Update on Huntsman Lawsuit: Ninth Circuit Reverses Trial Court

[Danzo]

4 hours ago, Teancum said:

I don't.  Do you?  My point is you can't say nothing came from principle unless separate accounts are set up.  The judge i incorrect here.

Might not.

In funds based accounting it isn't necessary that there be a separate bank account for each fund. The restrictions on the funds are noted in the financial statements.

Nothing annoys me more than when a non profit thinks all the different funds have to be in different bank accounts.  You end up getting 20 bank accounts with most of them low dollar amounts. 

 

[ttribe]

48 minutes ago, Danzo said:

In funds based accounting it isn't necessary that there be a separate bank account for each fund. The restrictions on the funds are noted in the financial statements.

Nothing annoys me more than when a non profit thinks all the different funds have to be in different bank accounts.  You end up getting 20 bank accounts with most of them low dollar amounts. 

 

There is no fund accounting at Ensign Peak.

[Calm]

7 hours ago, smac97 said:

And yet there is no evidence of misuse.

I was speaking generically because I assumed you were talking about a general principle applied to the Church.

I agree there is no evidence of misuse of funds, even if I might choose to use them differently. 
 

——

I have been thinking of the argument the Church’s wealth comes primarily from tithing.  There seems to be an assumption that the vast majority of donations to the church historically was tithing and I am not sure that is so.  It is understandable why someone looking at the way the Church operates today with donations where they have pretty much eliminated all the separate donations that once supported many programs in the Church.

I was told by my grandparents their ward raised all the money to build their chapel and contributed much of the labor and iirc up till I was in college, members were still expected to raise at least half the funds for building costs and this was most definitely not considered tithing.   It would seem if my memory is true and the process was consistent over the years (a big assumption) that most chapels built before the 70s were not built with tithing.  We had donations for the ward budget, endless fundraisers for running the youth programs, raising funds for missionaries, contributing to the hospital run by the Church (did they just give Primary’s Children to IHC or did they sell it?), and no doubt others I have forgotten.  

There have been several temples I am aware of where the land was donated and not as tithing.  The Newport Beach temple was, I just read, paid for by donations from locals and the Nauvoo Temple was also a special case iirc and built with donations and not tithing.  I highly doubt that I am aware of more than a small percentage of such donations, so likely a tip of the iceberg.  The Church started off with no tithing donations that I am aware of.  While they likely did a collection plate like others, I haven’t read anything that indicates tithes were the majority of church revenue in the beginning.  There is a reason why church leaders were involved in money-making attempts.  Remember that Martin Harris and others donated directly for certain projects like publishing the BoM, which was then sold.  Martin even thought he might get some money back from the sale iirc, but I don’t think he did.  Members have been giving gifts of money and labour beyond their tithing since the beginning.  It sounds to me from what I have read over the years there were times tithing collection yielded little and it was therefore never considered the solution to debt issues, instead other methods were used, at least up to 1899 when treatment of tithing became more consistent, more central to our teachings due to the revelation Pres Snow received and became more of an issue of worthiness.  
 

There were a lot of chapels and a few temples built and a lot of businesses started prior to this time (1899).  It is a big assumption, imo, to assume tithing was the only real or even primary source when the Church had so many other avenues of revenue from the membership in the early days to build wealth on.
 

More recently I don’t know how much of missionary work is covered by nontithing, but besides the money sent in by missionaries, there are many who donate to the general fund such as by my family due to there being a big gap between my son going and now my grandson going, which donations could very well be in excess of what is needed,  Such excess would likely get invested just as tithing excess is.  There was the PEP fund, which stopped asking for donations because more than enough was donated to cover future needs as well.  Excess there gets invested and the investment returns likely now funds the entire program.  Same thing has happened with the Church Temple Patron Fund which helps those who cannot afford to make  trip for their own ordinances cover the cost,

Even now while it’s likely the majority of revenue from members is tithing—because the Church has stop asking for other donations for church needs—we hear of rich members donating quite a bit on top of tithing, such as Huntsman senior allowing use of his plane when needed.  There is even a special department to get help with setting up the Church as a beneficiary of one’s estate, I believe ( there was a not so great video suggesting that awhile back that leads me to assume there are a few church employees who specialize in this area of donations).

Historically speaking, tithing might have been a small part of the labour and other gifts given to the Church in the beginning to survive.  Working on the Church farms and in the canneries (done much more often when I was younger) was never counted as tithing when assignments were given in my wards.  There is a lot of land owned in Utah and around by the Church, not all nonprofit making.  There is a very good chance that did not come from tithes, but was part of the overall neighborhood improvement efforts where irrigation ditches and roads were built along with people’s homes and barns and community buildings.  People got land just by working to improve it with the Homestead Act, the only fee was to record it.

I wonder if Quinn’s research addresses this.  The Church also looked for different ways to support the work.  It is probably made more confusing by the mixing of the personal estates of Joseph and Brigham and possibly later presidents with church assets. 

From what I recently read from Michael Quinn, the Church had a major overhaul in how it dealt with finances when Eldon Tanner took the helm of the financial department….which suggests to me assumptions based on today’s practices are likely to lead to the wrong conclusions about past income.  Tithing was originally only 2% until 1838.  In 1844, they went a little overboard imo in trying to systematize tithing, not taking into account past payments whether to simplify things because records were lacking or they thought it a necessary sacrifice. (Apparently not too necessary though because the top leaders exempted themselves for their service to the Church, in essence their labour was seen as amounting to more than 10% of their wealth…maybe they were right, I don’t know how busy members kept bishops back then, if they had much time to work farms or other businesses, it may have been their only option for some because they didn’t draw an income in other ways….but some leaders were pretty well off compared to the typical lay member.  Grateful the exemption no longer exists as it doesn’t make sense given the context of the teaching.  Better even leaders pay tithing and then get help for their families if needed through offerings. Looks like the history of dissatisfied members worrying about those who struggle to pay tithing when in need has a long history too (John E Page was the tithing collector for the Church and he apparently couldn’t stomach asking for money from the poor).  And while tithing nonpayment was cause for excommunication, it seems to have been enforced sporadically.  In 1868, 3/4 of one community (possibly all of southern Utah) were not full tithe payers.  BY believed less than 10% were full tithe payers from 1847-70.  Tithing revenue amounted to less than 1% rather than 10%.  Many bishops excused those in hardship from paying.  Efforts to get better compliance failed.  The Church couldn’t have survived, I am guessing, on such a low level of tithing compliance during a period of expansive growth including helping cover costs for emigrants.  They had to have other revenue coming in….which would mean the original source of church wealth is not built solely or even mostly on tithing.

Pres. Snow’s revelation tidied things up, made it simpler and cheaper as converts did not have to tithe on all their wealth, but just pay on incoming income, and it now included leaders being required to pay (on a list of 10,000 non compliant members, one was an apostle, so most apostles were paying tithing at that point).  Tithing moved to worse than WoW (alcohol and tobacco) as a violation.

What I have seen in my lifetime of 60+ years underscores that as well.  One of the possible conclusion one could draw from the fact there is so much excess tithing plus this reserve of tithing and the interest of this tithing does not appeared to have been touched much even though the Church has expanded its building of temples and chapels and even though a good portion of our membership is from less well off countries is that the Church has significant sources of wealth from nontithing sources.  And given the history of the Church’s revenue being a mixed bag of tithing donations; budget, building and other ward fundraising donations; missionary and other special funds donations (like the PEP); and likely extensive real estate assets from homesteading efforts that were donated to the Church or included in building up of towns (land set aside for churches and storehouses), I don’t think it is wise to assume pre 1899 that the primary source of revenue for the Church was tithing or that nowadays there isn’t a significant percentage of nontithing revenue from donations such as the missionary fund and until recently the PEP and other semi humanitarian funds.

Added:  deleted as I think I misunderstood him.  Will hopefully say more later in the article to clarify.

Edited August 25, 2023 by Calm

[Calm]

Early church businesses:

 

 

 

Does anyone know the extent of Quinn’s research  He lists these companies, but was he able to find what was use as capital to start these companies.  After reading of what in my view were too unregulated tithing practices of the first century of the Church’s existence, I would really like to see his records of tithing income the Church received.  I assume he had those, but he might have only the lists of full tithe payers and what was owed to be a full payer.  It is kind of a miracle they had any revenue from tithing at all from the way he explains it.

And oops, I forgot the link:

https://sunstone.org/wp-content/uploads/sbi/issues/102.pdf

Edited August 25, 2023 by Calm

[Calm]

I have been trying to find records of tithing revenue and have so far only been successful once, but very interesting article on an incident where a less than friendly tax officer decided the Church should pay taxes on tithing…back in 1869.  It includes this description of tithing for the previous year:

.

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Cash was scarce in Utah, and residents had little opportunity to earn cash before the early 1870s.[70] In fact, of the $143,372.77 that the tithing office received in 1868, only $25,114.12 was in cash.[71]The rest was paid in labor or in goods.[72] Young explained to Commissioner Delano that tithing donations were nearly always received in-kind.[73]

https://rsc.byu.edu/business-religion/omit-paying-tithing

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And were tithe payers making gifts to the church? Absolutely, said Young. He disputed the affidavits Taggart had collected from nonpayers who claimed that enforcement of tithe paying led to “‘temporal as well as spiritual ruin, if not the loss of life.’ I totally deny their veracity, and brand the latter assertion as a malicious insinuation (as black as the soul that invented it.)”[79] While nonpayment of tithing may have been an additional factor in the excommunication of certain individuals, it had rarely, if ever, been the sole cause of excommunication.[80] He doubted that half the members of the church paid tithing, and he himself “sometimes [paid] a little, but not as much as I should.”[81] In any event, Young denied excommunication was as ruinous as Taggart and Hollister believed—he knew of individuals who had joined the church for financial advantage, and others who had left it for the same reason.[82]

I wonder how accurate tithing clerks were in estimating the value of the in kind donations.

Quote

A bishop, Young’s clerk explained, might collect twenty gallons of molasses as tithing, which would be recorded as a $40 tithe, meaning the church would owe $2 of taxes on the tithing. But it would cost the church $13.20 to transport it to Salt Lake, and its market price would be between seventy-five and ninety cents per gallon. At the low end, then, the twenty gallons would bring in $15, and the church would have a net revenue of $1.80.[86] If the assessor used church records to determine income, then, it was possible for the assessed tax to exceed the church’s net revenue on the tithing.

*****very useful tidbit

Quote

Financially, moving away from tithing would also represent a significant sacrifice and challenge to the church. Tithing made up a significant portion of its revenue—a decade after Young proposed ending tithing, it represented about $540,000 of the church’s $1 million revenue.[108] If the church were to give up tithing, it would have to replace at least half of its revenue, with no guarantee that the Bureau of Internal Revenue would not treat the replacement as taxable as well.

Now if only we had that for every year since the beginning of the Church, once every ten years would be more than enough.   

Edited August 25, 2023 by Calm

[Calm]

A word of caution using Quinn’s conclusions about the church’s finances, apparently he was not as familiar with the material (or maybe it is more precise to say with the implications of the material he had access to) as he should have been, which lack led to misstatements and inaccurate conclusions.

https://bycommonconsent.com/2017/12/07/book-review-the-mormon-hierarchy-wealth-and-corporate-power/

For example:

Quote

Honestly, I’d be shocked if any historian thought $10,000 in 1899 was a modest annual income. But this explanation suggests that Quinn’s lack of financial sophistication, and the siren call of easy internet calculators, led him to believe that giving the modern value of old dollar amounts was both necessary and sufficient. And I feel like the seduction of the CPI calculator kept him from carefully evaluating the relevance and importance of dollar amounts, replacing them with a facile comparison.

Quote

Quinn calculates that in 2010, the church collected about $33.7 billion in tithing revenue.[fn7] Given that the church is notoriously opaque when it comes to finances, how did he arrive at that number?

Well, he has data from 1950-1960. During that decade, tithing was growing at a “mean average” [sic] of 12.9 percent annually.[fn8] So he estimated that tithing revenues continued to grow at a 12.9 percent rate year after year.

The problems with that approach are legion. First, it’s hard to point at the 1950s as a good baseline year. The post-WWII years were an economic boom time in the US, with huge GDP growth and enormous economic expansion. Then we had recession and stagflation in the 1970s, we had a recession in the 1990s, and the 2000s have hit us with a couple recessions, too. So a consistent growth of 12.9 percent, based on a golden decade, strikes me as unlikely.

Also, the growth center of the church shifted. In 1960, 90 percent of church members lived in the (relatively affluent) United States. Another 4-5 percent lived in Europe. At the same time, only 2 percent of church members lived in South or Central America.

By way of contrast, today, of the 15.9 million church members worldwide, only about 42 percent live in the United States. Nine percent live in Mexico, 25 percent in South America, and 3 percent in Africa. Church growth since 1960 has been disproportionately strong in developing economies, so I suspect that, even if the 1950s hadn’t been a poor baseline economically, it would still be a bad population demographic baseline.

Of course, Quinn didn’t have current data (or any data from the last half century), so wasn’t this extrapolation the best he could do?

No. He could equally well have told us that the 1950s had an average (or mean, or whatever he actually means there) growth of 12.9 percent, that the church hasn’t released anything since, and that, given economic and demographic changes since the 1950s, it is impossible to determine the amount of tithing revenue the church brings in. Maybe it’s less satisfying, but it’s more accurate.

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But I’m not convinced that he worked hard enough to understand the data that he had; he certainly didn’t construct an accurate or compelling story about the Mormon church and money. And I’m not sure that he even established a baseline for the story that I hope will one day be told.

That is unfortunate, but maybe the book has just the numbers I am interested in, I don’t need Quinn’s commentary, I just want to know what percentage of the Church’s revenue has been tithing over the years.  If for the first few decades, it was close to 100% and only after business bought with tithing started producing income do we see a drop in that percentage, that would be very different than if there was only slightly over a majority of the revenue that was tithing from the beginning as that would suggest seed money was much more than just tithing.  Early church finances must be nasty to figure out though given the changes in tithing, especially the first attempt at living the Law of Consecration, the United Order attempts, the bankruptcies and the moving of the center of the Church slowly west as struggles appeared.  Quinn also talks about money going out in loans, etc to more prominent members, but does not mention that I remember any revenue coming from them…which seems unlikely.

Edited August 25, 2023 by Calm

[Analytics]

13 hours ago, smac97 said:

Truth matters, after all.

I'm glad we can agree on that. Since you really believe that, please try to remove your current paradigm and take a fresh look at the following post made on the bottom of page 3 of this thread on June 15, 2015, by @kimpearson. The post received up-votes from GingerRed, Raingirl, Duncan, ksfisher, SeekingUnderstanding, racehorse, Gray, Mormon, cinepro, Danzo, Stargazer, Okrahomer, Hamba Tuhan, Calm, Congo, HappyJackWagon, JAHS, and bluebell.

To avoid accusations of cherry picking I'll quote the whole thing, but I will highlight the parts that I think are significant.

Quote

I am a CPA who has actually worked with the Church on money issues.  I haven't seen this discussed so I will try to add something to the conversation.

The Church of Jesus Christ of Latter Day Saint has two basic legal entities that it controls.

One is the non for profit entity we all identify as the Church.  All donations made to the Church through the donation process of each ward and branch go to this non profit entity.  This includes tithing, fast offering, missionary, perpetual education fund and humanitarian fund.  Members can and do make specific donations to the Church through gifts, wills and estates.  All of these funds by law must be kept in the non for profit legal entity.  Donations from these funds can be made to other non for profit entities such as the American Red Cross.  This non for profit entity does keep some reserve funds that are invested in very conservative investments but would only sustain the operations of the non for profit entity for a very short period of time.  The non for profit entity of the Church really does operate on the donations of members.  Primary uses are buildings, missionary, education including Church schools and seminaries and fast offerings.

The second entity controlled by the Church is a for profit entity that pays taxes like any other for profit business entity.  This entity I believe includes mainly land (ranches, farms and urban real estate), investments such as stock and bonds and now days a very limited number of businesses such as Deseret News and KSL radio.  The original source of funds for these businesses came primarily from the businesses that the Church established in the late 1800's and early 1900's including ZCMI, U&I Sugar, an Insurance company and a bank.  This entity also owned significant real estate that was sold.  Over the years the Church has actively managed these businesses.  Towards the end of the twentieth century, the Church sold its ownership in many of these businesses and kept only a few that aligned with the purpose of the Church.  As you can imagine, these sales generated significant cash.  These are the source of funds used to finance City Creek.  No donations from Church members were used to finance City Creek.  That would break laws and cause the Church to lose its tax exempt status.  The Church did not use funds from donations to start the original business either.  Most of the time money was borrowed to start these businesses and the Church was the only entity large enough to secure the loans.  I am sure that it is very possible that some donations were made back then that were used to pay some of the loans back but it would have been very limited.  Most of the tithing funds back then were in kind and there just wasn't that much hard cash.  Actually many of the early businesses were partially owned and operated by general authorities who eventually donated their ownership to the Church.  Its very difficult to determine exactly where funds came by in this time period as the records just aren't that good.

The one fund referred in numerous post above by Brother Burton would be only the fund of the non for profit entity.  All donations do go into this single bank account in the United States.  The banking in all foreign countries is handled based on the laws of that foreign country.

There is no cross mingling of funds between the two entities.  The closest thing is that the living allowances for general authorities comes from the for profit entity which is allowed by law to make contributions to a non for profit entity.

Both the for profit and non profit entities have been audited both by public accounting firms and government agencies.  Believe me, the Church has very sophisticated accounting systems and employees to make sure it complies with all laws.  If the statement was made that no tithing funds were used, I am confident that is the case.  Why would the Brethren make such a statement if it were false and could be proved false very easily by either the Federal or State government and would put the Church at a high risk of government penalties.

Just my two cents based on my understanding and what limited pieces of the Church finances I have seen.

What's important to keep in mind is that the phrase "tithing funds" is actually a bit ambiguous. It might simply mean "tithing", but it might also mean "the sacred funds into which tithing is deposited."

With 20-20 hindsight, I think kimpearson was mostly right about what he said. There is a non-profit legal entity, the Church itself, which also includes its own non-profit integrated auxiliary, Ensign Peak Advisors. 

There is also the for-profit entity, which includes the for-profit businesses it owns, which I'd broadly refer to as Deseret Management Corporation (DMC).

So from this perspective, the phrase "tithing funds" is shorthand for all of the funds in the non-profit legal entity, including the reserves, including both principal and interest. Hinckley wasn't implying that he had a magical checking account where he could withdraw $1.5 billion and specify that the specific dollars he was withdrawing were interest dollars and not principal dollars. And he wasn't implying that there was enough accumulated interest on unspent tithing to cover the cost.

He was implying that the sacred funds into which tithing donations were deposited would not be used for City Creek. 

That is the way kimpearson CPA interpreted Hinckley's assurances, and I think it is fair to give James Huntsman the benefit of the doubt and think he sincerely believed what kimpearson did for the same reasons.  And if you reread the old threads I've linked to from this paradigm, most of the comments are a lot more consistent with this paradigm than they are with the paradigm that "tithing funds" was intended to strictly mean tithing principal and not interest.

[Analytics]

14 hours ago, smac97 said:

Because unlike you, I have a track record of calling a spade a spade in relation to legal issues affecting the Church.  I have acknowledged when the Church has erred, but also when it has done right.  

Because unlike you, I have the training and expertise to evaluate the legal principles at issue here.

I'm not saying I'm impartial.  I'm saying I can put my partiality aside and view legal disputes with a pretty clear lens.  I don't think you can do this. ... For you, the Church is always wrong, always bad, always dishonest...

When I originally read this I just laughed it off as a baseless personal attack and as further evidence of you resorting to name calling because you can't effectively deal with the evidence I'm presenting. But I've been thinking about it and want to comment on it.

Last year I was called in as a non-testifying expert in a legal dispute between two entities that both had resources roughly on the same order of magnitude of the Church's. Potentially billions were at stake, and the dispute was way past the point of compromise. In addition to spending hundreds of hours going through documents and writing up my thoughts, I spent hundreds of additional hours working directly with teams of lawyers from white-shoe law firms formulating arguments, going over the evidence, preparing for depositions, sitting in on depositions, whispering suggested follow-up questions, strategizing in breaks, etc. 

The case involved a situation that came up that wasn't anticipated in the original contract. Both sides had good points, and there wasn't a clear right answer.

The reason I bring this up is because I was able to see up close and personal how lawyers think, and it was a bit surprising. The attorneys on each side were combing through the same evidence looking for their strongest arguments and strongest counterarguments. Both sides put together fabulous cases. I was expecting that. What I wasn't expecting was that the lawyers on both sides of the case were true believers in the righteousness of their respective positions. When one side eventually lost, the lawyers on that side were sincerely surprised and sincerely thought that based on the law and the facts, it was the wrong decision. 

I'm seeing the same thing in you. I am not taking sides in the dispute between the Church and James Huntsman. I'm not arguing that the Church is wrong and Huntsman is right. On this thread, I'm just trying to have some empathy for both sides and understand their arguments. And I've really only looked at one element of this--what's a "tithing fund" in the way that Hinckley used that term. How did people interpret it? Was it ambiguous? Can a tithing fund have interest in it? 

Huntsman claims he felt betrayed by the Church when the IRS whistleblower report came out. Before that, he was a tithe-paying true believer.

So how did tithe-pacing true believers interpret what Hinckely said? Did they interpret it then the way you interpret it now? Psychology has proven that our memories of things change. Is there a way to go back in time and understand how other people saw things?

Anyway, I agree with you on one point. I don't have the training and expertise to evaluate the legal principles here. But I do have significant expertise on the concept of principal and interest--in all likelihood I'm the only person here who has actually read The Theory of Interest from cover to cover. I'm probably the only person here who has heard of it. I'm probably the only person here who knows that "interest" is a complicated-enough topic to require a book called The Theory of Interest. 

Furthermore, I do have an outside non-partisan perspective on the Church. There is absolutely zero basis whatsoever to your allegations that I think "the Church is always wrong, always bad, always dishonest..." That just isn't true. Not even a little bit.

Because of my expertise in finance, because I have been paying attention to Mormonland for a few decades, because I have experienced life as both a believer and as a non-believer, and because I absolutely do not have a horse in this race, I'm well situated to evaluate some aspects of this dispute.

And I can say from my third-party perspective your argument that a "tithing fund" contains principal but doesn't contain interest isn't as strong as you think it is.

But as far as being a true-believing attorney who can't see both sides, you are in good company.

[Analytics]

Hi Smac,

In response to me saying, "I've said nothing about the law" you replied...

17 hours ago, smac97 said:

Boy, ain't that the truth.

So all that pablum about you being an expert witness was...?

The topic under discussion is a legal one.  I honestly thought you were addressing the law in your arguments.  I still think that (and that you are denying addressing the law because your arguments are not holding up very well.)...

Now I am going to say something about the law, and I ask you to correct me if I'm wrong.

As I understand the law, expert witnesses are hired to provide honest, unbiased, expert testimony. They are explicitly required not to be advocates for one side or the other. The weird things that have been said on this thread about the finer points of interest and principal prove that an expert witness could shed some valuable light on corporate finance on this issue.

If I were an expert witness in this discussion, I would explicitly be instructed not to talk about the legal issues and the law, but rather limit my comments to my field of expertise.

Am I wrong about that? Are expert witnesses supposed to talk about the law and the legal issues?

[Teancum]

15 hours ago, smac97 said:

Okay.  I don't think this is a question of fact.  It might be a mixed question of law and fact.

Could you elaborate still further.  You keep saying that "unless somehow accounted for in separate accounts you cannot say nothing came from principle."  If this is a point of fact, not law, my response would be: says who?  

Thanks,

-Smac

It is a simple concept really.  I think you understand it.  Look at it this way.  Let's assume you have a joint checking account with your wife.  Let's assume you both work and deposit both your paychecks into that joint account.  You earn some interest on that account.  You use the account to pay bills, etc but it also accumulates money because you leave some in every month to grow a cushion.  Say after five years you go but a car and pay cash.  Did the money come from your pay, her pay or interest?  Well nobody knows because you did not keep aa separate accounting or accounts. So who says?  Well nobody says.  That is really a silly question regarding a simple concept. It is an accounting principle really.  So as a CPA I say as do other CPAs and financial people.  

It is not a big issue really for me.  It is entertaining to watch you strain however to argue nothing came from tithing for the mall. See to me it does not matter.  Every dime the church has either came from donations or from the leaders using those donations to invest in various assets and business endeavors.  So it is all from member donations ultimatly.So who cares?  What difference does it make if the $ came from tithing or from excess tithing that invested. Even if it came directly from annual tithing contributions who cares?  What is to be gained by distinguishing?  It really boils down to a personal moral views as to whether a church that claims to be THE CHURCH OF JESUS CHRIST, a church that is worth hundreds of billions, a church that has over a $100 billion in assets that are easily liquidated, should be using that money for a shopping mall. You are quite fine with it.  Others may not be.  Reasonable people can disagree.  For me, the mall is investment on top of the revelation of how much the church has in their so called rainy day funds, are two reasons I stopped donating to the church. While I have not tithed for quite some time I still gave to fast offerings and the humanitarian aid fund.  But no longer.  Voting with my $ and donations is the only thing I can do in this regards.

[Teancum]

15 hours ago, Danzo said:

In funds based accounting it isn't necessary that there be a separate bank account for each fund. The restrictions on the funds are noted in the financial statements.

Nothing annoys me more than when a non profit thinks all the different funds have to be in different bank accounts.  You end up getting 20 bank accounts with most of them low dollar amounts. 

 

Well true. This is another approach to tracking funds separately without additional  bank accounts.

[Analytics]

21 minutes ago, Teancum said:

It is a simple concept really.  I think you understand it.  Look at it this way.  Let's assume you have a joint checking account with your wife.  Let's assume you both work and deposit both your paychecks into that joint account.  You earn some interest on that account.  You use the account to pay bills, etc but it also accumulates money because you leave some in every month to grow a cushion.  Say after five years you go but a car and pay cash.  Did the money come from your pay, her pay or interest?  Well nobody knows because you did not keep aa separate accounting or accounts. So who says?  Well nobody says.  That is really a silly question regarding a simple concept. It is an accounting principle really.  So as a CPA I say as do other CPAs and financial people.  

Exactly. I'm in finance more than accounting, but I totally agree with what you're saying here. The truth is that "interest" and "principal" are typically just abstract concepts, and in the corporate world they are usually just used for modeling. A contract for a loan can spell out how periodic "interest" charges will be (or won't be) calculated. But that is the exception more than the rule. What's more typical is a bond that says "This bond can be redeemed for $10,000 on June 30, 2030, and will make a coupon payment of $250 on June 30 and December 31 of every year between now and then." However, that bond can and often will be sold, sometimes multiple times, between when it is issued and when it matures. The price it is sold for will depend on numerous things including the perceived creditworthiness of the issuer and the yield curve at the time of sale. People will calculate the yield of the bond in numerous ways, but there isn't any tangible money called "interest." Rather, there are coupon payments, payments of the face amount on maturity, sale prices, book values, market values, and yields that can be calculated in multiple ways. But there isn't a thing called "interest" in there.

It's true that an Income Statement might attribute gains to interest (or more likely investment income), but that is just a way of connecting the book value of the asset portfolio at one point of time to the book value at another point of time. If you look at the actual balance sheet, there aren't any lines called "principal" or "interest." Rather, there is a list of bank accounts, bonds, equities, real estate, and other assets. Those assets are the things that are traded for the mall, not an abstract thing called "interest" or "principal." If the Church wanted to buy a mall and to do so liquidated bonds A-F, sold equities G-L, and added another $X.XX from the cash account, was that "principal" or "interest"? And does asking that question even make sense?

Granted, somebody could colloquially say "I won't spend more than this year's interest on purchase M," but by doing that you aren't spending an asset called "interest", you are just setting a budget for how much you'll spend. 

Because of all that, when somebody talks about something being paid from one kind of fund and not from another kind of fund, they are most likely talking about what literal fund will be used to make the purchase and not making a statement about limiting the purchase to the investment income that was earned on a particular fund over an unspecified period of time.

[ksfisher]

54 minutes ago, Teancum said:

It is a simple concept really.  I think you understand it.  Look at it this way.  Let's assume you have a joint checking account with your wife.  Let's assume you both work and deposit both your paychecks into that joint account.  You earn some interest on that account.  You use the account to pay bills, etc but it also accumulates money because you leave some in every month to grow a cushion.  Say after five years you go but a car and pay cash.  Did the money come from your pay, her pay or interest?  Well nobody knows because you did not keep aa separate accounting or accounts. So who says?  Well nobody says.  That is really a silly question regarding a simple concept. It is an accounting principle really.  So as a CPA I say as do other CPAs and financial people. 

Could I put this another way to help me understand what you are saying?

Say you give me $100 and I put it in the bank. 

After a period of time I earn $3 in interest. 

I then withdrawn $2 leaving $101 in my account.

Is the original gift from you still in the bank?

[Teancum]

7 minutes ago, ksfisher said:

Could I put this another way to help me understand what you are saying?

Say you give me $100 and I put it in the bank. 

After a period of time I earn $3 in interest. 

I then withdrawn $2 leaving $101 in my account.

Is the original gift from you still in the bank?

There is no way to tell if it is all in  the same account.  How do we know if you took the $2 from the interest earned or the initial investment?

[ksfisher]

5 minutes ago, Teancum said:

There is no way to tell if it is all in  the same account.  How do we know if you took the $2 from the interest earned or the initial investment?

So, even though the account balance has never dropped below the amount of your original gift to me, we don't know whether or not all of that gift is still in the bank after I make a withdrawal.

[Analytics]

1 minute ago, ksfisher said:

So, even though the account balance has never dropped below the amount of your original gift to me, we don't know whether or not all of that gift is still in the bank after I make a withdrawal.

Think of it the other way. What if you wanted to spend $2 of the principal but not touch the interest. How would you go about doing that?

[Teancum]

7 minutes ago, ksfisher said:

So, even though the account balance has never dropped below the amount of your original gift to me, we don't know whether or not all of that gift is still in the bank after I make a withdrawal.

Do you know where the $2 came from?  The original investment or the interest earned?  This is not a tough concept. 

[ksfisher]

7 minutes ago, Teancum said:

Do you know where the $2 came from?  The original investment or the interest earned? 

You've said several times that the money being discussed in the OP is fungible.  How does that concept play into the scenario I've described.

 

8 minutes ago, Teancum said:

This is not a tough concept.

I'm assuming you're not meaning this in a condescending manner.  I've been trying to put things in very simple terms in order to understand your thinking.

[Analytics]

4 minutes ago, ksfisher said:

You've said several times that the money being discussed in the OP is fungible.  How does that concept play into the scenario I've described.

 

I'm assuming you're not meaning this in a condescending manner.  I've been trying to put things in very simple terms in order to understand your thinking.

What fungible means in this context is that the $5 of interest are indistinguishable from the $100 of principal. Each of the dollars are the same.

If it wasn’t fungible, when you withdrew the principal you could check the serial number on each dollar they gave you to make sure they gave you the right ones.

Granted, you could set a budget for yourself that you’ll only withdraw the interest. But that is just a budget; you aren’t literally withdrawing interest dollars that are physically distinguishable from principal dollars.

[ksfisher]

14 minutes ago, Analytics said:

What fungible means in this context is that the $5 of interest are indistinguishable from the $100 of principal. Each of the dollars are the same.

If it wasn’t fungible, when you withdrew the principal you could check the serial number on each dollar they gave you to make sure they gave you the right ones.

Granted, you could set a budget for yourself that you’ll only withdraw the interest. But that is just a budget; you aren’t literally withdrawing interest dollars that are physically distinguishable from principal dollars.

So then couldn't I say that, in my scenario, if the bank balance never falls below the $100 that all the money Teancum gave me is still in the bank?

To me this seems like a simple concept, that all of gift money is still in the bank.

I realize that you and Teancum has different opinions. 

 

[Analytics]

On 8/24/2023 at 11:32 AM, smac97 said:

Problem #1: Huntsman will be obligated to prove, to a "clear and convincing" standard of evidence, that the foregoing statements are objectively false.  So you are quite correct to rebut Analytics when he speaks about what "members of the Church generally thought" the foregoing statements meant.  This case is not about what "members" thought, nor even about what Huntsman thought.  His subjective understanding of the above statements is largely irrelevant.  The challenge here is that the statements made by the Church are objectively accurate.

Here is another comment that is sort of about the law, but more broadly about your skills and strategy as a litigator.

Let's assume for the moment that Huntsman really hired me as an expert witness on what Mormons historically thought about these issues, and I then offered the above testimony, i.e., "members of the Church generally thought" about these issues in the way I've outlined. If that were the case, why in the heck would it be "quite correct to rebut" me? From my experience, a good attorney would concur with me, enthusiastically!

If I were an expert witness for Huntsman and offered my expert testimony on what "members of the Church generally thought," I would expect any attorney worth half his salt to jump on that. "Even the plaintiff's own expert witness concedes that Hinckley's statement was vague and that different members interpreted them differently! This proves he isn't the victim of fraud!"

That's how I'd expect a good attorney to respond to the comments of a self-described expert witness that says something that is helpful to his case. But I'm quite willing to hear about your strategy. Why do you think it is "correct to rebut" something I say that is good for your case?

Edited August 25, 2023 by Analytics

[Analytics]

3 minutes ago, ksfisher said:

So then couldn't I say that, in my scenario, if the bank balance never falls below the $100 that all the money Teancum gave me is still in the bank?

To me this seems like a simple concept, that all of gift money is still in the bank.

I realize that you and Teancum has different opinions. 

 

It's totally fine to think of it that way. If you make a rule that you will never let the balance fall below $100, you can say you are only spending the interest and not touching the principal. But that is a rule in your own head--a legitimate way of looking at things for sure, but still just a rule in your head. Likewise, somebody could get to exactly the same place by saying say that they are going to spend principal dollars as long as they are replaced with interest dollars.

Ultimately, the way Teancum and I have been describing this is consistent with mainstream accounting principles, but that is just one way we could look at this. If you wanted to set up some rules that make sense to you so that you could distinguish whether a dollar is a principal dollar or an interest dollar, you are free to do so. No shame there.

[smac97]

3 hours ago, Teancum said:

Quote

Okay.  I don't think this is a question of fact.  It might be a mixed question of law and fact.

Could you elaborate still further.  You keep saying that "unless somehow accounted for in separate accounts you cannot say nothing came from principle."  If this is a point of fact, not law, my response would be: says who?  

It is a simple concept really.  I think you understand it. 

I more or less agree that the concept is simple, and I do think I understand it.

But simple concepts can still need to be parsed on when brought into the legal sphere.  Hence my question: Says who?  Who says "unless somehow accounted for in separate accounts you cannot say nothing came from principle"?  

3 hours ago, Teancum said:

Look at it this way.  Let's assume you have a joint checking account with your wife.  Let's assume you both work and deposit both your paychecks into that joint account.  You earn some interest on that account.  You use the account to pay bills, etc but it also accumulates money because you leave some in every month to grow a cushion.  Say after five years you go but a car and pay cash.  Did the money come from your pay, her pay or interest?  Well nobody knows because you did not keep aa separate accounting or accounts. So who says?  Well nobody says.  That is really a silly question regarding a simple concept. It is an accounting principle really.  So as a CPA I say as do other CPAs and financial people.  

I get that you say this, but why is your say-so binding on an Article III judge asked to adjudicate issues associated with tithing and such?  That is the sphere in which we are operating, and in which I am attempting to get down to brass tacks.  

You seem to be resorting to something akin to GAAP: Generally Accepted Accounting Principles.  Would that be a fair statement of your position?

Let's postulate that Huntsman's lawsuit eventually requires a federal judge to adjudicate a question along the lines of:

• "1. In a Latter-day Saint context, does 'tithing' encompass both charitable donations from members of the Church and amounts subsequently generated by the Church's investment of donated funds?"

That is, I think, likely how a judge would approach this issue.  

Now, let's further postulate that Huntsman's lawyers respond to the judge's inquiry "Your Honor, our position is that 'tithing' does encompass both members' charitable donations to the Church and the Church's subsequent earnings realized by investing some portion of those donations."  I don't think the judge would be satisfied with a mere assertion.  They would need to demonstrate that their position is correct, likely as a question of law (or as a mixed question of law and fact).

Let us now further postulate that the judge proceeds with his inquiry this way:

• "2(A). If 'tithing' encompass both charitable donations and realized income/interest from invested tithing funds, can the Church only differentiate between tithes and earnings by keeping those amounts in separate bank accounts? 
• 2(B). Alternatively, if tithes and earnings are kept in the same account, is that determinative as to the meaning of 'tithes'?"

I think you would propose a response along the lines of what you have said previously ("Since money is fungible there really is no way to tell whether the $$ came from principle or earnings.  Not unless they stick earnings into a seperate account").  And I think the judge would then say something like this:

• 3. "Okay.  Says who?  What is the source of law that you are relying on here?  Common law?  Federal statutory law?  State statutory law?  Administrative law?  What source of law obligates the Church of Jesus Christ of Latter-day Saints to separate 'tithes' (charitable donations from its members) from earnings on investments as a condition of differentiating those amounts as a matter of law?"

How would you respond to that?

3 hours ago, Teancum said:

It is not a big issue really for me. 

Big enough for you to insist on it, several times over.

3 hours ago, Teancum said:

It is entertaining to watch you strain however to argue nothing came from tithing for the mall.

I haven't said that, let alone "strained" at it.  The Article III judge, and one of the 9th Circuit judges, have concluded that Pres. Hinckley's remarks were factually and substantive accurate and correct.

Frankly, I think the "straining" is pretty much entirely on your side of the debate.  I find the notion that "tithes" = "charitable donations from members and any income the Church subsequently realizes through investments" to be pretty absurd, particularly given that Pres. Hinckley expressly articulated a differentiation when making public statements about City Creek.

3 hours ago, Teancum said:

See to me it does not matter. 

It matters enough that you keep pressing the point.

3 hours ago, Teancum said:

Every dime the church has either came from donations or from the leaders using those donations to invest in various assets and business endeavors. 

Maybe.  And yet there remains a plainly obvious differentiation here: Charitable donations (tithes) and earnings/income/revenue on investments and business ventures funded - previously or presently, in whole or in part.  This second source of funds cannot reasonably be characterized as "tithing."  The Church doesn't recognize it as such, nor do the members, nor does the United States government, and so on.  

The only people who are attempting to conflate these things are people who dislike the Church of Jesus Christ of Latter-day Saints, and so are latching on to any argument that can be deployed against the Church (such as here, where Huntsman, and you, and Analytics, are coming up with ad hoc and contrived assertions with no substantive basis in law or fact).

3 hours ago, Teancum said:

So it is all from member donations ultimatly. 

But it's not all tithing. 

3 hours ago, Teancum said:

So who cares? 

James Huntsman.  And his lawyers.  And the Article III judge.  And the Ninth Circuit Court of Appeals.  And Analytics.  And you.

3 hours ago, Teancum said:

What difference does it make if the $ came from tithing or from excess tithing that invested.

The outcome of Huntsman's lawsuit - the topic of this thread - may very well turn on whether "$ came from tithing or from excess tithing that invested." 

If the former, Huntsman loses. 

If the latter, the Church wins. 

If the two (tithing and earnings) are conflated (as Huntsman and others are attempting to argue), Huntsman might win.

That's the difference.

3 hours ago, Teancum said:

Even if it came directly from annual tithing contributions who cares? 

I care.  Members of the Church care.  Because Pres. Hinckley assured us otherwise.

3 hours ago, Teancum said:

What is to be gained by distinguishing? 

Defeating Huntsman's stupid lawsuit.

Vindicating Pres. Hinckley against various calumnies against his honesty and character.

Having truth prevail over falsehoods and prevarications.

Worthwhile pursuits, these.

3 hours ago, Teancum said:

It really boils down to a personal moral views as to whether a church that claims to be THE CHURCH OF JESUS CHRIST, a church that is worth hundreds of billions, a church that has over a $100 billion in assets that are easily liquidated, should be using that money for a shopping mall.

I strongly disagree.  That is way outside the inquiry in this thread.

3 hours ago, Teancum said:

You are quite fine with it.  Others may not be.  Reasonable people can disagree. 

I agree with this.  But it's not really relevant to the topic at hand - Huntsman's lawsuit.

3 hours ago, Teancum said:

For me, the mall is investment on top of the revelation of how much the church has in their so called rainy day funds, are two reasons I stopped donating to the church. While I have not tithed for quite some time I still gave to fast offerings and the humanitarian aid fund.  But no longer.  Voting with my $ and donations is the only thing I can do in this regards.

I can appreciate your position.  Tithes are a potent expression of faith.  Faith comes first.  And we all must do what we think is right.

Thanks,

-Smac

Edited August 25, 2023 by smac97

[smac97]

1 hour ago, Analytics said:

Quote

Problem #1: Huntsman will be obligated to prove, to a "clear and convincing" standard of evidence, that the foregoing statements are objectively false.  So you are quite correct to rebut Analytics when he speaks about what "members of the Church generally thought" the foregoing statements meant.  This case is not about what "members" thought, nor even about what Huntsman thought.  His subjective understanding of the above statements is largely irrelevant.  The challenge here is that the statements made by the Church are objectively accurate.

Here is another comment that is sort of about the law, but more broadly about your skills and strategy as a litigator.

Let's assume for the moment that Huntsman really hired me as an expert witness on what Mormons historically thought about these issues, and I then offered the above testimony, i.e., "members of the Church generally thought" about these issues in the way I've outlined. If that were the case, why in the heck would it be "quite correct to rebut" me? From my experience, a good attorney would concur with me, enthusiastically!

No, let's not assume that.  It would never happen.

You are, yet again, demonstrating your lack of training and experience in the law.  Lawsuits are grounded in and guided by the law.  The Constitution.  Statutes.  Common law.  And also rules of procedure and evidence.

What you are proposing would never happen, as "what Mormons historically thought about these issues" is not relevant evidence, and hence not admissible pursuant to Rule 402 of the Federal Rules of Evidence.  The legal issue at hand is not "what Mormons historically thought about these issues," but what James Huntsman thought.

You don't have to take my word for it.  If what you are proposing would be worthwhile or allowed, Huntsman's lawyers would have attempted it.  Yet . . . they haven't.

1 hour ago, Analytics said:

If I were an expert witness for Huntsman and offered my expert testimony on what "members of the Church generally thought," I would expect any attorney worth half his salt to jump on that. "Even the plaintiff's own expert witness concedes that Hinckley's statement was vague and that different members interpreted them differently! This proves he isn't the victim of fraud!"

That's how I'd expect a good attorney to respond to the comments of a self-described expert witness that says something that is helpful to his case. But I'm quite willing to hear about your strategy. Why do you think it is "correct to rebut" something I say that is good for your case?

Roger, I think you place way too much stock and confidence in your forays into court as an expert witness.  You lack the requisite training and experience to speak competently about what "a good attorney" would do.  A good attorney would never need to address your scenario, as it is facially implausible and would never see the inside of a courtroom.

You way out ahead of your skis here.

Thanks,

-Smac

[Analytics]

On 8/24/2023 at 11:32 AM, smac97 said:

This case is not about what "members" thought, nor even about what Huntsman thought. 

 

13 minutes ago, smac97 said:

The legal issue at hand is not "what Mormons historically thought about these issues," but what James Huntsman thought.

Are you making this up as you go along?