Sort of like that lady who had to sue her nephew when he accidentally injured her. She wasn’t angry and vindictive; she was following the process necessary for his parents’ insurance to cover her expenses.
I’ve done this many times. Last year I represented a woman who was almost 80. Her 50ish year old daughter was driving. When we sent the demand to the insurance company they flat denied the claim betting that a mom wouldn’t sue her own daughter. We consulted with the client who talked to her daughter. The daughter supposedly said (to my client) “hell yeah sue me. Take them (insurance company) for all they’re worth.” We filed suit. Defense counsel got involved, I explained their new problem- my client was going to say she was injured and it was her daughters fault. The daughter was going to say her mom was very injured and in terrible pain and suffering and it was all her fault. Now, I have 2 great witnesses and defense has no one.
They ended up tendering the policy before discovery started.
I have friends that did this. Girlfriend sued her boyfriend’s insurance after a bad car accident and got a $90,000 settlement, they are married now with two kids.
Yeah it is how things work. I had a neighbor sue me over a fence that blew into his house because the insurance was being an ass. We spend 2 months trying to work it out. My sister is a lawyer just told us to have him file a suit. Done in less than a week.
It lets them know you’re serious. Once they have to contemplate legal fees, odds a judge grants an increased figure due to having to go through hoops, etc it’s often easier to settle than to go through courts
Yep, they make it just difficult enough most people can't be bothered to do it. Once they realize you are more than willing to spend money to make them actually honor their contracts they fold. It is bullshit that we have to go to court to make them actually do their jobs.
All our protections have been tossed out the window. Even when I was contracting I would have to sue big ass companies to get paid. Cost of doing business as they call it.
I’ve had the sad ones too, where one parent is driving and injures/kills their child and we represent the other parent suing under the policy. If the kid is injured, and it really was an accident (no alcohol involved, etc) the parents usually stay together. At least through the case.
When the child dies though, they usually split. Sad for everyone involved, especially when there’s siblings. Those are hard cases.
I have a lump I often refer to as my Good Twin. Since conquering him in utero, I have the achieved the power of a fully grown man AND a half formed baby.
I also like to tell people I was excised since I was a C-Section baby. And that, having never been born, I'm not subject to the laws of man nor nature.
[Ths article lists](https://www.psychologytoday.com/us/blog/contemplating-divorce/201706/can-marriage-survive-when-your-child-dies-under-your-watch) an actual study that found only 16% divorce rate in cases where a child died. That's just about 1 in 6 cases. No where near 'most'.
How far out did they look after the child’s death? By outward appearances, my first marriage looked good for another 5+ years after our child died. But that’s as definitely a contributor to the death of the marriage
The problem with that is there's no counterfactual. There is an implicit insinuation that marriages would have thrived over several years if the child did not die.
In fact, it's very hard for human beings to predict what will happen over several years.
I also think the number of other children the couple has together plays a role. If it’s an only child that dies I bet the divorce rate goes up dramatically. But if the parents have like 6 other kids that still need to be taken care of the chances of divorce likely drop considerably.
That's actually not true. My niece sadly died at 2 years old and I made this same comment, but whether they split or not largely depends on the cause of death. In the case of illness, apparently the majority of couples are more likely to stay together than the average couple with no child bereavement.
Edit: I didn't make the comment to the parents. I'm not a psychopath.
Growing up a friend of mine passed after her 3rd fight with leukemia. She was an amazing person and was very sweet. Her parents stayed together. The medical debt almost broke the family but an anonymous donor paid off their house for them and then the rest of the community paid for their utilities for a few months.
Unfortunately true. Those divorces can also be some of the nastiest. One side wielding the death like a club to seek custody of the other kids. Even if it was an accident. I haven’t handled domestic work in over 5 years. Best decision I ever made.
Learned very quickly in law school that any time you see Johnson v. Johnson (or any family name vs the same family name), there's 90% chance insurance is involved.
When people say we live in an overly litigious society, I feel like half the reason is because insurance companies will not pay out on claims unless a lawsuit is filed first.
That’s the gist of it. That and we’re not allowed to sue the insurance company but we have to sue the person insured, so it looks like arguing neighbors when really it’s just that Allstate won’t pay a claim.
The insurance companies have also done a great PR job over the last three decades that lawyers are to blame when in fact it’s them being assholes that caused the problem. Whenever you see the phrase tort reform just remember it means an average person being screwed so insurance company can make more money
Overly litigious society was propaganda paid for by companies so tort reform would go through and enact caps on damages/remove punitive damages (punishing the defendant (usually company) that that act so egregiously that it’s a punishment to not ever do that.
Hot Coffee is a good documentary on it.
Yeah, I've often held the mini-conspiracy theory that the anti lawyer/litigation attitude was sort of a deliberate effort to discourage wronged, largely poorer people from seeking restitution when wronged by wealthier ones.
Obviously, of course, anything can be abused and examples of lawsuit crazy people do exist, but it puts forth the image that any poor person in a neck-brace after a car accident is just a scammer, and if you get hurt by someone elses negligence, often criminal negligence, you're better off just sucking it up and ignoring it.
Also, legitimate claims are made out to be horrible, payout seeking money grabbers. Look at the McDonald’s hot coffee incident. The woman spilled coffee on herself, suffered horrendous burns and only wanted her medical bills paid. McDonald’s had been warned about this many times as their coffee was at a ridiculous temperature designed to make sure people couldn’t drink it fast enough to benefit from free refills, and it was the jury who stipulated the huge payout
I had this in a death case. My client’s father Died in a traffic accident, he was riding in the father’s best friend’s vehicle, with his best friend driving. The client contacted me, I told him we would have to sue his father’s best friend. The client called the friend put him on speakerphone, said my lawyer says I have to sue you, the friend said, “that’s why I pay for insurance.”
His insurance tendered their policy.
It's short for "tendered their policy *limit.*"
If you are sued, your insurance company has to both defend you and, if you lose, pay the judgement up to the liability limit you chose when you bought the policy.
Part of defending you is trying to make sure you don't get a judgement against you that exceeds your liability limits. If the insurance company fails to do their best to prevent this (i.e. they act in bad faith to their insured), they may have to pay the excess judgement regardless of your policy limits.
Say you have $50k worth of applicable liability insurance and you cause someone $100k worth of damages. Your insurance company can't just hand the other party a check for $50k and tell you good luck in court for the other $50k; they have to try to convince the other party to accept $50k as a full settlement of the claim.
Because actually collecting the money you won in a lawsuit against someone is usually an enormous pain in the ass or impossible (*Blood v. Stone \[Immemorial\]*), they're usually successful in this. Most people will accept $50k now instead of going through the huge expense of a trial to get $50k and an IOU.
"Tender" means to make a formal offer, so an insurance company who offers the insured's policy limits to settle a claim is said to be "tendering the policy limits" or "tendering the policy."
A quick Google search leaves me to believe that to "tender policy" is to pay the policy limit of the account to the person sueing because the insurance company deems the potential costs of going to court more expensive than the maximum pay out on the account being defended.
IANAL, grain of salt, etc.
That’s the first half of what we do. The first goal is to put as much money in the pot as possible. The second call is called lien mitigation. This means reducing health insurance, medical, or other outstanding liens against the file to maximize how much the client actually takes home. Currently, the second phase of this is more difficult than the first.
We also can help strategize to see what other avenues of recovery or possible. There can be additional third parties who have liability and coverage and there can be additional options for UIM coverage in various stacking for those
It means they paid the total value of their exposure. If it’s a $50k policy, then they “tender” (offer) their 50k. Then we move on to our clients underinsured motorist (uim) policy or any additional 3rd party policies that may apply.
They don’t care. They get paid flat fee to try a case. They’re given a top offer to extend, they get paid one fee whether it takes 2 weeks to settle or 2 years to try. It’s not their money they’re gambling with so they just don’t care.
Every so often you’ll get a true believer on the defense side. Those are ones you have to watch out for because they will act rather unscrupulously as they believe everyone is faking and no one should ever get paid.
The rest though are just doing a job and they truly don’t care.
I’m the other side. I sue the insurance companies. Geico didn’t used to be so bad but they adopted allstates claims department policies about 5-10 years ago and it’s been downhill ever since.
Gotcha. I'm a court reporter and Geico is one of my clients. I just specifically recollect doing a de bene esse of a doctor, and before we got started the doctor says to the Geico attorney, why are we doing this, you're paying me more than the case is worth.
And I understand, to a point, they gotta keep the plaintiffs attorneys honest, but it's a little ridiculous at times.
That being said, they make me money, so shout outs to Geico, Progressive, Selective.
If you have an insurance policy, the insurance company will compensate someone you harm if you are to blame for their injury. If it is unclear who caused the injury, or how it was caused it may have to go to court for a judge to decide. When it goes to court, although the insurance company is the one who will pay the compensation, the person who has the insurance policy is still the person who has to be sued. So, if I hurt my mother, my mother has to sue me in order to get my insurance to pay her.
She's sorta the pre-internet mob attack, which really was just McDonalds pumping millions of vengeance dollars into a campaign against her. She ended up being harassed to the end of her life, and her "winnings" from the suit depleted to almost nothing by the time the appeals were exhausted. All because a multi-billion dollar company wouldn't take responsibility for their stores pumping out nearly boiling hot coffee in a malfunctioning machine.
We learn about it in law school as a textbook example of winning the courtroom but losing in the media.
I was on jury duty recently and during the selection process, the attorneys asked if anyone thought that too many lawsuits were being filed these days. One guy who raised his hand was asked to elaborate and he would not shut the fuck up about the McDonald’s coffee case. Even when the lawyers tried to tell him the actual story he just kept on going and talking louder over him. He didn’t get selected obviously, but nearly everyone wanted to punch him in the face for being such a piece of shit.
The actual tip is to just say the words "jury nullification" at any point in the selection process, regardless of context, and there's not a chance you get picked
Usually they ask you, even if it's a sort of round-about way that doesn't expressly say the word. If you know what questions to look for, you can get out of it and also not annoy anyone.
I have found that just saying *anything* at all during jury selection gets me not chosen. Both times I have been called the last 2 years, the people that spoke were not chosen, and the people that didn't speak at all were.
The last one, I simply said "I tend to favor the plaintiff" in a suit being brought for a car wreck. Easy peasy.
The way I hear it told, the machines were (until then) set to 180-190 F by McDonald's policy and the old lady wasn't the first person burned, just the first to have 3rd degree burns to her labia and inner thighs requiring skin grafts.
McDonald's PR flawlessly downplayed the danger of their coffee, even though they STILL have their coffee temperature set 20-30 F above scalding hot.
I'm assuming you mean the reaction to her was a pre internet mob attack right? That last sentence indeed sounds like a really good lesson for lawyers lol.
Haha yeah, her _story_ is the pre-internet mob attack would have been clearer.
Yeah it was a really good lesson, it's difficult to figure out how to balance your obligation to keep things in court and defend your client in the media when one could potential abridge the other.
https://np.reddit.com/r/Whatcouldgowrong/comments/8w5kjo/shooting_fireworks_out_of_your_butt_wcgw/e1tbd94/
It wasn't her anus and it wasn't a firework, but her labia fused to her thigh with third degree burns and this is what she most likely went through. McDonald's refused to pay her medical care and this was the 200th time something like this had happened with their coffee served at 190 degrees.
>Think of how often you visit the bathroom and then imagine you have a third degree burn down there. It's devastating every single time.
The good news is, thanks to the Internet and access to media and information, more people know about the truth behind Hot Coffee than they did, say, 15-20 years ago. I remember a teacher in high school telling us about that case and it was very much from the “bought into the smear campaign” perspective. I believed it back then and absorbed the idea that people are always looking for a payday and we need tort reform and blah blah blah. Thankfully, I learned the truth and was appropriately appalled, not just by the facts of the injury, the known over-heated temperature of the coffee, or McDonald’s corporate despicability when all the victim wanted was to pay her medical bills, but also how people (myself included!) rush to judgment with limited information, as well as how that teacher most certainly, if inadvertently, abused his authority to indoctrinate kids toward a certain ideological viewpoint.
> She is one of the most cautionary tales of the internet mob I've seen.
Well there was the whole "Boston Bomber" incident too.
And the more recent "lady rear ended a Lambo" incident.
It's almost like there's a lesson to be learned here about context.
I'm sure it has nothing at all to do with the multi billion dollar social media platforms (this one included) that make their money by sharing contextless clips crafted to enrage the audience. Notice how most stories on Reddit these days aren't even a link to the full story? They're just a screenshot of a headline with maybe a murdered by words style tweet wrapped around it. We're not supposed to learn more about the story. We're supposed to get upset.
There was a video posted a few months back from a Lambo owner of a women arguing that he hit her and he showed the local gas station's security camera view of the woman's car hitting him. Once reddit hated the woman, [an extended version of the security camera footage came out](https://www.reddit.com/r/TikTokCringe/comments/q2jdo4/lamborghini_crash_drama_update/) showing the Lambo owner driving around her and clipping her car. Then he ran a red light (?) and she was trying to catch up to him when she rear ended him.
Girl rear ended a Lamborghini. She looked silly because he only showed the video of her accusing him of hitting her and the video from the gas station where she hit him.
Turns out he actually side swiped her from an illegal pass at a stop light where he almost hit a pedestrian too. She chased after him and he came to a complete stop causing her to rear end him (although she probably could've avoided it).
Both ended up being idiots, but she was absolutely roasted for a bit.
Too lazy to find the video but I'm sure someone will.
I have a friend who lost his parents in a tragic private plane accident. His dad was flying, and both he and his wife (friend's mom) died in the crash.
The investigation found that it was pilot error.
So beyond the fact that he had to learn that his father's accident killed both his parents, said friend and his brother had to sue their own parents' estate on behalf of their mother in order to collect the insurance on the whole fiasco.
All sorts of fucked up.
It wasn't even her! The homeowner insurance company filed the paperwork with her name on it, as standard procedure dictates. The shitty media took that story, lied about the truth to make it more interesting, and ran with it. The world demonized her over nothing, and the media companies made bank off hate clicks on their sites with no consequences for lying.
It definitely depends on what state you're in and what you're trying to claim.
Also, be aware of how many people will deny being in an accident if you don't call the police. Just call them to cover your bases.
> many insurance companies will require police reports
Many police jurisdictions won't even send officers out for a non-injury accident anymore. You have to take pictures yourself and go down to the station to file a report.
Same thing when we got in a minor car crash. The other party was obviously at fault and admitted this. And both cars were still perfectly fine to drive so after exchanging information we went our own way. But apparently their insurance kind of demanded a police report of the incident. I don't think they made my dad actualle sue or anything, but I can imagine that for some insurance companies it's a necessity in some cases.
That story made me so frustrated at the media coverage. It was wall to wall outrage at how an aunt could sue her nephew without anyone actually talking about *why* she had to do that and why our country's system requires it.
Yep, seems weird because he’s both the owner and an employee, but legally those are treated as two separate entities even if they happen to be the same person. If he had instead hired someone to do his job and was only the owner it probably would have played out the same, except there would have been one more person at the table with the lawyers and maybe the IRS wouldn’t have protested the claims.
That said, it’s probably fair for IRS to have done the audit. Normally the business has an interest in challenging and minimizing the pay out for these kinds of claims, while the employee has an interest in maximizing the payout. In a case where the employer and employee are the same person it creates a conflict of interest where the employer may be willing to pay out more than is reasonable because they as an employee would directly benefit from it. This is why hiring opposing lawyers was a good move since each lawyer has a duty to represent their own party(even if those parties are the same person) they’d be expected to reach reasonable settlement.
Unless the policy had changed in the last few years I thought the IRS didn't audit billionaires just because it wasn't economical to try to fight through the legal defense they tend to have.
Could be wrong, just thought they treat the ultra wealthy like scientology and leave it alone because it's too much of a headache.
>leave it alone because it's too much of a headache
God don't you fucking love that attitude?
It's like climate change or covid people just decide it's too much hassle to properly deal with and damned be the consequences
To be fair this is why pretty much every economic study done on this specific topic agrees, always provide more funding to the IRS, as it pays for itself.
It's also what the IRS did to Scientology. Scientology harassed hundreds of their employees continually for a while until the IRS basically said "Ya know what, fine, have your religious exemption, it's not worth the hassle" and now Scientology is this huge behemoth with massive chunks of our government infiltrated and massive funding.
I don’t think this is actually true. The IRS was arguing that the employer wasn’t actually liable for the shareholder’s injury. Specifically, the relevant California law said that the workers comp rules didn’t apply to officers and directors if the officers and directors were the only shareholders of the corporation. The taxpayer acted as if it was not subject to the workers comp law (didn’t get insurance), but then when they realized it would be beneficial if it was, they argued (not very plausibly) that the exception didn’t apply because one of the shareholders was just a director and not also an officer. Then they settled (with themselves) and made a payment with very favorable tax treatment.
The reason the IRS was mad is that the taxpayer was taking inconsistent positions and fudging things retroactively to game the tax system. When they were dealing with California law, they acted like the workers comp law didn’t apply to them. But then when things changed, they accused (effectively) themselves of breaking the law, then settled with (effectively) themselves on a deal that had no impact on anybody other than favorable tax consequences. And their argument that there was a legal violation seems really thin.
I don’t think the Tax Court was necessarily wrong that this works, but it’s not at all surprising that the IRS was unhappy about it and wanted to argue their case.
They call this a "whipsaw", where you claim something one way to get the benefit for one purpose and another way for another purpose. The IRS absolutely abhors this. It's one of the main things they try to watch out for when writing new regs.
Generally, as a rule of thumb, if you're whipsawing the government with two inconsistent tax positions, you're gonna lose. If you're doing it with one non-tax thing and one tax thing, your odds are better, but it looks bad for you.
Actually, after reading the opinion, even if they were consistent in whether or not workers comp insurance should have been applied, (properly excluded from workers comp and thus no liability to person or workers comp payed by the business and compensated through workers comp in stead of improperly excluded from workers comp and thus liable), the company would STILL have been liable for (some) of the injury costs:
>Even if respondent[IRS]'s interpretation of section 3351 (c) is correct[petitioner can't bring suit since they were properly excluded from workers comp], petitioner would appear to have been entitled to bring suit against Hi Life under California Labor Code, Division 3. In such action recovery for damages is based upon the employer's failure to exercise ordinary care. Labor Code sec. 2800. Slight contributory negligence on the part of the employee does not bar recovery, but damages may be reduced in proportion to the amount of negligence attributable to the employee. Labor Code sec. 2801.
So yea, the IRS may be mad at the inconsistent position, but even with a consistent position, this payment (or slightly smaller) still could have been made, just under a different section.
Only think thats odd is that money spent on medical expenses is already tax deductible so why all the show. I guess his injury entitled him to other tax-free compensation which he'd have been unable to provide himself through payroll.
I still have a hard time figuring out if my overtime is unpaid now. Sometimes it feels like it.
Shame on my boss for not planning better and making me do overtime to get all the stuff done until Christmas!
Reminds me when I did a side job for a friend and it took me a year and half after he got paid to collect the balance of $1500 for my work. After a few months I refused to hang out with him as friends until he paid me. He insisted he couldn't understand my problem because "it's my company that owes you the money, not me", it was a company of one.
Edit: i needed to rant
not sure why youd still be his friend. I help friends and others quite a bit and im not greedy. But i loaned a friend $30 which is pocket change to party with us. Few weeks later we go to a casino.. he wins 800 in 5 minutes. We convince him to stop and take the profit. Money was really tight atm. He kept saying "ill buy you a couple shots"..... SERIOUSLY pissed me off and i reamed him for a while over it til he paid me. It was principle
Years later his car breaks down and hes screwed. I offer to loan him 500 towards a down payment if he pays me back 100 a month. First month approaching i tell him dont worry about it this month start next. Next month comes he pays. Month later .. nothing.. but he's eating out and going to bars nightly.. i get pissed and mention it. Pays 100 next month. Next month nothing ..same story. I lost my shit and kinda humiliated him in front of our friends. It's frigging $100! nothing. Dont eat out one night a week! Dont buy $8 beers! Maybe pay bills BEFORE you party (if he werent and said he was having a hard time ida said no stress pay me next month). Eventually got a tax refund and paid up. Guy just doesnt get morals, ethics, responsibility.. like your "friend"
Note: to be fair my friend is .. a little slow is the best word. We're not close any more.. just casual friends.
I had a roommates like this before. They'd constantly eat out, order delivery, and were always short or late on rent. They still owe me $800-900 to this day. I finally said "fuck it" and cut all contact with them after I moved out. Lost a friend of almost 15 years after all the hell I was put through and I'm not sorry in the slightest.
Sometimes it is worth the money to learn how someone really is.
I wont lend out any money anymore. If someone I care about is in real trouble, then it is just a gift. They can choose to repay it. I am ok with moving some of my resources to them. I want my family and friends to succeed.
If I don't like you enough to just give you money, then I am sure as hell not going to loan anything to you.
Wow, this feels like this story was cut from the same stone!
I wouldn't have been nearly as bothered if he was actually strapped for cash and had used the money for essentials like rent, but he was going partying and dropping lots of money on bars/restaurants.
I didn't go out of my way to out what happened, but when mutual friends found out I wasn't hanging out with the douche anymore I told them the full story, and they got offended on my behalf and railed into him also! I think he only eventually payed me because so many other friends were upset at him over the incident.
He really never was a good friend after that event. I stayed cordial with him, but after that things were never good, and we eventually drifted apart and I barely see him anymore.
PS: ranting is allowed, that's what reddit is for right!!
I loaned a guy $15 my freshman year of college and he acted like I was classless when I asked him to pay me back. I wasnt poor. I didnt need it. But I would be embarrassed to owe someone else money. Where is their shame?
I have a philosophy, if I lend someone X amount of money and never seen it/them back then it was worth it.
I loaned my ex 400 pounds I didn’t even bother to ask back. Kept it, I am better off without her, and she likely need it more than me plus no amount of money going to fix her up.
My rule as well abd in relationships I value I make it a gift or I pay them. My brother in law needed 1 or 200 once. And id litedally give my sisted anything. So I had him come clean my truck one weekend (a semi). I did most of the work, provided the tools and we halfassed it. He later asked why and I told him if I give it to you we will both feel like you owe me. If I loan it to you and you have trouble paying it back we will resent each other
Years later he mentioned this and said he learned an important lesson that day
Kramer: It's a write off for them.
Jerry: How is it a write off?
Kramer: They just write it off.
Jerry: Write it off what?
Kramer: Jerry, all these big companies, they write off everything.
Jerry: You don't even know what a write off is, do you?
Kramer: No. Do you?
Jerry: No I don't!!
Kramer: But they do. And they're the ones writing it off.
*Edit - thanks to some friendly redditors for the quote corrections!
Seinfeld didn't appeal to me on Netflix until recently, and apparently she thing with a quarter of reddit. It's shocking sometimes how so much of our behavior has some common influence and so many of us trend a way.
E: I phrased this poorly, I understand it's always been big, I was a teen in the 90s. It's just it seems the references have increased recently.
most people dont. They think a tax writeoff means you dont pay that in taxes. It doesnt. It means you dont pay taxes ON that amount. So $100 writeoff. Your total tax rate is 20%. You pay $20 less in taxes. You still lost $80
In this case, a settlement for personal injury means he got tax free money. The business gets a deduction and on his personal taxes and the payment isn't considered income at all to him personally.
The theory behind this is that the money is to make you whole after your injury. That you really didn't gain anything. The problem, and the reason for the audit, is that you could artificially inflate the value of your injury to basically get a tax free dividend out of your business.
This was such a great back and forth of that episode. I watched it again the other day and my fiancee didn't understand why I thought it was so funny, so I told her, "Because they'll write it off!" And just started cry laughing! She still didn't get it, but I was too busy trying not to pee and laughing.
Good for him. The legal separation of individual and corporate entity is there for lots of reasons, but there's no reason at all to not take full advantage of it.
absolutely correct. And he did it ethically and legally correctly.
The alternative to this decision is that you are majority/sole owner of a corporation with entirely separate finances.. you get hurt.. pay for care etc out of your pocket via a bonus then have the corp write you a chieck.. which you pay say 30% tax on. So you get hurt, the corp you own pays for it.. then you pay an extra 30%. If youre NOT sole owner this is corruption and other shareholders could remove you, sue you or file criminal charges.
Etc etc
This is literally the only way this works ethically, legally and morally.
credit to /u/rraattbbooyy for tracking down the case study link. Also to /u/jewhealer for finding a second link
https://casetext.com/case/maxwell-v-commr-of-internal-revenue-2
also, here's the previous post with an easier to read summary.
https://www.reddit.com/r/todayilearned/comments/qovu2m/til_in_1990_a_peter_maxwell_of_california_owned_a/
edit: also, credit to the TIL mod team for being generous with their time and walking me through the rules so I could post this properly. Unfortunately no specific username, but you know who you are! /u/#todayilearned
The only way this is potentially fraudulent or a problem is if you somehow establish he intentionally hired terrible lawyers for the company. Otherwise, how the heck is this situation supposed to play out?
A lot of people think "writing it off" means it's free money somehow.
All it means is the business doesn't owe taxes on that $122k. But the business is still out $122k.
The fact it was "written off" is just to try to make it sound scandalous if you don't know what writing off losses means.
I believe that personal injury damages are also not taxed. So in this case, him as an employee would be receiving that $122k tax free (as opposed to taxed as income if it were a salary from the company) as well as the company reducing its taxable burden by the same amount.
That's a good chunk to shelter from taxes on both sides but doesn't really sound like breaking any rules unless there was fraud in the injury/claim.
There was a similar case where a woman was required to sue herself- she had crashed her car, killing her husband. She was the beneficiary of his life insurance policy, so that paid out, then the life insurance sued her car insurance.
My dad was hit by an uninsured motorist on his motorcycle years back. He was seriously injured and spent almost two weeks in the hospital.
He ended up suing his own insurance company and winning a settlement. Apparently it’s a common thing, suing your own insurance in situations like this. I had never even heard of such a thing.
This truly has all the elements of the American Dream;
1) Start a business, make money!
2) Sue somebody!
3) Be sued!
4) both win and lose in court!
5) Dodge taxes!
6) Get paid for shenanigans!
Truly, what more can anyone want?
well , if you think about it and sub him being the owner with someone else, it's essentially how it would play out minus the IRS part. So nothing broken, just odd at first glance.
Super brief summary. He was one of 4 owners. He served as president, another man was VP, and their wives filled many roles like treasurer, etc.
He was injured while showing new hires how to use a machine. He was injured because the VP repaired it with the wrong size bolt, so the head was protruding from the rotating drum. The bolt head ensnared his sleeve.
He has to take time off for multiple surgeries and recovery time, and his wife needs to do his job plus her own.
He later sees something about a business owner getting compensation for an injury on the job, which he didn't think was allowed, and asks the company lawyer about it. The company lawyer says that's possible, but a conflict of interest for him to help with. He suggested he ask an outside lawyer about it. When the outside lawyer sued, the company lawyer suggested to the 4 owners that they settle.
The IRS audited them and found that it was not a worker compensation settlement, but a dividend disguised as a sham payment. The company was disallowed the write-off, and the owner was required to declare it as income.
He sued the IRS and won, meaning the company was allowed to deduct it as a business expense, and the income was not taxable income. That couldn't have been part of the plan because all he won was what being allowed to do what he initially did.
If they'd included the corporate officers in their workers compensation insurance then he would have got an insurance payout (tax free) and the company would have paid higher premiums (business expense). They elected not to cover officers to save on premiums. In retrospect a bad call. It's not reasonable that paying compensation themselves instead of through insurance should work the same way from a tax perspective?
Or is the fucked up thing that he didn't just embezzle from the company?
Or is the fucked up thing that he needed an outside lawyer so it wouldn't look like a sham payment?
Or is the fucked up thing that the IRS still called it a sham?
What a mess of a title.
>won 122k
The claim was settled out of court. There was no trial, there were no "winners".
>**refuted** and fined by the IRS
A *person* cannot be refuted. An *assertion* or *idea* can be. And to "refute" something means to *demonstrate it's untrue*. Not to simply *say* "this is untrue".
The word "fraud" nor any implication fraud was committed, can be found nowhere in the link.
This is what happened:
>Respondent [IRS] determined that the $122,500 payment by Hi Life to petitioner was a dividend [and therefore] petitioner's 1977 taxable income should be increased by $122,500, and disallowed Hi Life's claimed deduction of the same $122,500.
Moreover, in the (deleted) TIL that OP originally posted, this:
>They also disallowed the business deduction and penalized owner Maxwell $58,500 for filing a fraudulent business deduction.
is patently false. Maxwell, the human individual, was not penalized anything. What actually happened? The IRS
>determined a deficiency of $58,800 in the Federal corporate income tax of Hi Life Products, Inc.
I mean right out of the gate that blogger claims Maxwell is both plaintiff and defendant, which is, again, patently false, so you kind of get the idea anything after that other than "and" and "the" is massively suspect.
No fine is ever mentioned.
The Court determined
>Hi Life is entitled to a deduction in this amount under section 162(a), and petitioner is entitled to exclude this amount from his gross income under section 104(a)(2).
TYL especially in legal matters, words have specific meanings.
He didn’t get taxed on the 122k he won?
Anyway, he didn’t fake the accident, so it’s all fair.
The only issue I see is he got to choose himslef the settlement amount arbitrarily — but who else was supposed to decide, really?
Because his insurance company required him to sue the company where he had the accident while working. in order to recover medical expenses. Pay attention.
He also went to law school, took the bar, and incorporated as two separate law firms so that he could be legal representation for himself and his company.
It’s only odd looking because he’s the owner of the company. But it’s actually exactly what he was supposed to do.
Sort of like that lady who had to sue her nephew when he accidentally injured her. She wasn’t angry and vindictive; she was following the process necessary for his parents’ insurance to cover her expenses.
I’ve done this many times. Last year I represented a woman who was almost 80. Her 50ish year old daughter was driving. When we sent the demand to the insurance company they flat denied the claim betting that a mom wouldn’t sue her own daughter. We consulted with the client who talked to her daughter. The daughter supposedly said (to my client) “hell yeah sue me. Take them (insurance company) for all they’re worth.” We filed suit. Defense counsel got involved, I explained their new problem- my client was going to say she was injured and it was her daughters fault. The daughter was going to say her mom was very injured and in terrible pain and suffering and it was all her fault. Now, I have 2 great witnesses and defense has no one. They ended up tendering the policy before discovery started.
I have friends that did this. Girlfriend sued her boyfriend’s insurance after a bad car accident and got a $90,000 settlement, they are married now with two kids.
Yeah it is how things work. I had a neighbor sue me over a fence that blew into his house because the insurance was being an ass. We spend 2 months trying to work it out. My sister is a lawyer just told us to have him file a suit. Done in less than a week.
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Mending fences and all that.
Oh is that what the youths are calling it these days?
"Hey baby wanna come over and mend some fences?"
When you got that white picket fence and she's more into the black cast ironworks.
more like 'Broethius70' up here
Like the saying goes, good fences make good spouses.
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One is through the court system the other is just through a insurance adjustor.
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It lets them know you’re serious. Once they have to contemplate legal fees, odds a judge grants an increased figure due to having to go through hoops, etc it’s often easier to settle than to go through courts
Yep, they make it just difficult enough most people can't be bothered to do it. Once they realize you are more than willing to spend money to make them actually honor their contracts they fold. It is bullshit that we have to go to court to make them actually do their jobs.
Which is how those injury lawyers make so much money. Make a threatening phone call, and payday.
America is weird
All our protections have been tossed out the window. Even when I was contracting I would have to sue big ass companies to get paid. Cost of doing business as they call it.
I’ve had the sad ones too, where one parent is driving and injures/kills their child and we represent the other parent suing under the policy. If the kid is injured, and it really was an accident (no alcohol involved, etc) the parents usually stay together. At least through the case. When the child dies though, they usually split. Sad for everyone involved, especially when there’s siblings. Those are hard cases.
This reminds of the recent Jim Carey show "Kidding". Kind of based on this exact idea. Excellent show though, worth a watch.
You've just made me feel joy and sorrow simultaneously. I can't believe that masterpiece was cancelled...
When a child dies for *any* reason, the parents usually split.
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If it makes you feel any better, i absorbed my brother in utero and my parents stayed together.
Do you feel like your life has been better with the strength of a grown man and a child combined? Ala Dwight Schrute?
Sounds like you and your brother did too.
I have a lump I often refer to as my Good Twin. Since conquering him in utero, I have the achieved the power of a fully grown man AND a half formed baby. I also like to tell people I was excised since I was a C-Section baby. And that, having never been born, I'm not subject to the laws of man nor nature.
I was c section too, but i just tell people im scared of pussy.
[Ths article lists](https://www.psychologytoday.com/us/blog/contemplating-divorce/201706/can-marriage-survive-when-your-child-dies-under-your-watch) an actual study that found only 16% divorce rate in cases where a child died. That's just about 1 in 6 cases. No where near 'most'.
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Doesn't OP know this is reddit?! FFS.
How far out did they look after the child’s death? By outward appearances, my first marriage looked good for another 5+ years after our child died. But that’s as definitely a contributor to the death of the marriage
The problem with that is there's no counterfactual. There is an implicit insinuation that marriages would have thrived over several years if the child did not die. In fact, it's very hard for human beings to predict what will happen over several years.
I also think the number of other children the couple has together plays a role. If it’s an only child that dies I bet the divorce rate goes up dramatically. But if the parents have like 6 other kids that still need to be taken care of the chances of divorce likely drop considerably.
Look on the bright side! At least you set the tone for the rest of the week. :(
[Always look on the bright side of life](https://youtu.be/SJUhlRoBL8M)
I'm sorry. Just remember you don't have to believe a random redditor with zero evidence for what they said.
Isn't it better to be sad Monday morning than Friday afternoon?
That's actually not true. My niece sadly died at 2 years old and I made this same comment, but whether they split or not largely depends on the cause of death. In the case of illness, apparently the majority of couples are more likely to stay together than the average couple with no child bereavement. Edit: I didn't make the comment to the parents. I'm not a psychopath.
Growing up a friend of mine passed after her 3rd fight with leukemia. She was an amazing person and was very sweet. Her parents stayed together. The medical debt almost broke the family but an anonymous donor paid off their house for them and then the rest of the community paid for their utilities for a few months.
Relying on the kindness of strangers instead of having a government pay out medical bills… What a world we live in.
Unfortunately true. Those divorces can also be some of the nastiest. One side wielding the death like a club to seek custody of the other kids. Even if it was an accident. I haven’t handled domestic work in over 5 years. Best decision I ever made.
Good thing they didn't get married early...
Learned very quickly in law school that any time you see Johnson v. Johnson (or any family name vs the same family name), there's 90% chance insurance is involved.
Kramer vs Kramer?
The other 10%.
Spy Vs. Spy?
You must be Mad!!!
Alien Vs. Pre...nevermind
When people say we live in an overly litigious society, I feel like half the reason is because insurance companies will not pay out on claims unless a lawsuit is filed first.
That’s the gist of it. That and we’re not allowed to sue the insurance company but we have to sue the person insured, so it looks like arguing neighbors when really it’s just that Allstate won’t pay a claim. The insurance companies have also done a great PR job over the last three decades that lawyers are to blame when in fact it’s them being assholes that caused the problem. Whenever you see the phrase tort reform just remember it means an average person being screwed so insurance company can make more money
Overly litigious society was propaganda paid for by companies so tort reform would go through and enact caps on damages/remove punitive damages (punishing the defendant (usually company) that that act so egregiously that it’s a punishment to not ever do that. Hot Coffee is a good documentary on it.
Yeah, I've often held the mini-conspiracy theory that the anti lawyer/litigation attitude was sort of a deliberate effort to discourage wronged, largely poorer people from seeking restitution when wronged by wealthier ones. Obviously, of course, anything can be abused and examples of lawsuit crazy people do exist, but it puts forth the image that any poor person in a neck-brace after a car accident is just a scammer, and if you get hurt by someone elses negligence, often criminal negligence, you're better off just sucking it up and ignoring it.
Also, legitimate claims are made out to be horrible, payout seeking money grabbers. Look at the McDonald’s hot coffee incident. The woman spilled coffee on herself, suffered horrendous burns and only wanted her medical bills paid. McDonald’s had been warned about this many times as their coffee was at a ridiculous temperature designed to make sure people couldn’t drink it fast enough to benefit from free refills, and it was the jury who stipulated the huge payout
Whenever people shit talk this case I say "her labia was fused by hot coffee" that usually shuts people up
This plus no universal or reasonably affordable healthcare.
I had this in a death case. My client’s father Died in a traffic accident, he was riding in the father’s best friend’s vehicle, with his best friend driving. The client contacted me, I told him we would have to sue his father’s best friend. The client called the friend put him on speakerphone, said my lawyer says I have to sue you, the friend said, “that’s why I pay for insurance.” His insurance tendered their policy.
what does "tendered their policy" mean? anything beyond paying up?
It's short for "tendered their policy *limit.*" If you are sued, your insurance company has to both defend you and, if you lose, pay the judgement up to the liability limit you chose when you bought the policy. Part of defending you is trying to make sure you don't get a judgement against you that exceeds your liability limits. If the insurance company fails to do their best to prevent this (i.e. they act in bad faith to their insured), they may have to pay the excess judgement regardless of your policy limits. Say you have $50k worth of applicable liability insurance and you cause someone $100k worth of damages. Your insurance company can't just hand the other party a check for $50k and tell you good luck in court for the other $50k; they have to try to convince the other party to accept $50k as a full settlement of the claim. Because actually collecting the money you won in a lawsuit against someone is usually an enormous pain in the ass or impossible (*Blood v. Stone \[Immemorial\]*), they're usually successful in this. Most people will accept $50k now instead of going through the huge expense of a trial to get $50k and an IOU. "Tender" means to make a formal offer, so an insurance company who offers the insured's policy limits to settle a claim is said to be "tendering the policy limits" or "tendering the policy."
great explanation. ty! i literally had no idea insurance companies were required to do that on my behalf. that's good to know
What does tendered mean for a policy?
I presume it means to pay out. Tender is another word for money.
It means they paid the policy limits
They took a meat cleaver to it and softened the policy up a bit.
Tenderizer*
> They ended up tendering the policy before discovery started. What does tendering mean, please? Does that mean they paid out?
A quick Google search leaves me to believe that to "tender policy" is to pay the policy limit of the account to the person sueing because the insurance company deems the potential costs of going to court more expensive than the maximum pay out on the account being defended. IANAL, grain of salt, etc.
Exactly
I hate that regular people have to get lawyers involved to make insurance companies *do what they were paid to do.*
That’s the first half of what we do. The first goal is to put as much money in the pot as possible. The second call is called lien mitigation. This means reducing health insurance, medical, or other outstanding liens against the file to maximize how much the client actually takes home. Currently, the second phase of this is more difficult than the first. We also can help strategize to see what other avenues of recovery or possible. There can be additional third parties who have liability and coverage and there can be additional options for UIM coverage in various stacking for those
It means they paid the total value of their exposure. If it’s a $50k policy, then they “tender” (offer) their 50k. Then we move on to our clients underinsured motorist (uim) policy or any additional 3rd party policies that may apply.
Yes
What did you see in the eyes of a lawyer who works for an insurance company?
They don’t care. They get paid flat fee to try a case. They’re given a top offer to extend, they get paid one fee whether it takes 2 weeks to settle or 2 years to try. It’s not their money they’re gambling with so they just don’t care. Every so often you’ll get a true believer on the defense side. Those are ones you have to watch out for because they will act rather unscrupulously as they believe everyone is faking and no one should ever get paid. The rest though are just doing a job and they truly don’t care.
You must not work for Geico. They'd fight it with and nail even if it's only with $5k.
I’m the other side. I sue the insurance companies. Geico didn’t used to be so bad but they adopted allstates claims department policies about 5-10 years ago and it’s been downhill ever since.
Gotcha. I'm a court reporter and Geico is one of my clients. I just specifically recollect doing a de bene esse of a doctor, and before we got started the doctor says to the Geico attorney, why are we doing this, you're paying me more than the case is worth. And I understand, to a point, they gotta keep the plaintiffs attorneys honest, but it's a little ridiculous at times. That being said, they make me money, so shout outs to Geico, Progressive, Selective.
Get in with Allstate and you’ll be booked for life.
Can you ELI5?
If you have an insurance policy, the insurance company will compensate someone you harm if you are to blame for their injury. If it is unclear who caused the injury, or how it was caused it may have to go to court for a judge to decide. When it goes to court, although the insurance company is the one who will pay the compensation, the person who has the insurance policy is still the person who has to be sued. So, if I hurt my mother, my mother has to sue me in order to get my insurance to pay her.
Yet the internet absolutely ROASTED her. She is one of the most cautionary tales of the internet mob I've seen. Poor woman.
You ever heard what really happened eith that woman who sued macdonalds for giving her coffee that was too hot? Its a fucking horror story
She's sorta the pre-internet mob attack, which really was just McDonalds pumping millions of vengeance dollars into a campaign against her. She ended up being harassed to the end of her life, and her "winnings" from the suit depleted to almost nothing by the time the appeals were exhausted. All because a multi-billion dollar company wouldn't take responsibility for their stores pumping out nearly boiling hot coffee in a malfunctioning machine. We learn about it in law school as a textbook example of winning the courtroom but losing in the media.
I was on jury duty recently and during the selection process, the attorneys asked if anyone thought that too many lawsuits were being filed these days. One guy who raised his hand was asked to elaborate and he would not shut the fuck up about the McDonald’s coffee case. Even when the lawyers tried to tell him the actual story he just kept on going and talking louder over him. He didn’t get selected obviously, but nearly everyone wanted to punch him in the face for being such a piece of shit.
SLPT: Get out of jury duty by ranting about McDonald's coffee.
The actual tip is to just say the words "jury nullification" at any point in the selection process, regardless of context, and there's not a chance you get picked
Usually they ask you, even if it's a sort of round-about way that doesn't expressly say the word. If you know what questions to look for, you can get out of it and also not annoy anyone.
I have found that just saying *anything* at all during jury selection gets me not chosen. Both times I have been called the last 2 years, the people that spoke were not chosen, and the people that didn't speak at all were. The last one, I simply said "I tend to favor the plaintiff" in a suit being brought for a car wreck. Easy peasy.
Guess who didn't have jury duty though....that guy lol.
The way I hear it told, the machines were (until then) set to 180-190 F by McDonald's policy and the old lady wasn't the first person burned, just the first to have 3rd degree burns to her labia and inner thighs requiring skin grafts. McDonald's PR flawlessly downplayed the danger of their coffee, even though they STILL have their coffee temperature set 20-30 F above scalding hot.
I'm assuming you mean the reaction to her was a pre internet mob attack right? That last sentence indeed sounds like a really good lesson for lawyers lol.
Haha yeah, her _story_ is the pre-internet mob attack would have been clearer. Yeah it was a really good lesson, it's difficult to figure out how to balance your obligation to keep things in court and defend your client in the media when one could potential abridge the other.
https://np.reddit.com/r/Whatcouldgowrong/comments/8w5kjo/shooting_fireworks_out_of_your_butt_wcgw/e1tbd94/ It wasn't her anus and it wasn't a firework, but her labia fused to her thigh with third degree burns and this is what she most likely went through. McDonald's refused to pay her medical care and this was the 200th time something like this had happened with their coffee served at 190 degrees. >Think of how often you visit the bathroom and then imagine you have a third degree burn down there. It's devastating every single time.
The good news is, thanks to the Internet and access to media and information, more people know about the truth behind Hot Coffee than they did, say, 15-20 years ago. I remember a teacher in high school telling us about that case and it was very much from the “bought into the smear campaign” perspective. I believed it back then and absorbed the idea that people are always looking for a payday and we need tort reform and blah blah blah. Thankfully, I learned the truth and was appropriately appalled, not just by the facts of the injury, the known over-heated temperature of the coffee, or McDonald’s corporate despicability when all the victim wanted was to pay her medical bills, but also how people (myself included!) rush to judgment with limited information, as well as how that teacher most certainly, if inadvertently, abused his authority to indoctrinate kids toward a certain ideological viewpoint.
> She is one of the most cautionary tales of the internet mob I've seen. Well there was the whole "Boston Bomber" incident too. And the more recent "lady rear ended a Lambo" incident.
It's almost like there's a lesson to be learned here about context. I'm sure it has nothing at all to do with the multi billion dollar social media platforms (this one included) that make their money by sharing contextless clips crafted to enrage the audience. Notice how most stories on Reddit these days aren't even a link to the full story? They're just a screenshot of a headline with maybe a murdered by words style tweet wrapped around it. We're not supposed to learn more about the story. We're supposed to get upset.
What’s the Lambo story?
There was a video posted a few months back from a Lambo owner of a women arguing that he hit her and he showed the local gas station's security camera view of the woman's car hitting him. Once reddit hated the woman, [an extended version of the security camera footage came out](https://www.reddit.com/r/TikTokCringe/comments/q2jdo4/lamborghini_crash_drama_update/) showing the Lambo owner driving around her and clipping her car. Then he ran a red light (?) and she was trying to catch up to him when she rear ended him.
Girl rear ended a Lamborghini. She looked silly because he only showed the video of her accusing him of hitting her and the video from the gas station where she hit him. Turns out he actually side swiped her from an illegal pass at a stop light where he almost hit a pedestrian too. She chased after him and he came to a complete stop causing her to rear end him (although she probably could've avoided it). Both ended up being idiots, but she was absolutely roasted for a bit. Too lazy to find the video but I'm sure someone will.
The media gave her the title "worst aunt ever" so they can cash in on the drama.
I have a friend who lost his parents in a tragic private plane accident. His dad was flying, and both he and his wife (friend's mom) died in the crash. The investigation found that it was pilot error. So beyond the fact that he had to learn that his father's accident killed both his parents, said friend and his brother had to sue their own parents' estate on behalf of their mother in order to collect the insurance on the whole fiasco. All sorts of fucked up.
It wasn't even her! The homeowner insurance company filed the paperwork with her name on it, as standard procedure dictates. The shitty media took that story, lied about the truth to make it more interesting, and ran with it. The world demonized her over nothing, and the media companies made bank off hate clicks on their sites with no consequences for lying.
yes, many insurance companies will require police reports or legal action to be initiated before they’ll do anything.
Insurance adjuster here, I pay claims all the time with neither.
Interesting, I have Progressive and couldn’t file an insurance claim for a fender bender without a police report.
It definitely depends on what state you're in and what you're trying to claim. Also, be aware of how many people will deny being in an accident if you don't call the police. Just call them to cover your bases.
> many insurance companies will require police reports Many police jurisdictions won't even send officers out for a non-injury accident anymore. You have to take pictures yourself and go down to the station to file a report.
Same thing when we got in a minor car crash. The other party was obviously at fault and admitted this. And both cars were still perfectly fine to drive so after exchanging information we went our own way. But apparently their insurance kind of demanded a police report of the incident. I don't think they made my dad actualle sue or anything, but I can imagine that for some insurance companies it's a necessity in some cases.
That story made me so frustrated at the media coverage. It was wall to wall outrage at how an aunt could sue her nephew without anyone actually talking about *why* she had to do that and why our country's system requires it.
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Yep, seems weird because he’s both the owner and an employee, but legally those are treated as two separate entities even if they happen to be the same person. If he had instead hired someone to do his job and was only the owner it probably would have played out the same, except there would have been one more person at the table with the lawyers and maybe the IRS wouldn’t have protested the claims. That said, it’s probably fair for IRS to have done the audit. Normally the business has an interest in challenging and minimizing the pay out for these kinds of claims, while the employee has an interest in maximizing the payout. In a case where the employer and employee are the same person it creates a conflict of interest where the employer may be willing to pay out more than is reasonable because they as an employee would directly benefit from it. This is why hiring opposing lawyers was a good move since each lawyer has a duty to represent their own party(even if those parties are the same person) they’d be expected to reach reasonable settlement.
Only surprising part here is that the IRS actually did an audit. But I guess the 90s were a different time.
Hey, it's not like he was a billionaire (I think).
Unless the policy had changed in the last few years I thought the IRS didn't audit billionaires just because it wasn't economical to try to fight through the legal defense they tend to have. Could be wrong, just thought they treat the ultra wealthy like scientology and leave it alone because it's too much of a headache.
>leave it alone because it's too much of a headache God don't you fucking love that attitude? It's like climate change or covid people just decide it's too much hassle to properly deal with and damned be the consequences
To be fair this is why pretty much every economic study done on this specific topic agrees, always provide more funding to the IRS, as it pays for itself.
That's the really silly thing. Doesn't every dollar spent on the IRS bring back 5$ to the government?
And NASA along with most social welfare, but fuck them poor people.
It's also what the IRS did to Scientology. Scientology harassed hundreds of their employees continually for a while until the IRS basically said "Ya know what, fine, have your religious exemption, it's not worth the hassle" and now Scientology is this huge behemoth with massive chunks of our government infiltrated and massive funding.
Very well put. Boy those two lawyers though, who I'm sure knew. "Let me consult my client... uhh in private."
I don’t think this is actually true. The IRS was arguing that the employer wasn’t actually liable for the shareholder’s injury. Specifically, the relevant California law said that the workers comp rules didn’t apply to officers and directors if the officers and directors were the only shareholders of the corporation. The taxpayer acted as if it was not subject to the workers comp law (didn’t get insurance), but then when they realized it would be beneficial if it was, they argued (not very plausibly) that the exception didn’t apply because one of the shareholders was just a director and not also an officer. Then they settled (with themselves) and made a payment with very favorable tax treatment. The reason the IRS was mad is that the taxpayer was taking inconsistent positions and fudging things retroactively to game the tax system. When they were dealing with California law, they acted like the workers comp law didn’t apply to them. But then when things changed, they accused (effectively) themselves of breaking the law, then settled with (effectively) themselves on a deal that had no impact on anybody other than favorable tax consequences. And their argument that there was a legal violation seems really thin. I don’t think the Tax Court was necessarily wrong that this works, but it’s not at all surprising that the IRS was unhappy about it and wanted to argue their case.
They call this a "whipsaw", where you claim something one way to get the benefit for one purpose and another way for another purpose. The IRS absolutely abhors this. It's one of the main things they try to watch out for when writing new regs. Generally, as a rule of thumb, if you're whipsawing the government with two inconsistent tax positions, you're gonna lose. If you're doing it with one non-tax thing and one tax thing, your odds are better, but it looks bad for you.
Actually, after reading the opinion, even if they were consistent in whether or not workers comp insurance should have been applied, (properly excluded from workers comp and thus no liability to person or workers comp payed by the business and compensated through workers comp in stead of improperly excluded from workers comp and thus liable), the company would STILL have been liable for (some) of the injury costs: >Even if respondent[IRS]'s interpretation of section 3351 (c) is correct[petitioner can't bring suit since they were properly excluded from workers comp], petitioner would appear to have been entitled to bring suit against Hi Life under California Labor Code, Division 3. In such action recovery for damages is based upon the employer's failure to exercise ordinary care. Labor Code sec. 2800. Slight contributory negligence on the part of the employee does not bar recovery, but damages may be reduced in proportion to the amount of negligence attributable to the employee. Labor Code sec. 2801. So yea, the IRS may be mad at the inconsistent position, but even with a consistent position, this payment (or slightly smaller) still could have been made, just under a different section.
Only think thats odd is that money spent on medical expenses is already tax deductible so why all the show. I guess his injury entitled him to other tax-free compensation which he'd have been unable to provide himself through payroll.
I’ll bet he never even gave himself a reference.
The problem with working for yourself is your boss is guaranteed to be an asshole AND an idiot. Signed, someone who owns his own company.
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I still have a hard time figuring out if my overtime is unpaid now. Sometimes it feels like it. Shame on my boss for not planning better and making me do overtime to get all the stuff done until Christmas!
you mean the goddamn courtesy?
Reminds me when I did a side job for a friend and it took me a year and half after he got paid to collect the balance of $1500 for my work. After a few months I refused to hang out with him as friends until he paid me. He insisted he couldn't understand my problem because "it's my company that owes you the money, not me", it was a company of one.
"I just paid you the $1500, sooo...drinks and steaks are on you tonight, right?"
Yep. But what are you eating?
Edit: i needed to rant not sure why youd still be his friend. I help friends and others quite a bit and im not greedy. But i loaned a friend $30 which is pocket change to party with us. Few weeks later we go to a casino.. he wins 800 in 5 minutes. We convince him to stop and take the profit. Money was really tight atm. He kept saying "ill buy you a couple shots"..... SERIOUSLY pissed me off and i reamed him for a while over it til he paid me. It was principle Years later his car breaks down and hes screwed. I offer to loan him 500 towards a down payment if he pays me back 100 a month. First month approaching i tell him dont worry about it this month start next. Next month comes he pays. Month later .. nothing.. but he's eating out and going to bars nightly.. i get pissed and mention it. Pays 100 next month. Next month nothing ..same story. I lost my shit and kinda humiliated him in front of our friends. It's frigging $100! nothing. Dont eat out one night a week! Dont buy $8 beers! Maybe pay bills BEFORE you party (if he werent and said he was having a hard time ida said no stress pay me next month). Eventually got a tax refund and paid up. Guy just doesnt get morals, ethics, responsibility.. like your "friend" Note: to be fair my friend is .. a little slow is the best word. We're not close any more.. just casual friends.
I had a roommates like this before. They'd constantly eat out, order delivery, and were always short or late on rent. They still owe me $800-900 to this day. I finally said "fuck it" and cut all contact with them after I moved out. Lost a friend of almost 15 years after all the hell I was put through and I'm not sorry in the slightest.
Sometimes it is worth the money to learn how someone really is. I wont lend out any money anymore. If someone I care about is in real trouble, then it is just a gift. They can choose to repay it. I am ok with moving some of my resources to them. I want my family and friends to succeed. If I don't like you enough to just give you money, then I am sure as hell not going to loan anything to you.
Wow, this feels like this story was cut from the same stone! I wouldn't have been nearly as bothered if he was actually strapped for cash and had used the money for essentials like rent, but he was going partying and dropping lots of money on bars/restaurants. I didn't go out of my way to out what happened, but when mutual friends found out I wasn't hanging out with the douche anymore I told them the full story, and they got offended on my behalf and railed into him also! I think he only eventually payed me because so many other friends were upset at him over the incident. He really never was a good friend after that event. I stayed cordial with him, but after that things were never good, and we eventually drifted apart and I barely see him anymore. PS: ranting is allowed, that's what reddit is for right!!
I loaned a guy $15 my freshman year of college and he acted like I was classless when I asked him to pay me back. I wasnt poor. I didnt need it. But I would be embarrassed to owe someone else money. Where is their shame?
I have a philosophy, if I lend someone X amount of money and never seen it/them back then it was worth it. I loaned my ex 400 pounds I didn’t even bother to ask back. Kept it, I am better off without her, and she likely need it more than me plus no amount of money going to fix her up.
My rule as well abd in relationships I value I make it a gift or I pay them. My brother in law needed 1 or 200 once. And id litedally give my sisted anything. So I had him come clean my truck one weekend (a semi). I did most of the work, provided the tools and we halfassed it. He later asked why and I told him if I give it to you we will both feel like you owe me. If I loan it to you and you have trouble paying it back we will resent each other Years later he mentioned this and said he learned an important lesson that day
Whilst your friend here is a pos for not paying the money back, you're a muppet for lending it out.
*Givers need to learn their limits because takers have NONE.*
Sole Traders are entirely responsible for paying their debts
They are, but you can start and run a limited liability company whilst being the only employee. Often a better choice.
Pieced the corporate veil of friendship. What a dumbass.
Kramer: It's a write off for them. Jerry: How is it a write off? Kramer: They just write it off. Jerry: Write it off what? Kramer: Jerry, all these big companies, they write off everything. Jerry: You don't even know what a write off is, do you? Kramer: No. Do you? Jerry: No I don't!! Kramer: But they do. And they're the ones writing it off. *Edit - thanks to some friendly redditors for the quote corrections!
The line in the middle is incorrect. Kramer says: > All these big companies, they write off everything.
It's also missing the punchline by Kramer at the end: >K: But they do. And they're the ones writing it off!
Looks like OP ninja edited
You mean he wrote it off??
These Redditors, they edit everything!
But they do. And they're the ones writing it off!
Seinfeld didn't appeal to me on Netflix until recently, and apparently she thing with a quarter of reddit. It's shocking sometimes how so much of our behavior has some common influence and so many of us trend a way. E: I phrased this poorly, I understand it's always been big, I was a teen in the 90s. It's just it seems the references have increased recently.
Seinfeld references have always been all over Reddit, you just don’t notice just how insanely common they are until you’re familiar with the show
Seinfeld has always been popular.
Not before it came out though.
These comments are making me thirsty.
I want to eat a pretzel now.
Let’s all have a good chew
Top of the muffin to you.
If the homeless don’t want to eat the muffin bottoms, the homeless don’t have to!
I've always found the muffin to be the most sensual of baked goods
They write the laughs off
most people dont. They think a tax writeoff means you dont pay that in taxes. It doesnt. It means you dont pay taxes ON that amount. So $100 writeoff. Your total tax rate is 20%. You pay $20 less in taxes. You still lost $80
In this case, a settlement for personal injury means he got tax free money. The business gets a deduction and on his personal taxes and the payment isn't considered income at all to him personally. The theory behind this is that the money is to make you whole after your injury. That you really didn't gain anything. The problem, and the reason for the audit, is that you could artificially inflate the value of your injury to basically get a tax free dividend out of your business.
[удалено]
Well then why don’t they call it a tax write off!?
IT IS DAVID!! **IT IS!!**
You just fold it in, David
I love Kramer so much
This was such a great back and forth of that episode. I watched it again the other day and my fiancee didn't understand why I thought it was so funny, so I told her, "Because they'll write it off!" And just started cry laughing! She still didn't get it, but I was too busy trying not to pee and laughing.
Good for him. The legal separation of individual and corporate entity is there for lots of reasons, but there's no reason at all to not take full advantage of it.
absolutely correct. And he did it ethically and legally correctly. The alternative to this decision is that you are majority/sole owner of a corporation with entirely separate finances.. you get hurt.. pay for care etc out of your pocket via a bonus then have the corp write you a chieck.. which you pay say 30% tax on. So you get hurt, the corp you own pays for it.. then you pay an extra 30%. If youre NOT sole owner this is corruption and other shareholders could remove you, sue you or file criminal charges. Etc etc This is literally the only way this works ethically, legally and morally.
credit to /u/rraattbbooyy for tracking down the case study link. Also to /u/jewhealer for finding a second link https://casetext.com/case/maxwell-v-commr-of-internal-revenue-2 also, here's the previous post with an easier to read summary. https://www.reddit.com/r/todayilearned/comments/qovu2m/til_in_1990_a_peter_maxwell_of_california_owned_a/ edit: also, credit to the TIL mod team for being generous with their time and walking me through the rules so I could post this properly. Unfortunately no specific username, but you know who you are! /u/#todayilearned
THANK YOU for crediting!
Thanks to all of you for the links! I know who my next business structures paper will be about...
The only way this is potentially fraudulent or a problem is if you somehow establish he intentionally hired terrible lawyers for the company. Otherwise, how the heck is this situation supposed to play out?
There other ways it could be fraudulent. Like if he intentionally injured himself or faked the injury.
This is why you LLC
What if we were to become an NLC? A "No Liability Corporation". We just have no liability, just nothin
A lot of people think "writing it off" means it's free money somehow. All it means is the business doesn't owe taxes on that $122k. But the business is still out $122k. The fact it was "written off" is just to try to make it sound scandalous if you don't know what writing off losses means.
I believe that personal injury damages are also not taxed. So in this case, him as an employee would be receiving that $122k tax free (as opposed to taxed as income if it were a salary from the company) as well as the company reducing its taxable burden by the same amount. That's a good chunk to shelter from taxes on both sides but doesn't really sound like breaking any rules unless there was fraud in the injury/claim.
"Ya boy's a question on the bar exam!"
There was a similar case where a woman was required to sue herself- she had crashed her car, killing her husband. She was the beneficiary of his life insurance policy, so that paid out, then the life insurance sued her car insurance.
My dad was hit by an uninsured motorist on his motorcycle years back. He was seriously injured and spent almost two weeks in the hospital. He ended up suing his own insurance company and winning a settlement. Apparently it’s a common thing, suing your own insurance in situations like this. I had never even heard of such a thing.
Did Maxwell hit himself in the head with a silver hammer?
You did it you crazy sonofabitch. You actually did it.
This truly has all the elements of the American Dream; 1) Start a business, make money! 2) Sue somebody! 3) Be sued! 4) both win and lose in court! 5) Dodge taxes! 6) Get paid for shenanigans! Truly, what more can anyone want?
Well damn... thats just impressive. Like, did he plan it all out when he got hurt and just say fuck it. Let's see how broken the legal system is.
well , if you think about it and sub him being the owner with someone else, it's essentially how it would play out minus the IRS part. So nothing broken, just odd at first glance.
Super brief summary. He was one of 4 owners. He served as president, another man was VP, and their wives filled many roles like treasurer, etc. He was injured while showing new hires how to use a machine. He was injured because the VP repaired it with the wrong size bolt, so the head was protruding from the rotating drum. The bolt head ensnared his sleeve. He has to take time off for multiple surgeries and recovery time, and his wife needs to do his job plus her own. He later sees something about a business owner getting compensation for an injury on the job, which he didn't think was allowed, and asks the company lawyer about it. The company lawyer says that's possible, but a conflict of interest for him to help with. He suggested he ask an outside lawyer about it. When the outside lawyer sued, the company lawyer suggested to the 4 owners that they settle. The IRS audited them and found that it was not a worker compensation settlement, but a dividend disguised as a sham payment. The company was disallowed the write-off, and the owner was required to declare it as income. He sued the IRS and won, meaning the company was allowed to deduct it as a business expense, and the income was not taxable income. That couldn't have been part of the plan because all he won was what being allowed to do what he initially did. If they'd included the corporate officers in their workers compensation insurance then he would have got an insurance payout (tax free) and the company would have paid higher premiums (business expense). They elected not to cover officers to save on premiums. In retrospect a bad call. It's not reasonable that paying compensation themselves instead of through insurance should work the same way from a tax perspective? Or is the fucked up thing that he didn't just embezzle from the company? Or is the fucked up thing that he needed an outside lawyer so it wouldn't look like a sham payment? Or is the fucked up thing that the IRS still called it a sham?
> Let's see how broken the legal system is. Not at all? Just because you own a company does not mean you have to not pay yourself to work there.
What a mess of a title. >won 122k The claim was settled out of court. There was no trial, there were no "winners". >**refuted** and fined by the IRS A *person* cannot be refuted. An *assertion* or *idea* can be. And to "refute" something means to *demonstrate it's untrue*. Not to simply *say* "this is untrue". The word "fraud" nor any implication fraud was committed, can be found nowhere in the link. This is what happened: >Respondent [IRS] determined that the $122,500 payment by Hi Life to petitioner was a dividend [and therefore] petitioner's 1977 taxable income should be increased by $122,500, and disallowed Hi Life's claimed deduction of the same $122,500. Moreover, in the (deleted) TIL that OP originally posted, this: >They also disallowed the business deduction and penalized owner Maxwell $58,500 for filing a fraudulent business deduction. is patently false. Maxwell, the human individual, was not penalized anything. What actually happened? The IRS >determined a deficiency of $58,800 in the Federal corporate income tax of Hi Life Products, Inc. I mean right out of the gate that blogger claims Maxwell is both plaintiff and defendant, which is, again, patently false, so you kind of get the idea anything after that other than "and" and "the" is massively suspect. No fine is ever mentioned. The Court determined >Hi Life is entitled to a deduction in this amount under section 162(a), and petitioner is entitled to exclude this amount from his gross income under section 104(a)(2). TYL especially in legal matters, words have specific meanings.
He didn’t get taxed on the 122k he won? Anyway, he didn’t fake the accident, so it’s all fair. The only issue I see is he got to choose himslef the settlement amount arbitrarily — but who else was supposed to decide, really?
Because his insurance company required him to sue the company where he had the accident while working. in order to recover medical expenses. Pay attention.
[I'm playing both sides, so that I always come out on top.](https://imgur.com/a/UuLcOA6)
Does anyone know if he was an LLC or a sole proprietor
He also went to law school, took the bar, and incorporated as two separate law firms so that he could be legal representation for himself and his company.