Background: Last summer the Los Angeles Hyperion plant had an
incident which resulted in a large sewage spill and odors
affecting nearby homeowners. The plant offered affected homeowners
a choice of (A) Reimbursement of hotel expenses while staying away
from their homes. (B) Reimbursement of up to $1200 for the
purchase of air conditioners so they could remain in their homes
and close the windows. Program description: https://www.lacitysan.org/cs/groups/public/documents/document/y250/ mdyz/~edisp/cnt063342.pdf
Come tax time, we receive a 1099-Misc for the $1200 as "Other
Income". Is this type of reimbursement properly classified as
taxable income?
If not, what would be the appropriate way to handle this on the
income tax forms?
Tom Russ <tar...@google.com> wrote:
Background: Last summer the Los Angeles Hyperion plant had an
incident which resulted in a large sewage spill and odors
affecting nearby homeowners. The plant offered affected homeowners
a choice of (A) Reimbursement of hotel expenses while staying away
from their homes. (B) Reimbursement of up to $1200 for the
purchase of air conditioners so they could remain in their homes
and close the windows. Program description: https://www.lacitysan.org/cs/groups/public/documents/document/y250/ mdyz/~edisp/cnt063342.pdf
Come tax time, we receive a 1099-Misc for the $1200 as "Other
Income". Is this type of reimbursement properly classified as
taxable income?
If not, what would be the appropriate way to handle this on theThe homeowners should have gotten their own air conditioners first,
income tax forms?
and been reimbursed for them afterwards. In that case it wouldn't be
income - it would have been a reimbursement. But taking the money (or
air conditioners) first is taxable income because the program doesn't
specify that it's reimbursement for anything that would make it non-
taxable.
I guess another option would have been to say the "incident" caused
physical personal injuries (however small) and this was to compensate
them for the injuries. That would have been tax free.
But being given money or air conditioners due to an "inconvenience"
is very likely taxable.
--
Stu
http://DownToEarthLawyer.com
Tom Russ <taruss@google.com> wrote:
Background: Last summer the Los Angeles Hyperion plant had an
incident which resulted in a large sewage spill and odors
affecting nearby homeowners. The plant offered affected homeowners
a choice of (A) Reimbursement of hotel expenses while staying away
from their homes. (B) Reimbursement of up to $1200 for the
purchase of air conditioners so they could remain in their homes
and close the windows. Program description:
https://www.lacitysan.org/cs/groups/public/documents/document/y250/
mdyz/~edisp/cnt063342.pdf
Come tax time, we receive a 1099-Misc for the $1200 as "Other
Income". Is this type of reimbursement properly classified as
taxable income?
If not, what would be the appropriate way to handle this on the
income tax forms?
The homeowners should have gotten their own air conditioners first,
and been reimbursed for them afterwards. In that case it wouldn't be
income - it would have been a reimbursement. But taking the money (or
air conditioners) first is taxable income because the program doesn't
specify that it's reimbursement for anything that would make it non-
taxable.
I guess another option would have been to say the "incident" caused
physical personal injuries (however small) and this was to compensate
them for the injuries. That would have been tax free.
But being given money or air conditioners due to an "inconvenience"
is very likely taxable.
"Stuart O. Bronstein" wrote
Tom Russ <taruss@google.com> wrote:
Background: Last summer the Los Angeles Hyperion plant had an
incident which resulted in a large sewage spill and odors
affecting nearby homeowners. The plant offered affected
homeowners a choice of (A) Reimbursement of hotel expenses while
staying away from their homes. (B) Reimbursement of up to $1200
for the purchase of air conditioners so they could remain in
their homes and close the windows. Program description:
https://www.lacitysan.org/cs/groups/public/documents/document/y25
0/ mdyz/~edisp/cnt063342.pdf
Come tax time, we receive a 1099-Misc for the $1200 as "Other
Income". Is this type of reimbursement properly classified as
taxable income?
If not, what would be the appropriate way to handle this on the
income tax forms?
The homeowners should have gotten their own air conditioners
first, and been reimbursed for them afterwards. In that case it
wouldn't be income - it would have been a reimbursement. But
taking the money (or air conditioners) first is taxable income
because the program doesn't specify that it's reimbursement for
anything that would make it non- taxable.
I guess another option would have been to say the "incident"
caused physical personal injuries (however small) and this was to >>compensate them for the injuries. That would have been tax free.
But being given money or air conditioners due to an
"inconvenience" is very likely taxable.
Why wouldn't this be considered a gift? After all, the homeowner
is doing nothing in return to "earn" the $1200. I always
considered the difference between a gift and income is that a gift
is something given to someone with no expectation of getting
anything in return. On the other hand, income is paid to reward
some kind of effort or action by the recipient. In this case, it
seems the homeowner does nothing to "earn" the $1200 and the
provider of the money is seemingly getting nothing in return. So
why is this not a gift?
"Rick" <ri...@nospam.com> wrote:
"Stuart O. Bronstein" wrote
Tom Russ <tar...@google.com> wrote:
Background: Last summer the Los Angeles Hyperion plant had an
incident which resulted in a large sewage spill and odors
affecting nearby homeowners. The plant offered affected
homeowners a choice of (A) Reimbursement of hotel expenses while
staying away from their homes. (B) Reimbursement of up to $1200
for the purchase of air conditioners so they could remain in
their homes and close the windows. Program description:
https://www.lacitysan.org/cs/groups/public/documents/document/y25
0/ mdyz/~edisp/cnt063342.pdf
Come tax time, we receive a 1099-Misc for the $1200 as "Other
Income". Is this type of reimbursement properly classified as
taxable income?
If not, what would be the appropriate way to handle this on the
income tax forms?
The homeowners should have gotten their own air conditioners
first, and been reimbursed for them afterwards. In that case it
wouldn't be income - it would have been a reimbursement. But
taking the money (or air conditioners) first is taxable income
because the program doesn't specify that it's reimbursement for
anything that would make it non- taxable.
I guess another option would have been to say the "incident"
caused physical personal injuries (however small) and this was to >>compensate them for the injuries. That would have been tax free.
But being given money or air conditioners due to an
"inconvenience" is very likely taxable.
Why wouldn't this be considered a gift? After all, the homeownerGenerally only humans are allowed to make gifts from a tax
is doing nothing in return to "earn" the $1200. I always
considered the difference between a gift and income is that a gift
is something given to someone with no expectation of getting
anything in return. On the other hand, income is paid to reward
some kind of effort or action by the recipient. In this case, it
seems the homeowner does nothing to "earn" the $1200 and the
provider of the money is seemingly getting nothing in return. So
why is this not a gift?
standpoint. And it's only a gift if it comes from disinterested
sense of generosity. These payments were for a specific purpose, not
out of pure generosity. Income tax is imposed in any accession to
wealth that is not subject to an exception. It has nothing to do
with working for it.
--
Stu
http://DownToEarthLawyer.com
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