Donations

[Old guy]

Only $ 37 B? that is pretty low for Serbia.

[brianstl]

10 minutes ago, Old guy said:

Only $ 37 B? that is pretty low for Serbia.

According to the IMF Serbia's GDP for 2017 was projected to be $37.7 billion.  Unless Harvard has massively under performed just about everyone else again this quarter, their endowment should be solidly above that number. 

[Old guy]

Harvard's endowment is a lot less solid than what you think it should be. They have not got their act together at the endowment office since 2008, before that even. Yale's endowment under Swensen past them by long ago, and their (Harvard's) endowment returns are miserable compared to other schools. 

[cheeseman]

I have no problem with tightening the donation rules.  There are plenty of groups who have prostituted the idea.  My point was changing something because it is seen as a loophole is fine as long as you apply the same to all loopholes which did not happen.  My understanding is that the endowment tax is still in the passed bill but Old Guy brought up a factor that I had not read about before. 

[willie]

21 minutes ago, Old guy said:

Harvard's endowment is a lot less solid than what you think it should be. They have not got their act together at the endowment office since 2008, before that even. Yale's endowment under Swensen past them by long ago, and their (Harvard's) endowment returns are miserable compared to other schools. 

Are you talking dollars or returns? Harvard' s dollar amount is far greater then anyone else. They just spun off their natural resource  division to Bain Capital. Cost them a percent or 2.Harvard's return this year is around 8% vs. an industry average in the !3's. 

[SluSignGuy]

4 hours ago, willie said:

Are you sure this survived? I thought this was pulled in the final version, but I'm not sure. 

I think it survived.  Tax on graduate tuition remission was pulled but not endowments.

https://www.bizjournals.com/boston/news/2017/12/21/mit-harvard-say-gops-endowment-tax-will-cost-them.html

SLU won't be hit, but Wash U will.

[Old guy]

 

1 hour ago, willie said:

Are you talking dollars or returns? Harvard' s dollar amount is far greater then anyone else. They just spun off their natural resource  division to Bain Capital. Cost them a percent or 2.Harvard's return this year is around 8% vs. an industry average in the !3's. 

Their returns are poor, Yale's are much better. The raw amount the last time it was reported in the magazine was around $ 37.6 B. That was the time when they replaced the managers of the endowment with other managers, I recall some of the funds would go to outside managers which may be the Bain's Capital slice you mention plus others. They using internal knowledge and expertise to manage their funds before this reorganization and this did not work as well as they had hoped. And yes, I think their problem is not only the returns they get but the atrocious amounts they spend in all kinds of things. If their return this year is around 8% they have improved. However keep in mind that the 2017 year to date return of the SPX is 19.91% (as of yesterday's numbers, 5 days before the year closes). This means that a simple passive investment in an SP 500 index ETF would have beaten Harvard's return flat out (around 11% return over Harvard's). 

[Old guy]

OT. I happened to sit next to my wife's brother, a CPA, during the game tonight. He gave me the following tip that may be useful to any of you that pays estimated taxes. The taxes we are paying in April are for 2017,  however if you want to take the full deduction this year for all the State estimated taxes you paid, you must pay the estimated taxes before December 31st. If you pay, as it is legal to do, early in January (up to the 15th) the estimated State tax will have been paid in 2018 and will not be deductible because State taxes paid after Jan 1st 2018 will not be deductible from Federal income taxes any longer. So if you pay estimated taxes you have a week or so to get your money transferred to the bank and pay the taxes before December 31st, 2017. This is something a number of you may benefit from. I was planning to pay mine just before January 15th, but will be paying them before year end. Hope you can save some money from this tip.

[Quality Is Job 1]

5 minutes ago, Old guy said:

OT. I happened to sit next to my wife's brother, a CPA, during the game tonight. He gave me the following tip that may be useful to any of you that pays estimated taxes. The taxes we are paying in April are for 2017,  however if you want to take the full deduction this year for all the State estimated taxes you paid, you must pay the estimated taxes before December 31st. If you pay, as it is legal to do, early in January (up to the 15th) the estimated State tax will have been paid in 2018 and will not be deductible because State taxes paid after Jan 1st 2018 will not be deductible from Federal income taxes any longer. So if you pay estimated taxes you have a week or so to get your money transferred to the bank and pay the taxes before December 31st, 2017. This is something a number of you may benefit from. I was planning to pay mine just before January 15th, but will be paying them before year end. Hope you can save some money from this tip.

I'm no CPA, but my reading of the new tax law as covered in the Post-Dispatch, suggests that up to $10,000 in state taxes can still be deducted for those who itemize.

[kshoe]

6 hours ago, cheeseman said:

I have no problem with tightening the donation rules.  There are plenty of groups who have prostituted the idea.  My point was changing something because it is seen as a loophole is fine as long as you apply the same to all loopholes which did not happen.  My understanding is that the endowment tax is still in the passed bill but Old Guy brought up a factor that I had not read about before. 

The idea that every single loophole would need to be closed for you to be happy they are closing this loophole seems weird to me. Close as many as you can! This was one of the most egregious so it's good that it's closed.

[cheeseman]

6 minutes ago, kshoe said:

The idea that every single loophole would need to be closed for you to be happy they are closing this loophole seems weird to me. Close as many as you can! This was one of the most egregious so it's good that it's closed.

This loophole was closed to punish a specific group of organizations for political reasons.  My point was that had the tax bill set out to close loopholes as one of their goals then many more would have been shut down rather than just this one.  I find that you are satisfied that only one loophole was closed a bit weird.  

[willie]

4 minutes ago, cheeseman said:

This loophole was closed to punish a specific group of organizations for political reasons.  My point was that had the tax bill set out to close loopholes as one of their goals then many more would have been shut down rather than just this one.  I find that you are satisfied that only one loophole was closed a bit weird.  

I don’t believe they were out to close any specific loophole. They were out to raise revenue to keep the projected deficit under 1.5 trillion necessary to pass the bill under reconciliation. The athletic lobby was not strong enough to kill this. 

[cheeseman]

3 minutes ago, willie said:

I don’t believe they were out to close any specific loophole. They were out to raise revenue to keep the projected deficit under 1.5 trillion necessary to pass the bill under reconciliation. The athletic lobby was not strong enough to kill this. 

You are making my point - closing this loophole was not about closing a loophole at all but for political reasons (such as getting under their self imposed 1.5 trillion number).  They could have found any number of loopholes that would have accomplished their goal but for some reason they choose this one.

[RUBillsFan]

43 minutes ago, Quality Is Job 1 said:

I'm no CPA, but my reading of the new tax law as covered in the Post-Dispatch, suggests that up to $10,000 in state taxes can still be deducted for those who itemize.

I am a CPA, your reading isn't wrong, but you are missing a piece.  The $10,000 limit is for all taxes state/local income taxes, personal property taxes, and real estate taxes.  So if you have say $8,000 in state income taxes, $3,000 in real estate taxes, and $700 in property taxes, you are capped at a $10,000 deduction on your 2018 tax return.

Old Guy is right that making sure you have paid in all of your 2017 state taxes by 12/31/17 is generally a good idea (unless you are subject to the alternative minimum tax, in which case there is no benefit).  Most people are either not going to itemize their deductions in 2018 under the new law because the standard deduction is much higher or their itemized deduction for taxes paid will be capped at the $10,000.  Therefore, most will want to get that deduction for state taxes in 2017 because they won't see any benefit from it if they pay it in 2018.

[kshoe]

12 minutes ago, cheeseman said:

This loophole was closed to punish a specific group of organizations for political reasons.  My point was that had the tax bill set out to close loopholes as one of their goals then many more would have been shut down rather than just this one.  I find that you are satisfied that only one loophole was closed a bit weird.  

What political reasons are there for shutting down a ridiculous loophole that led to the federal government paying up to 39.6% * 80% of Alabama's stadium improvements and Nick Sabans salary. Seems like this one should cut across all parties, as just an utterly ridiculous tax break that needed to be ended.

have you ever heard the phrase, don't let the perfect be the enemy of the good. Saying we can only close a loophole if we close every single loophole is exactly that!

and for the record, I'm not in favor of this tax bill at all, but this part makes 100% sense to me.

[kshoe]

3 minutes ago, cheeseman said:

You are making my point - closing this loophole was not about closing a loophole at all but for political reasons (such as getting under their self imposed 1.5 trillion number).  They could have found any number of loopholes that would have accomplished their goal but for some reason they choose this one.

For some reason = it's a ridiculous  tax break that never should have been there in the first place.

[willie]

5 hours ago, Old guy said:

 

Their returns are poor, Yale's are much better. The raw amount the last time it was reported in the magazine was around $ 37.6 B. That was the time when they replaced the managers of the endowment with other managers, I recall some of the funds would go to outside managers which may be the Bain's Capital slice you mention plus others. They using internal knowledge and expertise to manage their funds before this reorganization and this did not work as well as they had hoped. And yes, I think their problem is not only the returns they get but the atrocious amounts they spend in all kinds of things. If their return this year is around 8% they have improved. However keep in mind that the 2017 year to date return of the SPX is 19.91% (as of yesterday's numbers, 5 days before the year closes). This means that a simple passive investment in an SP 500 index ETF would have beaten Harvard's return flat out (around 11% return over Harvard's). 

Without trying to defend Harvard’s returns you can!t compare endowment returns to a S&P index. While the index may be up 20+% this year it may go down that amount in the next correction/ panic. Endowments own bonds- real estate- commodities- hedge funds -alternatives ets. I believe some of the top endowment returns this year are in the 14% range. In 2008 the S&P was down 35+%. No endowment was down that much. 

[brianstl]

The non-profit business has become a joke over the last couple decades.  It became a vehicle to make a bunch of people at the top of those NFPs rich.

[cheeseman]

9 hours ago, kshoe said:

What political reasons are there for shutting down a ridiculous loophole that led to the federal government paying up to 39.6% * 80% of Alabama's stadium improvements and Nick Sabans salary. Seems like this one should cut across all parties, as just an utterly ridiculous tax break that needed to be ended.

have you ever heard the phrase, don't let the perfect be the enemy of the good. Saying we can only close a loophole if we close every single loophole is exactly that!

and for the record, I'm not in favor of this tax bill at all, but this part makes 100% sense to me.

You have missed my point - clearly the attacks on higher ed by this bill was easy to see.  They wanted to punish the "elite" and going after the sports programs is one way to cause problems with funding at a school.  All I was saying they could have picked any number of loopholes and accomplished what Willie pointed out.  It is clear from your previous posts on other topics that you feel the same way about the so called "elites" so I don't expect you to understand.  Justice is only justice when it is applied fairly - I assume you have heard this.  By the way this will hurt Billiken athletics much more than the AL of the world.

[kshoe]

16 minutes ago, cheeseman said:

You have missed my point - clearly the attacks on higher ed by this bill was easy to see.  They wanted to punish the "elite" and going after the sports programs is one way to cause problems with funding at a school.  All I was saying they could have picked any number of loopholes and accomplished what Willie pointed out.  It is clear from your previous posts on other topics that you feel the same way about the so called "elites" so I don't expect you to understand.  Justice is only justice when it is applied fairly - I assume you have heard this.  By the way this will hurt Billiken athletics much more than the AL of the world.

Sure you could pick any number of loopholes to close and raise revenue but not all loopholes are created equal. This loophole was egregious, others less so.

I don't believe this is an attack on "elites." The endowment tax could be viewed as such. This is an attack on tax payer sponsored spending on D1 athletics. I don't consider D1 athletics to be "elite." Personally I don't feel like the federal government should be spending any money (or forgoing any revenue) when it comes to D1 coaching salaries and facility upgrades.

The end result of this change will not be a bunch of schools going bankrupt. Rather D1 departments will slow down their spending on coaching salaries and facility improvements.

[Old guy]

I believe that when you talk about special favors awarded to some company or institution or even sector of the economy, what you may be talking about used to be referred to as "pork." This means politicians taking care of their own special interests, an activity that has been around almost forever and probably has been referred to by different names throughout the ages.

 

[Box and Won]

11 hours ago, RUBillsFan said:

I am a CPA, your reading isn't wrong, but you are missing a piece.  The $10,000 limit is for all taxes state/local income taxes, personal property taxes, and real estate taxes.  So if you have say $8,000 in state income taxes, $3,000 in real estate taxes, and $700 in property taxes, you are capped at a $10,000 deduction on your 2018 tax return.

This sucks.

[cheeseman]

1 hour ago, kshoe said:

Sure you could pick any number of loopholes to close and raise revenue but not all loopholes are created equal. This loophole was egregious, others less so.

I don't believe this is an attack on "elites." The endowment tax could be viewed as such. This is an attack on tax payer sponsored spending on D1 athletics. I don't consider D1 athletics to be "elite." Personally I don't feel like the federal government should be spending any money (or forgoing any revenue) when it comes to D1 coaching salaries and facility upgrades.

The end result of this change will not be a bunch of schools going bankrupt. Rather D1 departments will slow down their spending on coaching salaries and facility improvements.

Or smaller programs such as SLU will simply not be able to compete.  One man's egregious is another man's OK.

[brianstl]

3 hours ago, kshoe said:

Sure you could pick any number of loopholes to close and raise revenue but not all loopholes are created equal. This loophole was egregious, others less so.

I don't believe this is an attack on "elites." The endowment tax could be viewed as such. This is an attack on tax payer sponsored spending on D1 athletics. I don't consider D1 athletics to be "elite." Personally I don't feel like the federal government should be spending any money (or forgoing any revenue) when it comes to D1 coaching salaries and facility upgrades.

The end result of this change will not be a bunch of schools going bankrupt. Rather D1 departments will slow down their spending on coaching salaries and facility improvements.

And it wasn’t just closing the donation loophole.  They ended the deductiblity of the cost of all entertainment tickets as a business expense.  That in my view is a good thing for the everyday fan.  That deduction artificially inflated the price of tickets to all major sporting events.  

[bauman]

6 minutes ago, brianstl said:

And it wasn’t just closing the donation loophole.  They ended the deductiblity of the cost of all entertainment tickets as a business expense.  That in my view is a good thing for the everyday fan.  That deduction artificially inflated the price of tickets to all major sporting events.  

Actually, I view this business expense deduction as holding down (if anything) the price of tickets for sporting events rather than inflating the price.  Assuming the fact that many of the Div 1 programs' expenses are fixed, administrators will need to replace at least a portion of the revenue lost due to corporations ending a significant portion of their entertainment outlays.   While I'm not privy to how much SLU MBB takes in on the fee required to be eligible to buy seats in the prime areas of Chaifetz, lets just assume it is $1,000,000 and that half of that amount is needed for fixed type costs.  How is that $500,000 loss going to be replaced?  You and I are going to be part of the solution, even if we aren't aware of it.  Rather than lowering our ticket price, as you suggest, I think just the opposite is going to take place.  To make this revenue loss even more significant we need to acknowledge that even more revenue will be lost due to company's not buying the tickets anymore.

One benefit for those of us who have season tickets in the arena sections not requiring an additional donation is that we might finally be able to afford upgrading our seats to sections which now require the fee.  It is a crime to come to every game and see large numbers of Blue Seats vacant-either not sold or sold but not used.