via Occupy Seattle. Open thread below...

I received a lot of supportive feedback about my last post in which I criticized Gov. Mary Fallin for trying to boost her reelection campaign by generating collective anger towards the refugee children now housed at Fort Sill in Lawton.

Fallin's campaign has started a petition drive that aims to force President Barack Obama to move the Central American children-most of whom are fleeing violence in countries such as Honduras and Nicaragua-from the federal facility in Oklahoma. The petition drive is superfluous. Its only purpose is to create anger among conservative Oklahoma voters and activate them to support Fallin, who has been sinking in the polls  recently.

The children are part of a widely reported exodus of Central American young people seeking asylum and refuge in the U.S. They have been labeled "migrant" or "illegal aliens" by the media and right-wing here, but the reality is they're political refugees and victims of botched U.S. international and immigration policies.
The Oklahoma governor's message is clear and simple: We don't want these children in Oklahoma.  As I wrote, this is a craven message and really tests the limits of Oklahoma voters. Do they really have that much hate inside themselves that they would allow children to suffer and even die and revel in it? Fallin's campaign is banking on it. It's also banking on the fact that voters won't look more deeply into the issue and note a policy enacted under former President George Bush has prevented the federal government from acting more quickly to resolve the issue. Blame Bush, not Obama.

Here are some more extended arguments about the issue:

(1) Both the Catholic Church and, more importantly for Oklahoma, some Southern Baptist Church leaders have come out in support of giving aid to the children and treating them humanely, but the local right-wing religious folks have been fairly silent on the issue. Fallin's campaign ploy really sets a new low in arousing "group hate" against a group of vulnerable children. It sets an unbelievable precedent in hatred and cravenness. The fact that Southern Baptist Church leaders here, in particular, aren't fully criticizing Fallin's lack of compassion shows how craven this religious denomination-rooted in racism-has become at the local level.

(2) To extend the argument further, I think about all the sanctimonious Oklahoma people who make mission trips to impoverished countries, preaching their gospel and undoubtedly furthering the anti-abortion cause among people. But now that these brown-skinned people are in their home state in the U.S., the home-grown "missionaries" turn their backs on them and become red in the face with anger and indignation. These people simply lack moral compunction. Their religious beliefs are twisted and sordid.

(3) What about American "exceptionalism," the right-wing canard? So our country is so exceptional that we're going to deport children back to countries in which they face death and misery and impoverishment?

(4) The cliché is that Oklahomans are so nice, but what type of craven people would support a politician who agitates essentially for the mistreatment of children? What type of people would get some type of visceral thrill by mistreating children? Let's be clear: Many, many Oklahomans are not "nice" at all in any traditional sense. They burn inside with hatred and spite. It's the state's shame, and the dirty little secret you won't find on any state tourist brochure.

(5) Let's also be clear about this: Fallin's campaign ploy is racist. If these children were white, would there even be a question about helping them? Fallin's attempt to agitate the hateful mob is rooted in the darker side of the American story, the racist story, the one coated over with euphemisms in our elementary-school textbooks.

Conservative politicians, of course, have a long history of whipping up anger among voters in order to get votes while deflecting attention way from issues that matter, such as income inequality. So there's nothing really new here, with the exception that these are young children who need our help. Fallin may well reverse her slide in the polls, but let it be noted at the very least that doing so at the expense of vulnerable children is an ugly way to do so.

Don’t Get Caught Short on Short Sale

 

After the real estate crash, many taxpayers’ mortgages exceeded the value of their properties, so they did a short sale or went through a foreclosure. In a short sale the bank will accept less than the value of the mortgage to satisfy the debt, the difference between what the bank accepts and what the property owner owes may be income to the property owner. In a foreclosure the unpaid balance mortgage less the fair market values of the property may be income to the property owner. Many of these taxpayers received Form1099-C, from their banks, showing large amounts of debt cancellation.

Generally, cancellation of debt is taxable income, but due to the magnitude of the crisis, Congress passed a temporary exclusion of up to $2 million for taxpayers who lost their primary residence.  This temporary exclusion expires at the end of 2013, so taxpayers who lose their homes in future years could be stuck with a substantial tax liability. These taxpayers should contact a knowledgeable tax professional who can clearly explain the tax consequences of short sales and foreclosures before surrendering their property.

First, it must be determined if the canceled debt is “recourse” or “non-recourse.” If the mortgage is non-recourse, there will be no cancellation of debt income (CODI), but the taxpayer will be required to treat the transaction as a sale where the gain or loss is equal to the amount of the debt forgiven minus the taxpayer’s basis in the property.

For instance, Jimbo owns a house with a basis of $150K subject to a $200K non-recourse mortgage. The house is foreclosed on and Jimbo receives nothing from the sale.  Jimbo will have a gain on the sale of $50K ($200K minus $150K).

When the cancelled debt is recourse, the taxpayer needs to calculate the CODI and the gain or loss on the sale.  The CODI equals the debt forgiven minus the fair market value (FMV) of the property, and the gain or loss equals the FMV of the property minus the taxpayer’s basis.

For instance, Jimbo owns a house with a basis of $150K subject to a $200K recourse mortgage. The house is foreclosed on when its FMV is $75K and Jimbo receives nothing from the sale.  Jimbo will have CODI in the amount of $125K ($200 minus $75) and a loss of $75K ($75 minus $150).  If the house is a rental property Jimbo will be able to deduct the $75K loss; however, if the house is his personal residence, none of the loss will be deductible. The taxpayer then must determine if the CODI can be excluded.

Taxpayers who are insolvent and have gone through a Chapter 11 bankruptcy will be able to exclude CODI under a permanent section of the code, 108(a) (1) (a).If the taxpayer is solvent, however, and the mortgage was for a primary residence, then under the temporary exclusion passed by Congress, 108(h) (1), the taxpayer can exclude up to $2 million of the CODI.

It is important to note that only qualified principle mortgage debt qualifies for the special exclusion. Qualified principle mortgage debt is debt used to acquire or improve the property; therefore, any refinance or home equity loan that exceeds the original principle and is not used to improve the property will not be eligible for the special exclusion.  Only CODI from primary residence qualifies for the special exclusion. CODI from vacation or second homes is not excludable and must be reported as income.

Two other exclusions related to real property used in a taxpayer’s trade or business (not rentals) and certain qualified farm debt may be available to solvent taxpayers. Also, taxpayers that use exclusions are usually required to adjust their tax attributes (decrease their tax basis in properties) but when the home mortgage exclusion is used and the taxpayer no longer owns the property no adjustments to tax attributes are required.

Most taxpayers who have gone through a short sale or foreclosure that resulted in CODI are outraged when their tax accountant informs them of their tax liability.  Many will get second opinions or rant about statements their real estate agent made. In cases where solvent taxpayers short-sell their vacation homes, they are usually stuck with large CODI and a non-deductible loss, the worst of both worlds.

 

About the author – Gregory Fallon, EA provides tax planning and preparation services for individuals and businesses located in the South Bay area of Los Angeles, CA.  For more information about this article, contact Gregory at info@gregfallon.com.

 

They say the first part of fixing a problem is admitting that you have one. With that in mind, check out these lines from the Republican Party's new 100-page review of its failures in 2012 (pdf):

As part of the Growth and Opportunity Project’s effort, focus groups were conducted in Columbus, Ohio, and Des Moines, Iowa, to listen to voters who used to consider themselves Republicans. These are voters who recently left the Party.

Asked to describe Republicans, they said that the Party is “scary,” “narrow minded,” and “out of touch” and that we were a Party of “stuffy old men.” This is consistent with the findings of other post-election surveys.

So at least on paper, Republicans (or at least the ones who wrote the report), know there's an issue. But does that mean they're ready to solve it? Well, unless you think the GOP's problem has nothing to do with the policies it represents, all signs point to no:

Beyond immigration, it barely touches on policy. That was by design, according to the report, because it’s not the RNC’s purview. Still, policy is no small part of the GOP’s internal debate now, which underscores the limitations of what a party committee can do.

For instance, there are no references to abortion or Planned Parenthood — or any of the issues that were at the heart of the battle for female voters last year. The report says the GOP lost the “war on women” messaging but doesn’t make clear how the party should be on offense going forward.

Other suggestions are likely to meet with some chuckles, such as one related to doing better with younger voters: “Establish an RNC Celebrity Task Force of personalities in the entertainment industry to host events for the RNC and allow donors to participate in entertainment events as a way to attract younger voters.”

Hmmm. On the one hand, it really didn't work out too well for John McCain when he attacked Barack Obama in 2008 as "the biggest celebrity in the world." So maybe it does make sense to embrace celebrity culture.

But on the other hand, last I checked, Clint Eastwood was a celebrity. And I think we all remember what he brought to the table in 2012:

To be fair, Clint might not be the kind of celebrity Republicans need—he's had a great Hollywood career, but he's in his twilight years, he's a he, and he likes talking to empty chairs on live television. Republicans need somebody better—follow below the fold to find out the celebrity that I'd suggest they consider.

Earlier this month, researchers announced the results of a big new nutritional study in Europe that seemed to yield more evidence that processed meats like bacon and sausage can lead to an early grave. The media responded with the usual "Death by Salami" headlines. What news outlets downplayed about the study, though, is that despite their best efforts, the EU researchers couldn't find any evidence that red meat will kill you. In fact, the study shows that not eating red meat is a risk factor for an early demise.

After correcting some measurement errors, the researchers in Europe had to conclude that not only was red meat intake "no longer associated with mortality" but "all-cause mortality was higher among participants with very low or no red meat consumption." 

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