Yes, it is possible for a piece of property to drop in value in California. The San Francisco Giants ballpark, SBC Park (formerly PacBell Park), has dropped in value by $88 million between 2001 and 2003, according to the Assessment Appeals Board of the City of San Francisco.
The Giants received a property tax refund of $3.6 million.
Source: San Francisco Examiner
According to Tax Analysts, the Tax Court has released clarifying statements in the Kanter and Ballard cases. However, the statements are not available on the Tax Court’s website.
Tax Analysts is reporting that Chief Judge Joel Gerber released statements outlining the procedures followed in the cases. The Supreme Court in March ordered the Tax Court to release the original findings of Special Trial Judge Couvillion.
The Tax Court today decided a case where the petitioner’s complain that the Alternative Minimum Tax (AMT) shouldn’t apply to them because of “equitable grounds.” The petitioners did not have any tax preference items. They aren’t the high income millionaires that the AMT was originally intended for.
But they (and you and I) are stuck with the AMT. And they fell into its’ grasp. As the court notes, “Absent some constitutional defect, we are constrained to apply the law as written.” “The proper place for a consideration of petitioner’s complaint is the halls of Congress, not here.” Hays Corp. v. Commissioner, 40 T.C. 436, 443 (1963), affd. 331 F.2d 422 (7th Cir. 1964).
This isn’t the first such case, and it won’t be the last. The AMT is a convoluted beast destined to grasp more of the middle class each year. In general, everything you do to lower your regular tax raises (or causes you to fall into) your AMT.
Case: Wiese v. Commissioner, TC Summary 2005-91
The Fifth Circuit Court of Appeals recently ruled on the appeal of Leonard Gittinger of his case from the US Tax Court. In its’ unpublished ruling, the Court noted,
“…his arguments are completely and utterly frivolous, generally relating to the proposition that wage income is not taxable income. See I.R.C. §§ 1(a)(1), 61(a)(1), 7701(a)(1), (14). As we have previously noted, there is no need for us to refute “with somber reasoning and copious citation of precedent” the notion that wages are not income, lest by doing so we suggest that this argument has some colorable merit. Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir. 1984)…Because Gittinger did not even allege any irregularity in the assessment procedure and he did not raise a valid defense or offer an alternative means of collection, we have no difficulty whatsoever affirming the tax court’s judgment.”
And the petitioner was fined another $6,000 for continuing his frivolous arguments.
As reported in Tax Analysts, the projected Federal deficit for 2005 has shrunk by nearly 25% from $424 billion to $333 billion. The reason? Tax collections (revenues) are up, across the board, by about 14%.
As I previously noted, the Tax Court had a secrecy rule that prevented, in certain circumstances, litigants from knowing what the judge felt the ruling should be. This “star chamber” provision became clear when the Kantar case was decided by the US Supreme Court earlier this year.
Luckily, previously is also the place where that oderous rule has been placed—the junk yard of history. As noted in this article in the Chicago Tribune and this article in the International Herald-Tribune (likely appearing in tomorrow’s New York Times), the rule has been rescinded as a direct result of the Supreme Court’s ruling. However, its’ status as to past cases is unknown.
This is one rule change that is definitely for the better.
…and still has a $5 Billion deficit projected for next year. Oh, the Governator signed the budget.
Moody’s Investment Services followed up by raising California’s Debt Rating from A3 (bad) to A2 (not as bad). Perhaps I’m being a bit cynical about this; after all, Moody’s says that both A3 and A2 ratings indicate “bonds with many positive investment qualities.” California, though, has one of the worst ratings of any state.
On the good news side of the ledger, the Governator used the line-item veto to eliminate some egregious programs, such as the UC Berkeley Center for Labor Research and Education. He also vetoed hiring 14 new state tax investigators. While the veto “saved” $1.2 million, the investigators were budgeted to bring in $4 million in back tax payments and penalties annually. So tax cheatersprocrastinators, you can rejoice!
Again, the key for California will be the results of the November 8th special election, which will have numerous initiatives that could change our state government in many ways.
…You’re stuck, and look fairly stupid.
At least once a week, the Tax Court tells a tax protester that, “Yes, Virginia, there is an income tax, and you must pay it.” And your arguments that (a) it’s unconstitutional, (b) you don’t live in the United States but in the state of [fill in the blank], or (c) it was never approved, etc. (see the Tax Protester FAQ for a complete list of the reasons) won’t work.
This week’s case is Hodges v. Commissioner, TC Memo 2005-168. We won’t bore you with the constitutional issues; rather, there’s an interesting issue that develops because of the petitioner’s claims regarding the unconstitutionality of the income tax. The amount of tax is dependent on when one of the petitioner’s relatives passed away. The Court chooses to not believe the petitioner as to the date of death. As pointed out by the Court, “We need not accept self-serving testimony, even if unopposed.” Would the Court have felt this way had their been no constitutional issues raised? We don’t know, but making stupid arguments to a court and then trying to get them to rule in your favor isn’t a good idea.
Oh, yes; the petitioners also received penalties for failing to file a return, for failing to make estimated payments, and for taking a frivolous petition.
So, Virginia, do you still want to claim there’s no income tax?
As reported yesterday, California will soon have its’ new 2005-06 budget. Dan Weintraub, a columnist with the Sacramento Bee, reports on more of the specifics (missing from yesterday’s report).
Some highlights:
—Education funding increases, despite what you may hear from the teacher’s unions;
—The state is repaying the $1.2 Billion it owes the cities one year earlier than scheduled. This will make local governments quite happy.
—The budget is balanced on paper. However, it’s balanced by using one-time funds. Thus, next year’s budget starts off $5 Billion in the hole.
So, let’s take the good with the bad. Given the makeup of the legislature, this is probably as good as one could hope for. Just remember that we’re still looking at a special election in November with a whole host of initiatives that have the potential to change the picture in Sacramento.
California’s legislature and the Governator agreed on a budget last night that, supposedly, increases spending (a little) without increasing taxes (or implementing new taxes). That doesn’t mean there won’t be new fees, including new court filing costs, and who knows what else buried in the fine print.
Until we see the actual budget, and the analysts’ reports on the budget, we’re better off not speculating as to whether it’s a good or bad deal. For now, look at it as a $117 Billion unknown.
Coverage: San Jose Mercury News (one-time registration required)
