re: LA tuition donation tax credit

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That's not how it worked for taxpayers that bought film credit over the cap for 2016. There was no penalty abatement for credits disallowed because the cap was exceeded.

And what about the debacle with solar credits and alternative fuel credits. This governor and legislature re-writes tax law retroactively as they see fit. I would not do it.

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Federal vs state issues.

If there are problems with this, it's going to be the IRS denying the charitable deduction. Generally, if you get high up enough in the IRS system, you can find people who are reasonable and if you have an otherwise clear past, you can get things like this abated.

Now, LDR? You are right. They are much more difficult to deal with. I feel like they must get flogged in public if they give a single abatement, especially on the individual side. The business side is a teeny bit easier to deal with, but not much.

I am convinced that LDR/ the state looks at penalties as additional tax revenue and they don't want to give that up.

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I have a few Georgia clients and they have a similar education tax credit/donation, the Georgia Goal Scholarship Program. I take a federal charitable donation deduction and a state tax credit, and add back the federal donation to the GA income. It's been available in Georgia since 2008. I have had no IRS issues with the donation deduction through 2017.

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That's good to hear.

LA is talking about doing the addback as well.

My only concern is that, this is now an obvious attempt to get around the 10K deduction on state and local taxes. In the past, if the IRS denied the charitable deduction, you could just claim it as a tax deduction, which is probably why they didn't bother worrying about it.

I may be overthinking this.

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obvious attempt to get around the 10K deduction on state and local taxes

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That is not entirely true. Anyone that itemizes regardless of their state tax obligation will benefit from this even if there state tax obligation is only $100.

The fact that it does get around the $10000 does not make the purpose of the credit to get around the $10k.

How are you going to tell the 503C corporations that have been accepting donations all year under the guise they are federally tax deductible that suddenly they are? I suppose the IRS could do that but it would be cold. Several states have these programs and as the other posters says the programs existed before the new tax plan put limits on the state tax deductions.

Louisiana was particularly stupid to not put a limit on them. Alabama has a $30 million cap and you go to their website and enter your contribution and get your credit there. Once they give out $30 million they start on the next year it appears. I went to their website and they say any contributions now are for 2019.

I suspect they will in 2019. I am contemplating contribute more than I need for 2018 because the law reads I can carry them over for 3 years and I am afraid they will change it in 2019.

I saw a draft the LDR put out and I will tell you that the LDR has some thing screwy about when you get the credit. They say you get the credit when you contribute buy you have to have a receipt the state acknowledges to claim it or something like that.

You could be right on this. Once something good like this comes around, the state has the propensity to botch it by tinkering with it. Although, it doesn’t make sense for them to cap it, since it arguably saves them money. Also, they’d have to have the votes in committee to come after this program. Don’t think that’s the case as of right now.

I think it should work this year as others said, but in year 2/3 they will botch it.

I made my contribution already. Seems the SOP submits contributions quarterly and the state acknowledges them with some kind of receipts about 6 weeks latter. I wanted mine by year end so I can file early in 2019 and get the taxes I have already paid back quicker.

I believe the wording is "after August 27". That would mean anything donated on Monday Aug 27 will still qualify for deduction. I plan to wire the second half of my Aces donation first thing Monday morning.

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I sent my donation to ACE by wire transfer. I'm sure people could certify mail a donation check too.

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Yeah, I'd wire it. Don't risk a check. Should be ok... but why take the chance?

Also... these are proposed regulations. Which means that they are open for public comment, and can be changed / never put into effect. This is one of those strange times where small government conservatives, and high-state-tax liberals are all coming together.

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.I can go on and on.

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you could go on and on with a bunch of fantasy, but Freeman provides FACTS.

if film tax credits are a good idea for that industry, why not have same policy for ALL businesses?

State of La will pay 1/3 of all your expenses in the state...just think of all the homes people could buy? Heck, why not just have the state pay ALL expenses for ALL businesses?

How any person with an IQ above 50 thinks film tax credits are a good idea shocks and scares me, but then Obama was elected twice....