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There seems to be some confusion over why Fair Market Value of STA WAC is relevant, and if it is relevant, what exactly makes good proof? I spent 3 hours preparing this for Merc over at Matrixwatch, so I thought I might as well post it here where it will be easy to find. I apologize for the length, but as with anything concerning STA, it is difficult to be concise. Perhaps, by studying it a few times, you might feel more prepared to discuss the issue with the IRS - day after tomorrow!
NOTE: Gary Harvey's online ThisPaysBig illustration of the Ponzi-constructed YMMSS is already gone. Thankfully the screenshots are still available. I urge you to get your screenshots of WAC ads NOW before they disappear too.
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If you are reading this, you are aware that STA IBA are in a real pinch, far worse than "merely" having been originally ripped off.
The recent uproar over STA-issued 1099's boils down to this: IBA are being held accountable for taxes on WAC, which have no value to IBA, ONLY to Kim Inman, and ONLY as: 1. a "product" to help STA appear legitimate AND 2. a tax deduction for STA. In fact, not only do WAC possess virtually zero Fair Market Value (FMV), it can be said that (because of the artificially inflated amounts on the 1099's) WAC represent a NEGATIVE FMV.
If Kim had sent us a new computer (for example), we would be legally required to pay tax on a commonly acknowledged item of "non-cash REAL compensation." And, I dare say, most IBA would not have a problem paying taxes if we had "received" something of actual value. Something we could actually sell, if need be, for money to pay our taxes with!
However, by looking at the WAC available for sale in the STA Classifed Ads http://www.staretail.com/csearch.asp...ch+Classifieds (the only place where a "reasonable buyer" would even know what a WAC is), we can see that STA WAC can hardly be given away, and thus, they have virtually zero FMV. Therefore, we should not be required to pay taxes on them. But that is exactly what will happen if we IBA do not take a pro-active stance, so
DO NOT ALLOW YOUR EYES TO GLAZE OVER NOW!
We IBA don't dare help Kim Inmans case by following STA advice to claim "home office" deductions to offset the amount of tax on the 1099's. THIS IS NOT THE "EASY WAY OUT" THAT IT MIGHT APPEAR TO BE!
IRS rules are very strict about this, REQUIRING receipts to substantiate deductions. We have no such receipts, because we didn't buy the WAC during the APPLICABLE tax year - we didn't buy them at all. The were generated by an illegal Ponzi-style "accelerator table," so the deduction for "advertising" would be denied anyway.
What's worse, if the IBA TRIES to claim this questionable deduction, the likelihood of being audited increases. And IF he/she is audited without having obtained proof of his/her claims, the IBA will find him/herself "up the creek" with no paddle in sight. Severe fines, late fees and penalties are not out of the realm of possibility.
Now that we realize that we need proof, how do we go about getting it? Let's start with a definition. According to Bankrate.com, "Fair market value is the final price at which two interested parties agree to make a deal."
Notice that it has nothing to do with the fact that the item in question was merely ADVERTISED. The evidence of FMV is in the AGREEMENT on the monetary amount the item will sell for at the time it is sold - not what it cost when it was new (which is essentially what STA is claiming). A look at the ads for WAC indicate many sellers willing to take "best offers." That is a start, but...
Screenshots of the ads AND corresponding written testimony from the seller of what the final price was (if any), especially the latter documentation constitutes valid, credible documentation of the FMV on WAC. The fact that IBA were given the chance to return the WAC supports our claim but does NOT, by itself, provide substantial evidence.
We NEED to get this documentation NOW (before Kim, in a further effort to cover his too-big rear end, removes it).
The alternative scenario: IF/when the IRS issues inquiries to both sides (as a result of our complaints), Inman has a very nice paper trail proving that he sold 1000's of WAC for $10+ each. If we do not get our own proof otherwise, and get it ASAP, there is a very good chance that we IBA WILL BE HELD ACCOUNTABLE to the IRS for whatever Kim Inman can PROVE. And, without a well-prepared fight on the part of IBA, he can prove a LOT (see above).
Plus, our 2+ years of effort to get STA shut down, well, that all goes down the drain, at least as far as the IRS goes. And, since the IRS and the FBI work together, we lose credibility in our complaints to the FBI, too.
Finally, our complaints will increase in validity when they include hard proof. If we decide to file them anyway (without proof), our chances of getting the attention of any given authority are greatly reduced, AND in any case, WE WILL NEED PROOF OF OUR CLAIMS, sooner or later.
WARNING: the only available illustration of the Ponzi construction of YMMSS/STA (Gary Harvey's ThisPaysBig sites) has already been removed! The only remaining evidence that it ever existed is in screenshots taken by Yours Truly. Sooner or later, the STA Classified section WILL disappear, too. That WILL be a successful result of IBA working with Matrixwatch (as well as the efforts of the WLD attorneys), BUT we need screenshots BEFORE it happens. As in, TODAY IF NOT SOONER !!.
Sharing/posting screenshots would be a good idea (and I would be happy to do it) except that, for at least two significant reasons, the quality of shared screenshots is significantly decreased. And, after a bit of practice, it is just as easy (and much more effective) to get our own.
For your own good, and for the good of our cause: Get your screenshots. Email the sellers. Then, print it all, including this post, and show it to your CPA.
By saving ourselves, we save our fellow IBA - and vice versa.
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TO CAPTURE A SCREENSHOT: There is software out there, some even for free or free trial, but it's just as easy to:
1. Navigate to the screen you want to record and
2. Press Ctrl/PrntScrn buttons on your keyboard, then
3. Open Paint (Start/Programs/Accessories/Paint) and click Paste, and
4. Save As (something like "WACs Ad Screenshot") in jpg format.
5. Make sure you save it where you can find it - it is a good idea to designate a new folder for this.
If you know how to copy/cut and paste, this is almost as easy. With a little practice, you will be very proficient. Until then, any link in this forum opens a new window, so these directions will be here for you, step-by-step.
Disclaimer: I am not a tax professional. I am a layman/business owner. But I have plenty of experience with Kim Inman. Please, get your screenshots today and email the sellers of the WAC so your real tax professional CAN help you! Also, to reduce the already profuse confusion, I suspect it might be helpful to treat the WAC issue (illegal "accelerator table" generated) as separate from any money you actually received. Just a thought.
NOTE: Gary Harvey's online ThisPaysBig illustration of the Ponzi-constructed YMMSS is already gone. Thankfully the screenshots are still available. I urge you to get your screenshots of WAC ads NOW before they disappear too.
-------------------------------------------------------------------------
If you are reading this, you are aware that STA IBA are in a real pinch, far worse than "merely" having been originally ripped off.
The recent uproar over STA-issued 1099's boils down to this: IBA are being held accountable for taxes on WAC, which have no value to IBA, ONLY to Kim Inman, and ONLY as: 1. a "product" to help STA appear legitimate AND 2. a tax deduction for STA. In fact, not only do WAC possess virtually zero Fair Market Value (FMV), it can be said that (because of the artificially inflated amounts on the 1099's) WAC represent a NEGATIVE FMV.
If Kim had sent us a new computer (for example), we would be legally required to pay tax on a commonly acknowledged item of "non-cash REAL compensation." And, I dare say, most IBA would not have a problem paying taxes if we had "received" something of actual value. Something we could actually sell, if need be, for money to pay our taxes with!
However, by looking at the WAC available for sale in the STA Classifed Ads http://www.staretail.com/csearch.asp...ch+Classifieds (the only place where a "reasonable buyer" would even know what a WAC is), we can see that STA WAC can hardly be given away, and thus, they have virtually zero FMV. Therefore, we should not be required to pay taxes on them. But that is exactly what will happen if we IBA do not take a pro-active stance, so
DO NOT ALLOW YOUR EYES TO GLAZE OVER NOW!
We IBA don't dare help Kim Inmans case by following STA advice to claim "home office" deductions to offset the amount of tax on the 1099's. THIS IS NOT THE "EASY WAY OUT" THAT IT MIGHT APPEAR TO BE!
IRS rules are very strict about this, REQUIRING receipts to substantiate deductions. We have no such receipts, because we didn't buy the WAC during the APPLICABLE tax year - we didn't buy them at all. The were generated by an illegal Ponzi-style "accelerator table," so the deduction for "advertising" would be denied anyway.
What's worse, if the IBA TRIES to claim this questionable deduction, the likelihood of being audited increases. And IF he/she is audited without having obtained proof of his/her claims, the IBA will find him/herself "up the creek" with no paddle in sight. Severe fines, late fees and penalties are not out of the realm of possibility.
Now that we realize that we need proof, how do we go about getting it? Let's start with a definition. According to Bankrate.com, "Fair market value is the final price at which two interested parties agree to make a deal."
Notice that it has nothing to do with the fact that the item in question was merely ADVERTISED. The evidence of FMV is in the AGREEMENT on the monetary amount the item will sell for at the time it is sold - not what it cost when it was new (which is essentially what STA is claiming). A look at the ads for WAC indicate many sellers willing to take "best offers." That is a start, but...
Screenshots of the ads AND corresponding written testimony from the seller of what the final price was (if any), especially the latter documentation constitutes valid, credible documentation of the FMV on WAC. The fact that IBA were given the chance to return the WAC supports our claim but does NOT, by itself, provide substantial evidence.
We NEED to get this documentation NOW (before Kim, in a further effort to cover his too-big rear end, removes it).
The alternative scenario: IF/when the IRS issues inquiries to both sides (as a result of our complaints), Inman has a very nice paper trail proving that he sold 1000's of WAC for $10+ each. If we do not get our own proof otherwise, and get it ASAP, there is a very good chance that we IBA WILL BE HELD ACCOUNTABLE to the IRS for whatever Kim Inman can PROVE. And, without a well-prepared fight on the part of IBA, he can prove a LOT (see above).
Plus, our 2+ years of effort to get STA shut down, well, that all goes down the drain, at least as far as the IRS goes. And, since the IRS and the FBI work together, we lose credibility in our complaints to the FBI, too.
Finally, our complaints will increase in validity when they include hard proof. If we decide to file them anyway (without proof), our chances of getting the attention of any given authority are greatly reduced, AND in any case, WE WILL NEED PROOF OF OUR CLAIMS, sooner or later.
WARNING: the only available illustration of the Ponzi construction of YMMSS/STA (Gary Harvey's ThisPaysBig sites) has already been removed! The only remaining evidence that it ever existed is in screenshots taken by Yours Truly. Sooner or later, the STA Classified section WILL disappear, too. That WILL be a successful result of IBA working with Matrixwatch (as well as the efforts of the WLD attorneys), BUT we need screenshots BEFORE it happens. As in, TODAY IF NOT SOONER !!.
Sharing/posting screenshots would be a good idea (and I would be happy to do it) except that, for at least two significant reasons, the quality of shared screenshots is significantly decreased. And, after a bit of practice, it is just as easy (and much more effective) to get our own.
For your own good, and for the good of our cause: Get your screenshots. Email the sellers. Then, print it all, including this post, and show it to your CPA.
By saving ourselves, we save our fellow IBA - and vice versa.
------------------------------------------------------------------------
TO CAPTURE A SCREENSHOT: There is software out there, some even for free or free trial, but it's just as easy to:
1. Navigate to the screen you want to record and
2. Press Ctrl/PrntScrn buttons on your keyboard, then
3. Open Paint (Start/Programs/Accessories/Paint) and click Paste, and
4. Save As (something like "WACs Ad Screenshot") in jpg format.
5. Make sure you save it where you can find it - it is a good idea to designate a new folder for this.
If you know how to copy/cut and paste, this is almost as easy. With a little practice, you will be very proficient. Until then, any link in this forum opens a new window, so these directions will be here for you, step-by-step.
Disclaimer: I am not a tax professional. I am a layman/business owner. But I have plenty of experience with Kim Inman. Please, get your screenshots today and email the sellers of the WAC so your real tax professional CAN help you! Also, to reduce the already profuse confusion, I suspect it might be helpful to treat the WAC issue (illegal "accelerator table" generated) as separate from any money you actually received. Just a thought.
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