4 ms·

Isn't the entire point of these assessments to look at total assets, and not just annual income? I dont think this was an oversight or mistake. I think the exp

Isn't the entire point of these assessments to look at total assets, and not just annual income? I dont think this was an oversight or mistake. I think the expectation was that yes, people should sell assets if they have them .

xboxnolifes 2y ago
The "mistake" is that the assets themselves are the source of income. Sell them off, and the income goes away too. It's the equivalent of expecting the parents to use 100% of their income to put their kids into college, which is impossible.
- Dylan16807 2y ago
  A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it. If the business is worth enough then selling it can replace all the income you would have ever gotten from it. It's not as simple as "income goes away". The specific numbers make all the difference.
  - bb88 2y ago
    > A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it. Normal US tax law that most people fall under says no, stock itself is not income. It's only taxed at the time of sale. If you ask for mark to market taxing then any increase in market value during the calendar year will count as income -- even if you didn't sell anything throughout the year. But usually those people are drawing a direct income from trading.
    - s1artibartfast 2y ago
      Yes, but I think these tests look at both income and assets (like stock). That is why people get dinged for owning assets, even if they are a source of income.
- s1artibartfast 2y ago
  IF I have stock and make $XX,XXX in dividends, how is that different? IF I have own apartments and make $XX,XXX in rent, how is that different? I think the idea is that Yes, the expectation is for people to make actual sacrifice before they qualify.
  - adastra22 2y ago
    If this was inventory they were counting, sure. But you can’t sell part of a small business. Let’s say the parents own a restaurant, and the value of the land, building, and kitchen equipment is a few million. Do they sell an oven from the kitchen to put you through school? Sell the parking lot? It’s an all or nothing thing. The business needs all its assets to function, and shouldn’t be considered any more than for its income potential.
    - throwaway2037 2y ago
      Lease back for land and building is definitely possible. Most capital efficient corps do not own their own land and buildings for precisely this reason.
      - adastra22 2y ago
        It is sometimes an option, not always. Depends on the cash flow of the business and current market risks. Not every business is automatically eligible. Small mom and pop restaurants often can’t get a loan on demand, at least not on predatory terms.
    - jorvi 2y ago
      Situation: You have parents A, B and C. - Parents A own a small business. - Parents B sold their small business two years ago, and put the money in the stock market. - Parents C just scrimped and scraped and over the years saved up money equal to parents A and B. I’m not sure why you’re so hellbent on giving specifically parents A a free pass. Why the unequal treatment?
      - 2y ago
switchbak 2y ago
Should they also cut their kidneys out and sell those too? For someone not in your system, the expectations that seem normal to you sound absolutely insane to others.
- s1artibartfast 2y ago
  Nobody is forcing them to pay this price any more than you are forced to sell a kidney for a private jet. Education costs are out of control, but you can still get a degree elsewhere for 10% the MIT cost, and have it paid for entirely by the government if you are low income
- albedoa 2y ago
  Does MIT include the market value of their kidneys in their assessment? You might have lost track of what is being discussed here. Anyway no, they should not cut their kidneys out and sell them.
to11mtm 2y ago
I'd ask how the assets are structured internally. Is it a small business netting the owner 100K a year with 500K in the bank? That's different than a small business netting the owner 75K a year but the trucks and equipment for the landscaping business (easiest example, replace as needed) being worth 200K... It's complicated.

xboxnolifes 2y ago

The "mistake" is that the assets themselves are the source of income. Sell them off, and the income goes away too. It's the equivalent of expecting the parents to use 100% of their income to put their kids into college, which is impossible.

Dylan16807 2y ago
A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it. If the business is worth enough then selling it can replace all the income you would have ever gotten from it. It's not as simple as "income goes away". The specific numbers make all the difference.
- bb88 2y ago
  > A bunch of stock is a source of income too, but it wouldn't be wrong to use some of it. Normal US tax law that most people fall under says no, stock itself is not income. It's only taxed at the time of sale. If you ask for mark to market taxing then any increase in market value during the calendar year will count as income -- even if you didn't sell anything throughout the year. But usually those people are drawing a direct income from trading.
  - s1artibartfast 2y ago
    Yes, but I think these tests look at both income and assets (like stock). That is why people get dinged for owning assets, even if they are a source of income.
s1artibartfast 2y ago
IF I have stock and make $XX,XXX in dividends, how is that different? IF I have own apartments and make $XX,XXX in rent, how is that different? I think the idea is that Yes, the expectation is for people to make actual sacrifice before they qualify.
- adastra22 2y ago
  If this was inventory they were counting, sure. But you can’t sell part of a small business. Let’s say the parents own a restaurant, and the value of the land, building, and kitchen equipment is a few million. Do they sell an oven from the kitchen to put you through school? Sell the parking lot? It’s an all or nothing thing. The business needs all its assets to function, and shouldn’t be considered any more than for its income potential.
  - throwaway2037 2y ago
    Lease back for land and building is definitely possible. Most capital efficient corps do not own their own land and buildings for precisely this reason.
    - adastra22 2y ago
      It is sometimes an option, not always. Depends on the cash flow of the business and current market risks. Not every business is automatically eligible. Small mom and pop restaurants often can’t get a loan on demand, at least not on predatory terms.
  - jorvi 2y ago
    Situation: You have parents A, B and C. - Parents A own a small business. - Parents B sold their small business two years ago, and put the money in the stock market. - Parents C just scrimped and scraped and over the years saved up money equal to parents A and B. I’m not sure why you’re so hellbent on giving specifically parents A a free pass. Why the unequal treatment?
    - 2y ago

switchbak 2y ago

Should they also cut their kidneys out and sell those too? For someone not in your system, the expectations that seem normal to you sound absolutely insane to others.

s1artibartfast 2y ago
Nobody is forcing them to pay this price any more than you are forced to sell a kidney for a private jet. Education costs are out of control, but you can still get a degree elsewhere for 10% the MIT cost, and have it paid for entirely by the government if you are low income
albedoa 2y ago
Does MIT include the market value of their kidneys in their assessment? You might have lost track of what is being discussed here. Anyway no, they should not cut their kidneys out and sell them.

to11mtm 2y ago

I'd ask how the assets are structured internally. Is it a small business netting the owner 100K a year with 500K in the bank? That's different than a small business netting the owner 75K a year but the trucks and equipment for the landscaping business (easiest example, replace as needed) being worth 200K... It's complicated.