is so little, and family of course, which an accountant may determine to be a gift. In that instance, he will record it as a gift; but still pay the loan back, depending on the accountant suggestion, but the interest will remain at zero with no consequences filing as a gift because no taxes due on the small amount, maybe.

     Rod has made small loans, and repaid them to his mom since Rod was in High School; mostly food money, gas money, something for school, or medical, or some other survival items under $100. Rod view that the IRS is not as concerned about such small loans, as a big ticketed item like a house, from a family member is common knowledge, reasonable person, or maybe even a trier-of-fact, supported in the article, “Family Loans: Does the IRS Care If I Lend My Kids Money?” TaxAct Blog, 22 May 2018, blog.taxact.com/family-loans-lend-my-kids-money.” No Rod can't remember every small loan he borrowed from his parents. These never amounted to much before being repaid short-term. 

    These are some common tax consequences at issue that may apply April 15, 2019 from the below two articles:

Family Loans: Does the IRS Care If I Lend My Kids Money?” Tax Act Blog, 22 May 2018, blog.taxact.com/family-loans-lend-my-kids-money 

“Filing a gift tax return for a loan. In most cases, you won’t have to pay taxes for a “loan” the IRS deemed a gift."

“You only owe gift tax when your lifetime gifts to all individuals exceed the Lifetime Gift Tax Exclusion. For tax year 2017, that limit is $5.49 million. For most people, that means they’re safe. Other family loans that are safe from tax consequences. "You don’t have to worry about family loans being subject to gift tax rules if: You lend a child $10,000 or less, and the child does not use the money for investments, such as stocks or bonds.”

“As a parent, there’s a chance you may lend your kids money throughout life. Maybe it’s to buy a bicycle, to get their first car or even to purchase their very own home. But, when you fork over cash to your family, does the Internal Revenue Service (IRS) care about those loans? For small loans, the answer is simple – no. The IRS isn’t concerned with most personal loans to your son or daughter. They also don’t care how often loans are handed out, whether interest is charged or if you get paid back. But, as with most things, there are exceptions to that rule.

"Student loans for tuition. You can give “student loans” to your kids by drawing up a contract like any other loan. When they graduate and start making payments, the kids can take the student loan interest deduction on any interest paid to you. You will have to pay taxes on that interest income.”

“Interest-free loans. If you loan a significant amount of money to your kids – say, enough to buy a house – it’s important to charge interest. If you don’t, the IRS can say the interest you should have charged was a gift in that case, the interest money goes toward your annual gift giving limit of $14,000 per individual."

"The loan must be legal and enforceable. Otherwise, it may be deemed a gift."

"Fortunately, it’s easy to make a loan legal. Write a note that shows the loan amount, when it will be paid back, the rate of interest, and any collateral or security.”

“About Sally Herigstad. Sally Herigstad is a certified public accountant and personal finance columnist”

Garber, Julie. “How Is the Gift Tax Calculated, and When Do You Owe It?” The Balance, www.thebalance.com/how-is-the-gift-tax-calculated-3505674

“Another important consideration is that not all gifts are taxable. Dad could pay his son's tuition bills or medical expenses in any amount without incurring a gift tax,"

“The Annual Gift Tax Exclusion. It all starts with the annual exclusion, which lets you make gifts of up to $15,000 per year per person tax-free as of 2018.”

“When and Why You Must File a Gift Tax Return. You must report gifts over the annual exclusion to the IRS on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. This records how much you've gone over the annual exemption each year—the amounts that count against your lifetime exemption.”

“The Balance makes personal finance easy to understand. It is home to experts who provide clear, practical advice on managing your money. Whether you’re looking to invest, buy a home, save for retirement, or achieve another financial goal, The Balance’s 20-year-strong library of more than 9,000 pieces of content will answer your questions with straightforward personal financial advice.”

     In conclusion, Rod will seek accountant advice before filling taxes in 2019. Well, I, Rod, hoped you learned something from this piece he wrote; he sure is. And if it is all wrong, that is how much he knows about taxes. When he was in Business, a bookkeeper service did his end of year taxes. Yes. Rod speaks in third-person-self; something new he started. 10/23/2018