Is Investment Income earned on Tithing still Tithing Funds?

[Chum]

2 hours ago, Danzo said:

Everyone uses loopholes to avoid paying taxes on their Income. 

Equating a simplified tax process offered to folks in poverty with purchased tax laws leveraged by corporations to escape the tax burden borne by countless smaller businesses seems like a fairly disingenuous thing to do.

[Chum]

2 hours ago, carbon dioxide said:

I am happy it does not collect taxes.  Politicians have enough tax revenue.  They just need to control their spending more.  Giving more money to politicians to spend is like giving more alcohol to a drunk. It does not promote more responsible behavior. 

It is my tax revenue. I prefer my church to pay into it, the same as entities who can't afford to purchase politicians do.

edit: Not saying the Church purchases politicians. That reference is just to frame the size of the entity.

Edited August 31, 2021 by Chum

[Chum]

2 hours ago, Amulek said:

If churches were to begin paying taxes do you think there would still be an obligation for them to stay out of government?

In other words, do you think there should be taxation without representation?

I think my church should voluntarily do both, because it can.

[Analytics]

 

4 hours ago, Stargazer said:

But even the IRS recognizes that interest or dividends generated from a principal are not the principal. As fungible as the money in the account is, the IRS does not tax the principal; only the interest. The IRS must therefore be able to distinguish one from another.

Interest income is a flow. Principal is a stock. Yes, the IRS can distinguish them.

4 hours ago, Stargazer said:

I don't recall offhand what your profession is/was, but accountants are not committing mental accounting bias...

I didn't say accountants were committing mental accounting. I said Smac was with his proposed methodology of distinguishing principal dollars from interest dollars.

4 hours ago, smac97 said:

This seems like a shell game.

Yes, money is fungible, and yet money from one source is treated very differently than money from another source...

If you'd like to think about it clearly, the flow interest income might be treated differently than the flow of tithing income, and both are treated differently than the stock of money they have. 

4 hours ago, Amulek said:

No, no it isn't. Mental accounting has to to with behavioral economics, not with any particular formalized system of accounting.

I wasn't talking about a formalized system of accounting. I was talking about Smac's ad hoc methodology for how to distinguish tithing dollars from interest dollars so that they could be treated differently. 

3 hours ago, Danzo said:

You really need to stop giving tax advice. 

You really need to stop beating your wife. 

3 hours ago, Danzo said:

In all of the years I have been practicing, I have never once, in Tax Court or dealing directly with the IRS heard them use the term Flows or Stocks.

That doesn't mean the difference isn't inherent in the theory underlying the system.

3 hours ago, Danzo said:

I know you don't like how the church spends or invests its money.  Thats ok, you don't have to like it, you have every right to not like it. 

I don't really care how the Church spends or invests its money.  

I feel they've been secretive and misleading to their donors, and I wonder if Ensign Peak Advisors is actually a Private Foundation and ought to be taxed as such. But I have no problem with what the Church does with its money.

3 hours ago, Danzo said:

But please stop saying how the IRS treats things until you actually know what you are talking about.    

Stop beating your wife until you get some counseling about how to control your emotions.

Edited August 31, 2021 by Analytics

[Danzo]

32 minutes ago, Chum said:

Equating a simplified tax process offered to folks in poverty with purchased tax laws leveraged by corporations to escape the tax burden borne by countless smaller businesses seems like a fairly disingenuous thing to do.

THe standard deduction is not just offered to folks in poverty, the standard deduction is offered to wealthing people as well.  In fact it is worth more to wealthy people than to poor people.  The same with itemized deductions. In fact there are poor people who can't take the standard deduction because they don't fit into that "loophole".

What about the "loophole" that allows extra standard deduction fo a blind person but not a deaf person?

I think you may call something a "loophole" if you disagree with it.  "Simplified tax process" if you agree with it.

All deductions arise because someone in congress created a "Loophole"

"Every deduction from gross income is allowed as a matter of legislative grace, and only as there is clear provision therefor can any particular deduction be allowed, and a taxpayer seeking a deduction must be able to point to an applicable statute and show that he comes within its terms."

 

[Stargazer]

1 hour ago, Analytics said:

I didn't say accountants were committing mental accounting. I said Smac was with his proposed methodology of distinguishing principal dollars from interest dollars.

Distinguishing them is what accountants do, too. It is not mental accounting.

[JustAnAustralian]

  

5 hours ago, Fair Dinkum said:

So the growth on money I put into my retirement account is not retirement money?

The growth on the principal is not the principal itself.

[Chum]

4 hours ago, Danzo said:

THe standard deduction ... within its terms."

 

Your point being that because you can apply the word loophole to describe diff income brackets then public funds really belong to politicians and super wealthy tax avoidance is a topic that needs changing because some bit of non-super-wealthy tax law is slightly less complicated than it possibly could be.

I think that hit on all your talking points.

[Ipod Touch]

On 8/30/2021 at 9:05 AM, smac97 said:

I disagree.  Interest on tithing money is not "still tithing money." 

[mfbukowski]

15 hours ago, Danzo said:

"Every deduction from gross income is allowed as a matter of legislative grace, and only as there is clear provision therefor can any particular deduction be allowed, and a taxpayer seeking a deduction must be able to point to an applicable statute and show that he comes within its terms."

There you go!

Saved by grace after all we can do!  🤨

[Fair Dinkum]

14 hours ago, JustAnAustralian said:

 

The growth on the principal is not the principal itself.

I think that is just a “distinction without a difference”  tithing money placed into an investment fund is still tithing money,   While it may be set aside to some future need it is still earmarked as tithing money. Just like any money I set aside for retirement is earmarked as retirement money. If my investments grows then the amount I have available for retirement improves as well and similarly if the church can get a good return on tithing it invests it has more tithing money to fulfill the mission of the church.  The problem is that President Hinckley stated that No tithing would go to build the Mall, and that statement is unfortunately not true.  We can parse words, spin our heads around and jump over fires but tithing funds were in fact used to build the city Creek Mall. 

I understand the need for those who feel the need to protect President Hinckley by parsing words and stretching the English language to lengths it was never intended to be stretched to to make your points.

[smac97]

1 hour ago, Fair Dinkum said:

I think that is just a “distinction without a difference”  tithing money placed into an investment fund is still tithing money,  

With respect, I disagree.  There are substantial differences between charitable donations (tithing) and revenue generated from the donee's subsequent investment of those charitable donations.

A charitable donation is defined principally by its source (the donor), the destination (the donee), the purpose (a gift, not a transaction).  It is an unconditional gift.  It is deductible by the donor. 

The source of a charitable donation is a donor (i.e., a tithepayer). 
The source of profit / revenue / interest is the donee's investment of the money in some sort of for-profit venture (stocks, mutual funds, real estate, etc.).

The destination of a charitable donation is a nonprofit organization (i.e., the Church).
The destination of profit / revenue / interest is initially a for-profit venture/investment, then back to the nonprofit organization (the donor has no role in the process).

The purpose of a charitable donation is for the donor to assist the nonprofit organization. 
The purpose of profit / revenue / interest is for the nonprofit organization to preserve and grow its resources.

A charitable donation is an unconditional transfer from the donor to the donee. 
Profit / revenue / interest generated by the donee's subsequent investment of the donation is not an unconditional transfer from a donor to a donee.

A charitable donation is deductible from the donor's gross income, and thus lowers the taxes paid. 
Profit / revenue / interest generated by the nonprofit organization's subsequent investment of the money is not deductible by the donor.

And so on.

1 hour ago, Fair Dinkum said:

While it may be set aside to some future need it is still earmarked as tithing money.

If I make a charitable donation of $1,000 to the Church, and if the Church invests some of that and generates $250 in profit from the investment, how much of that money is "earmarked" as a charitable donation from me?  $1,000 or $1,250?

1 hour ago, Fair Dinkum said:

Just like any money I set aside for retirement is earmarked as retirement money.

Not like that at all.  

A charitable donation is materially distinguishable from profits/revenue/interest derived from the donee's subsequent investment of that charitable donation.

1 hour ago, Fair Dinkum said:

If my investments grows then the amount I have available for retirement improves as well and similarly if the church can get a good return on tithing it invests it has more tithing money to fulfill the mission of the church.

Nope.  A donee's profits/revenue/interest derived from the donee's investment of that charitable donation is not itself a "charitable donation."

1 hour ago, Fair Dinkum said:

The problem is that President Hinckley stated that No tithing would go to build the Mall,

With respect, I disagree.  The problem is that a group of self-selected faultfinders are arbitrarily complaining and nitpicking and trying to equivocate and obfuscate because they are bound and determined to try to make the Church look bad.

1 hour ago, Fair Dinkum said:

and that statement is unfortunately not true. 

That statement was quite true.

1 hour ago, Fair Dinkum said:

We can parse words, spin our heads around and jump over fires

As you and yours are doing.

1 hour ago, Fair Dinkum said:

but tithing funds were in fact used to build the city Creek Mall. 

Tithing funds were in fact not used to build the City Creek Mall.

1 hour ago, Fair Dinkum said:

I understand the need for those who feel the need to protect President Hinckley by parsing words and stretching the English language to lengths it was never intended to be stretched to to make your points.

Right back atcha.  I understand that people estranged from and angry at the Church and its leaders feel the need to find fault and vilify the Church, even to the extent of relying on substantial mischaracterizations, falsehoods, and equivocations.  In the end, though, there are substantial differences between charitable donations (tithing) and revenue generated from the donee's subsequent investment of those charitable donations.

Look, there are plenty of good faith criticisms to level against the Church and its leaders, members, etc.  I will own that.  We have made plenty of mistakes and will continue to do so.  But this effort by you, Analytics, Huntsman, etc. to allege fraud/misconduct relative to City Creek is just not one of them IMO.

Thanks,

-Smac

Edited September 1, 2021 by smac97

[Danzo]

13 hours ago, Chum said:

Your point being that because you can apply the word loophole to describe diff income brackets then public funds really belong to politicians and super wealthy tax avoidance is a topic that needs changing because some bit of non-super-wealthy tax law is slightly less complicated than it possibly could be.

I think that hit on all your talking points.

I think you may be confusing the standard deduction with income brackets.  The income brackets determine the rate the income is taxed.  The standard deduction eliminates the income from tax in the first place.

In 2020, the standard deduction is 12,400.00 per person, 18,650.00 for someone filing as head of household.   For a person who is taxed in th 10% tax bracket, that deduction [loophole] is worth 1,240.00, for someone in the 37% tax bracket, that deduction is worth 4,588.

It gets better,  if a person were married, the deduction[Loophole]  jumps to 24,800.  If a couple is not married but there are kids, one parent can claim 12,400.00 and the other can claim 18,650 as head of household and their standard deduction (together) goes up to $31,050 not taxed at all. (Tax law highly encourages people to have kids without being married)

It can get even better. If the above could were self employed and had five children and had the 5 children work for the company and be paid $12,400 a child then all the inocme to the children would be income tax free, their salaries would be a deduction to the parents and the parents would have used the standard deduction to gain 62,000 tax free income from the children's standard deduction[loophole] and 31.050 [loophole] for themselves for a total tax deduction [loophole] of 93,050.00

If they were well off and in the highest tax bracket, the standard deduction [loophole] would have saved them over 34,000.00 in tax.

There are other ways to utilize the standard deduction [loophole] but that gives you an idea of how that particular loophole can be used by someone who knows how the standard deduction works.

 

Personally, I think some deductions[loopholes] are good and some not so good, but I think we need to call a spade a spade and recognize that whether a tax deduction is good or not is a value judgement, also, people usually feel that deductions they can use are "good" and those that only someone else can use are "Bad"

 

 

Edited September 1, 2021 by Danzo

[Danzo]

For those interested in what the IRS really thinks about non profit investment income they can look at the form non profits use to report the income, the IRS form 990

Page 1, line 8 is for reporting contributions(could be tax deductable for the giver)  and grants.  Line 9 is for reporting program service income, line 10 investment income, line 11 other revenue.  

There is no line for reporting investment income on money from  contributions seperate from investment income 

Page  9, Part VIII breaks down revenue, but only has one line (line 3) for investment income.  It is only broken down by whether the investment income comes from unrelated business revenue(which would have to be reported on a 990T

The IRS requires Inventment income to be reported seperately from all other sources of revenue, it doesn't require seperate invetment income reporting for the different catagories of income the non profit receives, (except for unrelated business revenue)

 

[rongo]

1 hour ago, Fair Dinkum said:

I think that is just a “distinction without a difference”  tithing money placed into an investment fund is still tithing money

Is your issue with the fact that it actually is tithing, or is it simply that the Church has vociferously denied that it is tithing? 

I don't understand the freak out, personally. I don't care whether tithing is used for XYZ (including City Creek or whatever), but I do understand the arguments of those who personally think that tithing should only be able to be spent on ABC, but not XYZ. To me, it's a silly thing to be hung up about, and a silly hill that the Church picked to die on ("no tithing was used for . . ."). I think choosing to die on the hill is a big part of the problem, and a self-inflicted wound.

I've shared this before, but Bishop Burton explained to me that there is only one checking account in the Church, period, despite the internal accounting categories. This includes Ensign Peak capital and dividends, donation receipts, and everything else. Money is not moved back and forth between separate accounts; the internal categories are for accounting purposes only, but there is only one checking account for the Church. I had asked about whether fast offering shortages are made up with tithing, and he explained that it was the wrong way to look at it, because both tithing and fast offerings and everything else is all in one big pot. 

I wonder if the Church simply agreeing that tithing is used for everything would deflate the issue, or if those who want to have a gripe with the Church will then try to "punch the cut opened up above the eye." They don't have to agree, because their perspective that tithing isn't touched within the internal categories is reasonable. But, I wonder if simply yawning and saying "So what?" would defuse this particular criticism or make it worse. Probably worse for some people, but they are probably already predisposed to want it to be worse. 

[Fair Dinkum]

4 hours ago, smac97 said:

With respect, I disagree.  There are substantial differences between charitable donations (tithing) and revenue generated from the donee's subsequent investment of those charitable donations.

A charitable donation is defined principally by its source (the donor), the destination (the donee), the purpose (a gift, not a transaction).  It is an unconditional gift.  It is deductible by the donor. 

The source of a charitable donation is a donor (i.e., a tithepayer). 
The source of profit / revenue / interest is the donee's investment of the money in some sort of for-profit venture (stocks, mutual funds, real estate, etc.).

The destination of a charitable donation is a nonprofit organization (i.e., the Church).
The destination of profit / revenue / interest is initially a for-profit venture/investment, then back to the nonprofit organization (the donor has no role in the process).

The purpose of a charitable donation is for the donor to assist the nonprofit organization. 
The purpose of profit / revenue / interest is for the nonprofit organization to preserve and grow its resources.

A charitable donation is an unconditional transfer from the donor to the donee. 
Profit / revenue / interest generated by the donee's subsequent investment of the donation is not an unconditional transfer from a donor to a donee.

A charitable donation is deductible from the donor's gross income, and thus lowers the taxes paid. 
Profit / revenue / interest generated by the nonprofit organization's subsequent investment of the money is not deductible by the donor.

And so on.

If I make a charitable donation of $1,000 to the Church, and if the Church invests some of that and generates $250 in profit from the investment, how much of that money is "earmarked" as a charitable donation from me?  $1,000 or $1,250?

Not like that at all.  

A charitable donation is materially distinguishable from profits/revenue/interest derived from the donee's subsequent investment of that charitable donation.

Nope.  A donee's profits/revenue/interest derived from the donee's investment of that charitable donation is not itself a "charitable donation."

With respect, I disagree.  The problem is that a group of self-selected faultfinders are arbitrarily complaining and nitpicking and trying to equivocate and obfuscate because they are bound and determined to try to make the Church look bad.

That statement was quite true.

As you and yours are doing.

Tithing funds were in fact not used to build the City Creek Mall.

Right back atcha.  I understand that people estranged from and angry at the Church and its leaders feel the need to find fault and vilify the Church, even to the extent of relying on substantial mischaracterizations, falsehoods, and equivocations.  In the end, though, there are substantial differences between charitable donations (tithing) and revenue generated from the donee's subsequent investment of those charitable donations.

Look, there are plenty of good faith criticisms to level against the Church and its leaders, members, etc.  I will own that.  We have made plenty of mistakes and will continue to do so.  But this effort by you, Analytics, Huntsman, etc. to allege fraud/misconduct relative to City Creek is just not one of them IMO.

Thanks,

-Smac

I'll agree to disagree however fortunately a judge is currently hearing this case and will decide.  If that judge rules against Huntsman, which is probably what will happen, then I will gladly admit that I was wrong.  Fair Enough?

[smac97]

15 minutes ago, Fair Dinkum said:

I'll agree to disagree

Sounds good.  Reasonable minds can disagree about all sorts of things, including important things.

15 minutes ago, Fair Dinkum said:

fortunately a judge is currently hearing this case and will decide. If that judge rules against Huntsman, which is probably what will happen, then I will gladly admit that I was wrong.  Fair Enough?

I think the judge will say that Huntsman's claims are barred by the ecclesiastical abstention doctrine, and will dismiss the case on that basis.  I don't think he will "reach" the point under discussion here (whether profits from a donee's investment of charitable donations are legally distinguishable from the charitable donations per se).

Thanks,

-Smac

Edited September 1, 2021 by smac97

[Vanguard]

6 hours ago, smac97 said:

Right back atcha.  I understand that people estranged from and angry at the Church and its leaders feel the need to find fault and vilify the Church, even to the extent of relying on substantial mischaracterizations, falsehoods, and equivocations.  In the end, though, there are substantial differences between charitable donations (tithing) and revenue generated from the donee's subsequent investment of those charitable donations.

Look, there are plenty of good faith criticisms to level against the Church and its leaders, members, etc.  I will own that.  We have made plenty of mistakes and will continue to do so.  But this effort by you, Analytics, Huntsman, etc. to allege fraud/misconduct relative to City Creek is just not one of them IMO.

Thanks,

-Smac

And that's my point. Some who disagree with you cannot admit that your position is imminently reasonable without losing their leverage. For myself, I can understand their reasoning though it doesn't make the difference in my final conclusion.  

Edited September 1, 2021 by Vanguard

[Vanguard]

1 hour ago, Fair Dinkum said:

I'll agree to disagree however fortunately a judge is currently hearing this case and will decide.  If that judge rules against Huntsman, which is probably what will happen, then I will gladly admit that I was wrong.  Fair Enough?

But this cannot be strictly about what conclusion a judge renders. Should s/he render a decision that counters the Church's stance, I can accept it and still believe the decision is wrong though reasonable. It in no way affects how I feel about the Church, however, considering that I believe their own position is reasonable on a moral level. Are you able to agree to the same should the courts decide in favor of the Church? Or will you still claim they are morally at fault? Your answer would speak volumes... 

Edited September 1, 2021 by Vanguard