Monday, March 2, 2009

Damn Uncle Sam

For years, I have been telling people that FIFTY PERCENT OF THEIR PROFITS GO TO THE GOVERNMENT.

No one listens.

I am not going to go out and do the math for every one of you out there, but that's the percentage. Get used to it. Plan for it.

One problem arises when you do do everything you can, and earn a good living, and then the person you've spent your life with dies, and because of bureaucratic red tape, you have to pony up hundreds of thousands of dollars.

Enter Annie Leibovitz.

(Continued after the Jump)

After Ellen reports (Annie Leibovitz is in a jam) that most of Annie's financial problems have come about because when her partner Susan Sontag died and left Annie several properties, Annie had to pony up FIFTY PERCENT of their value in taxes in order to keep them. Had Annie and Susan been seen in the eyes of the government as a legal couple, Annie wouldn't have had to pay anything.

Now, this isn't the place for a debate about same-sex marriage, and so on, so don't bother with that in the comments. The state should recognize Annie and Susan's relationship in some way so as to not tax the living hell out of them AGAIN. The problem is that those properties were purchased with after-tax dollars (likely), and the government is treating the assets as if they were transferred to some unknown third party, and re-taxing them.

Damn Uncle Sam.

Please post your comments by clicking the link below. If you've got questions, please pose them in our Photo Business Forum Flickr Group Discussion Threads.

14 comments:

Anonymous said...

I'm not an accountant, but I think there is a big 'death' tax regardless of the familial relationship.

I remember at least one business that had to be sold because a surviving spouse could not pay the 50% inheritance tax.

Don't think this is a same-sex or not-same-sex problem at all.

But, again, I'm not an accountant.

Sure sucks, that's for sure. The last thing you should have to worry about during a time of incredible loss like this is the tax problems.

pcb said...

yes, the country has debated about this over and over, the "death tax" (estate tax)... well, guess what... the death tax isn't going anywhere anytime soon. In fact it will increase in 2011 to 55%.

Originally designed to pay for war, the death tax has been enacted 4 separate times for 4 separate conflicts. The only time it wasn't repealed after the conflict ended was after WW1.... and it was only 10% then, but has since climbed as high as 77%

GW Bush lowered the rates in 2001, but those rules will expire in 2011. And don't think for 1 second that the gracious geniuses we hired to run our country for the next 4 years will do anything about extending the discount... We elected the wrong people in november!

Ron Paul 2012!!!!

Anonymous said...

I'm not an accountant either, but I think the problem is really that Annie did not have ownership in the properties before Susan's death. If you both have ownership, then there is no tax liability, as I understand it.
Being married helps smooth the path to joint ownership, since you can take half ownership with no current tax liabilities.

Whether you are married or not, you do in fact have to be willing to share ownership, however. If a spouse (heterosexual or homosexual) does not want to sign over joint ownership of a property, then the surviving spouse has a tax liability. That's the price of not co-mingling assets.

In any case, good estate planning would have avoided this problem, in all likelihood. If you have a multi-million-dollar estate that is asset rich and cash-poor, then it's up to you to plan for passing that on to your loved ones.

As to general fairness, and double-taxation, most of these kinds of assets have appreciated significantly since first purchased (at least until Bushco nuked our financial system). Why should a day-laborer have to pay tax on every penny he earns, while a multi-hundred-millionaire can "earn" wealth tax-free by simply not losing his inheritance?

For the record, I agree that same-sex marriage should be allowed, whatever it's called.

Ken Hagler said...

The death tax is one of the planks of the Communist Manifesto. Sadly, it would take a civil war to even have a chance of getting rid of it at this point.

Anonymous said...

"Ken Hagler said...
The death tax is one of the planks of the Communist Manifesto."

Hagler, you're a brainwashed moron ignorant. You didn't change since 5th grade!? Try to talk about what you know. You'll save time, by the way...

Michael Sebastian said...

Hey, Anonymous--if you're going to call names here, at least have the stones to sign your own name to your sophomoric invective--if indeed you're the same "anonymous" posting both of the above "anonymous" comments; and other snarky remarks on other posts here.

And you might pause to pull your head out of your a-- before you repeat the tired Democrat class-warfare talking point about GWB nuking our financial system. You might thus learn that the current economic crisis was caused by government interference and idiocy of longstanding across the political spectrum. (Ever heard of Barney Frank and Chris Dodd?) Of course, to do so will require mastery of words with three syllables, and after-school reading of something more challenging than Cosmo or Maxim.

As for same-sex marriage: the libertarian answer is to have the government out of the business of sanctioning marriages, gay or straight. Let individuals make relationship "contracts" between them outlining stuff like postmortem or post-separation division of property and other assets; government's role, as with all contracts between private entities, should be limited to enforcing the agreement. Any couple could then seek religious blessing separately, from any religious body that is willing to provide it.

Michael said...

Well put Michael. Could not have said it better.

Bill Bogle, Jr. said...

It is not a simple case of married or not. Sure, between spouses, there is no tax liability for a transfer, even at death, so the surviving spouse does not have pay the tax then, but each person has an exemption up to the maximum state and federal estate tax floor. If Susan and Annie were married, then Annie could have inherited the property, or been a joint tenant, and not pay tax, but when Annie died, her basis in that property is what Susan bought it for, so the tax man cometh then. Susan's Estate would have gotten the estate tax exemption when her estate was probated. What we are dealing with is extremely high valued property, and hence the tax. Own three townhouses in NYC and a farm in Dutchess County and you pay the tax on the date of death value. The tax is the least, but the liquidity needed to pay the tax is one that is a real problem in this economy. Think owning Enron stock before you died, and then having to pay the tax on the value as of the date of death with the non-existent dollars once the stock tanked. A very real problem today.

I feel for her, as she is very talented, but left with the bill to pay now.

Bill Bogle, Jr.
www.BoglePhoto.com

Anonymous said...

Call me whatever you like, but I guess you could say that this is a case of the "Have nots" having no sympathy for the "Haves". Ms. Leibovitz is in no financial bind... she has been left a small fortune of properties. She can sell them, pay the taxes and still have much, much more than if she didn't inherit anything at all. There are many out there who would be more than happy to have such problems.

Anonymous said...

The election results this past November revealed that 60+ million voters have no problem with the government taking money from one group of people and and giving it to another group of people. Until that changes, keep writing those checks, America...

Gene Forsythe said...

I have to second the comments above concerning estate planning.

People making lots of money and/or holding large estates of property and cash are individually responsible for properly planning for their demise.

There are many available mechanisms which leave the survivors with control over the estate while reducing (in some cases, eliminating)the death tax liability.

Marital status is a non-issue, as is does not apply to children and other blood relatives.

The bottom line is to treat your inheritance with the same respect and planning that you treat your annually recurring tax liability.

Gene Forsythe

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kickstand said...

You say "this isn't the place for a debate about same-sex marriage", yet your post is one of the most powerful arguments in favor of it that I have heard.

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