Conference nyoss1::market_investing

    
    	If it is given to you on the basis that "she could take some back
    if she wants", then this is, strictly speaking, illegal.  The gift laws
    that govern this are intended for this to be just that: "gifts" -- the
    money is yours to do whatever you wish with just as if it came in a
    Christmas card to you.  Since this money is truly yours, you will have
    to pay whatever taxes are due on investment income and you'll have to
    pay any penalties (what penalties are you referring to - things like
    early withdrawals from CDs?) that you bump into.
    
    	Since you can do whatever you'd like with your money, I do presume
    that there is nothing to stop you from gifting some of it back to her
    if you so choose to do.  This would have to be on your free will and
    not by her demand, however.  Holding this money in reserve "just in
    case" might indicate that you understood that you couldn't use this
    money for yourself, and thus it might not be considered a gift in the
    first place.  (Its subtle, but "Give me back $1,000 of the money" is
    quite a bit different from "Here, you are having some troubles so have
    a $1,000.")
    
    							-craig

    re: .0
    
    I don't mean to pick on you or your friend. Has anyone watched last
    night's (9/17/92) "Prime Time" on ABC? They talked about all the
    cheatings going on in our wellfare system. People using fake names,
    addresses and IDs to get wellfare while either they are working or are
    not eligible for it. It costs the tax payers of this country over 180 
    BILLION dollars a year. I hope your friend is only considering to use
    this as a temporary leverage to help her to get back on her own feet
    again. Otherwise, I don't see why we taxpayers should subsdize her
    while she has 40 grands stashed away somewhere. I don't mean to be so
    "cold hearted". But, it is just not fair!!! There are many working
    people who survive on a paycheck by paycheck basis and they don't have
    $40K. I think the people who are really in trouble and need help are 
    the ones truely deserve wellfare. But, the ones trying to cheat, to 
    work "around" the system should be caught and severely punished!!!!
                                  

    re: .0 & .2
    
    I went back and reread your note. I guess your wife's friend is
    "disabled". Therefore, I juat want to stress one more time that I 
    DON NOT mean to pick on you or your friend. It's just that I you
    brought up a sensitive issue and especially after I watched "Prime
    Time" last night. It just struck a nerve in me.  

    Put the money into a tax-free municipal bond mutual fund.

  And don't give more than $10k to one person or it is subject to gift tax.

    
    Do not take the money.  The idea that yourself and other friends and 
    family are going to split up this 40K is a problem looking for a place
    to happen.  You are right to be concerned about taxes, and as is
    clearly stated in the previous notes you, for all your good intentions,
    could end up with a financial nightmare on your own hands due to
    penalities, or even worse getting audited by the government.
    
    Some ideas.  How old is this woman?  Can she keep the 40K from sale of
    her property without taxes?  Is the entire 40K profit?  If it is and
    she gives it to you who is going to pay these taxes?  
    
    How are her assets being looked at by the housing authority?  By that
    what I mean is are they looking to total assets or could she buy an
    anuity and not have the money count against her?  
    
    Canthe money be invested in govenment tax free securites and with the 
    interest make up enough of a difference to get her into other lower
    cost housing?
    
    Have you talked to a professional financial consultant?  If this is
    distressing you maybe a first call could be to Digital's Employee
    Assistance Office.  Maybe they have some ideas as well.
    
    If the 40K is gain from the sale of property there is sure to be
    taxes.  Also, gift taxes as suggested and other personal income taxes
    from capital gains on the investment will certainly be due.  Your
    initial approach to solving this problem could have disasterous 
    consequences.
    
    I know I created more questions than answers as I fortunately have
    not been faced with something of this nature before.  I hope that
    you can find an appropriate solution to your friends circumstance.
    
    Regards,
    
    John

In some cases government agencies will look back several months or years
for "gifts" like this.  They take the position that someone who has recently
given away a large sum of money and is now asking to be considered without
funds is obviously creating a scam.  No offense intended.

I agree with the complaint that there are too many undesrving people who are
"working the system", but there are also cases in which too much of a burdon 
is placed a deserving person.  

There are counselors who can offer planning and advice for situations like
this.  You might be able to get a pointer from DEC health services.
I'd suggest talking with one of these.

    Why this has to be classified under "gift" rather than a no-interest
    "loan" if IRS does come after you? People do this all the time i.e.
    borrowing money from friends and family - sometimes in large sums. But
    in that case your friend is still considered the "owner" of this money
    which may disqualify him/her for the housing deal. But do all
    diffrent govt. agencies talk to each other? I doubt it!

Thanks for all the concerns and suggestions...I'll have to give this
some careful thought and ask some more advice from professionals.

Some information on the woman...curiously enough she is a former DECie.
She was Ken and Stans secretary for a time back in the beginning, had a
badge number of 53 or 56 I think.  But she contracted some skin thing
and some mental problems and hasn't worked since....
She was in her 20's then and late 50's now.

She's a rather pathetic creature really, one of God's unfortunates, but
kids and pets love her and she can be useful when she puts herself together. She
has not been on welfare but lived like a pauper all her life, taken care of
by an old-maid aunt who had a goverment pension and her mother's social security.
They all lived togther in the same house and wouldn't consider welfare though
I'm sure all 3 would have qualified. Most of what they did have they gave 
away to children and pet charities which I found unbelievable as their
house crumbled from dis-repair. First the aunt died and the mother a short
time later. We finally had to get her on disability so she could get some
mental health help she needed. The money from this 1/2 the house (other half
sister in California) is the ONLY significant money she has ever seen or likely
to see.

Real estate guy said she wouln't have to pay tax cause you are allowed 
the proceeds from one sale. 

Not too sure about the housing authority rules. I'll find out more about this.

Sounds like a loan to us might be the way to go, which we invest
in a tax-free municipal mutual, and hope the housing authority doesn't
find out. She had to get a local 600$ apartment in the short term anyway which
is gonna eat up a chucnk of it and she wants to get some transportation.
We can probably study this situation for 6-9 months, and see what looks best.

It seems a shame if fear, uncertainty and doubt could prevent us from helping
someone like this.

Whats an annuity?
We'll have to get more info on how the housing people look at this

Thanks for all the help..rocky

    re: .9
    
    My sympathy goes out to her!
    
    My understanding of the "one time capital gain exemption" is that the
    person has to be at "retirement age" (Is it 65 for man and 59� for
    woman?). I am sure someone can correct me if I am wrong here. Maybe,
    the fact that she is disabled will make a difference?

re .-3

  The problem with a no interest loan is...  The IRS then assumes that the
interest (at some absurd rate) is a gift.  They have gotten a lot of people
on this one.

    Some corrections:
    
    One-time capital gain income reduction on a sale of your home is
    $125,000 and can be taken by anyone over 55 years old. So, the lady
    will not pay any taxes on her money (if proceeds are less than $125k).
    
    Also, if she is disabled, she can start collecting full SS benefits at
    the age of 60, not 62 (80%) or 65 (100%). Talk to SSA people.
    
    Get this loan from her ASAP 'cause there will be a check on her assets
    and some time (3 to 6 to 12 months) should pass to make her elegible to 
    the low-income/SS benefits. Also, check her status for SSI benefits.
    
    Simon

SSI rings a bell, I think thats what she is on, since getting out of mental
health last time. the SS thing is good to know, she must be fairly close to 
60, I'll ask the wife for precise age.

Were does one purchase tax-free municipal funds that were mentioned a while back?
Any recommended vendors in the Worcester/Leominster Mass. area?
thanks

    For a good Tax-Free Mass. Mutual Fund try 
    Scudder Mass Tax Free Bond Fund #800-225-5163.  
    
    Fidelity also has a TF Fund, but requires $5000 min. 

    I may be wrong about this but I don't believe that there is an age 
    restriction when it comes to being eligible to collect Social Security
    due to a disability. My sister-in-law who had Cystic Fibrosis collected
    SS from the time she was 18 because she was unable to work. I also know
    of a few others who are in thier 20's and 30's and collecting.

re .-1

  Correct.  It can be difficult to get SSI to declare you totally disabled so
you can get disability.