'Extreme Makeover' Family Sues ABC
tiny dancer
LOS ANGELES, August 12, 2005
Five orphaned siblings who moved into a new dream home on the American hit
television show "Extreme Makeover: Home Edition" are suing the ABC network,
the company that built the house and the couple who took them in after their
parents died.
The children range in age from 15 to 22. They claim that after "Extreme
Makeover" built a new nine-bedroom mansion for them to live in with Phil and
Loki Leomiti, the Leomitis engaged in "an orchestrated campaign" to drive
them away by insulting them and treating them poorly.
Their complaint, which was filed Wednesday, alleges fraud and breach of
contract. It seeks unspecified compensatory and punitive damages.
The children ultimately moved out of the Leomitis' home in Santa Fe Springs,
California, a small city southeast of Los Angeles, and are living separately
with friends, said Charles Higgins II, the eldest sibling.
Their complaint, which was filed Wednesday, alleges fraud and breach of
contract. It seeks unspecified compensatory and punitive damages.
"What we're really seeing is the collision between reality TV and the
perception reality TV seeks to create in the minds of the general public,"
said their lawyer, Patrick Mesisca.
ABC said in a statement that "It is important to note that the episode was
about the rebuilding of the Leomiti family's existing home to accommodate
the inclusion of the five Higgins siblings, whom the Leomitis had invited
into their lives following the death of their parents."
People who answered the phone at the Leomitis' home initially said the
couple had no comment and later referred questions to ABC and to Endemol
USA, the television show's Dutch-owned production company. Endemol publicist
Melissa Armstrong said the company had not yet reviewed the claim.
The parents of the Higgins children died 10 weeks apart in the spring of
2004 - the mother of breast cancer and the father of heart failure. The
Leomitis, who knew the children from church, opened their home to them in
July 2004, according to the lawsuit.
Producers of "Extreme Makeover" learned of the children's plight from a
television newscast.
Workers demolished the Leomitis' house in February and then built the new
one. "Extreme Makeover" producers arranged for the siblings to receive cars,
groceries, computers, stereos and other gifts.
The builder, Pardee Homes, paid off the mortgage on the new house but the
Leomitis retained the title, according to the lawsuit. Around the time the
episode first aired in late March, the siblings moved out.
Mesisca, the attorney, acknowledged Wednesday that the siblings were never
promised a house in writing. But the network's statements and actions could
legally be considered a promise, he said.
"We were promised a home," said Charles Higgins II. "They broke that
promise."
http://www.cbsnews.com/stories/2005/08/12/entertainment/main775018.shtml
EnEss
> 'Extreme Makeover' Family Sues ABC
> LOS ANGELES, August 12, 2005
> The parents of the Higgins children died 10 weeks apart in the spring of
> 2004 - the mother of breast cancer and the father of heart failure. The
> Leomitis, who knew the children from church, opened their home to them in
> July 2004, according to the lawsuit.
>
> Producers of "Extreme Makeover" learned of the children's plight from a
> television newscast.
>
> Workers demolished the Leomitis' house in February and then built the new
> one. "Extreme Makeover" producers arranged for the siblings to receive
> cars,
> groceries, computers, stereos and other gifts.
>
> The builder, Pardee Homes, paid off the mortgage on the new house but the
> Leomitis retained the title, according to the lawsuit. Around the time the
> episode first aired in late March, the siblings moved out.
I heard about this on the Abrams Report tonight. The oldest son, Charles
Higgins, and his lawyer was on. If the Leomitis had no legal authority to
serve as guardians or foster parents or adoptive parents to the Higgins
children, ABC made a foolish error in providing a brand new, large, posh
home for a couple of people who didn't need or deserve it while making no
legal provision for the children they claimed to be trying to help any
entitlement to the home. That was pretty stupid...but I don't know that it
makes ABC legally responsible to the Higgins children for damages or to
provide them another house. Pardee Homes, who built the house and paid the
mortgage might have a legal claim against ABC for soliciting charity from
them for misrepresented purposes. But I don't know if they have a case
either. One might reasonably assume these people had some responsibility to
properly insure that their donation was legally secured to go to the
intended parties. If you do something stupid and foolish that you haven't
investigated fully, does the law have an obligation to make things better
for you?
I don't know the answer to any of these questions. But it does seem to me
ABC and the company that donated the house used really bad judgment. As for
those orphaned kids, I feel really bad for them. But I'm not sure anyone
"owes" them anything.
NS
(add sbc before global to email)
MaryL
"EnEss" <star...@global.net> wrote in message
news:nZcMe.1513$Z%6....@newssvr17.news.prodigy.com...
> "tiny dancer" wrote:
>> 'Extreme Makeover' Family Sues ABC
>> LOS ANGELES, August 12, 2005
> <snip>
>
> ABC and the company that donated the house used really bad judgment. As
> for those orphaned kids, I feel really bad for them. But I'm not sure
> anyone "owes" them anything.
>
> NS
> (add sbc before global to email)
>
I think there are a number of problems with these programs. For example,
there have been reports of some homes being so "enhanced" that the people
they were built for could no longer afford the taxes and maintenance. Some
apparently had to go into bankruptcy and others had to sell and move. I
think these shows are real money-makers for the producers, but I doubt that
the long-term benefits to the recipients even remotely approach the scenes
that are shown on TV. These shows are manipulative.
MaryL
tiny dancer
"MaryL" <carst...@yahoo.comTAKE-OUT-THE-LITTER> wrote in message
news:OhdMe.2510$Ix4.2014@okepread03...
I agree with you mary. The first couple shows were much more scaled back
and well-intentioned, I think. Then they began to go way overboard. I'd
sooner see 'em modestly fix up a whole block of homes rather than making one
elaborate mansion that's way out of line in most of the neighborhoods they
build 'em in.
And Eness, I think the siblings have a case against the family who took them
in possibly, but not ABC nor the show.
td
>
>
Cliff and Linda Griffith
news:3EdMe.17072$Rm3...@bignews4.bellsouth.net...
> And Eness, I think the siblings have a case against the family who took
them
> in possibly, but not ABC nor the show.
>
>
> td
I dunno.... I was watching the Dan Abrams show, and I saw and heard the
eldest sibling and the lawyer. Dan asked if the foster parents kicked the
kids out, and the man and the lawyer refused to answer that question. I may
be wrong, but something tells me the siblings' story isn't on the up and up.
I'm thinking that maybe the kids became obnoxious, refused to follow the
house rules, etc. Maybe they said things like, "Look, we got you this
house, so you need to cut us some slack. If it weren't for us, you wouldn't
even *have* this house, so don't be telling us what we can and can't do!"
Maybe they got mad at the foster parents and moved out one by one, vowing to
"get back at them". I think they're going after ABC and the show because
those entities have the deepest pockets.
Linda, suspicious
goldenm...@yahoo.com
I think these are the five black kids who
moved in with the Samoians.
Anyone know?
GM
flick
news:1124167581.1...@g47g2000cwa.googlegroups.com...
I didn't see the show.
What I don't understand is how these kids were allowed to be on their own
without anyone having legal custody of the underage children. When the
parents died, wouldn't something have happened in court? The older kids
made the legal guardians of the young ones? Or something?
flick 100785
>
> GM
>
>
EnEss
"flick" wrote:
> What I don't understand is how these kids were allowed to be on their own
> without anyone having legal custody of the underage children. When the
> parents died, wouldn't something have happened in court? The older kids
> made the legal guardians of the young ones? Or something?
Agreed. That's what my point was, too. Orphaned children are not like stray
kittens on the street that anyone can come along and scoop up and take home.
Child protective services in that county would have to be involved. A court
would have to designate the Leomitis as legal guardians. They would have to
become licensed as foster parents and pass a waiting period before a judge
could appoint them legal guardians or adoptive parents of the kids. If these
things weren't done, ABC acted prematurely and erroniously in making a gift
of the home to the Leomitis, who certainly don't need a super-sized house
like that if the Higgins kids aren't living there. And unless the Leomitis
were approved by the family court in their jurisdiction to act as legal
guardians for the children, there would be no way to legally enforce that a
gift of a house made to them by some entity go only to the orphaned
children.
ABC ought to have a staff of lawyers that could do better than this, you
would think. But that doesn't mean ABC is liable for damages to the orphaned
kids. The article quotes a spokesperson for ABC who claims that there was no
written contract to the Higgins kids that ABC was making a gift of a house
to them. If that's true, my guess is the Higgins children are flat out of
luck. I'm not sure either that the kids have a claim against the Leomitis.
If the deed to the home was put in the Leomitis name only and there was
nothing in the contract stipulating that the gift to the Ls were valid only
as long as the Higgins children live there, I think pretty much that means
the Higgins have no claim to the home. Under the US system, anyone in the
society is free to make a gift to anyone else he or she chooses.
flick
news:0253g1tbeor46ut94...@4ax.com...
>
> Naaaaaah! Ya think? Of course they are manipulative, both of their
> subjects and their audience, and the only people who really go home
> happy are the networks and the producers. Reality TV is "The Magic
> Christian" come to life, in many regards - people will go along with
> anything if they think will get something for nothing. Or, like on
> "Fear Factor", they will guzzle horse anus and intestine for cash and
> prizes. Welcome to the decline of American civilization...
Oh good grief. Fear Factor. We don't have TV, but I've seen FF a couple
times at friends' houses.
The idea of "we're gonna make you do anything for money" is disgusting. Why
don't they just find a couple skid-row drunks and see what they can make 'em
do for a bottle of Mad Dog?
I'm equally disgusted with the participants. If you have that much
initiative, athleticism, etc., WTF are you doing pimping yourself for that
measly prize money?
Losers on both sides of the camera. Blech.
flick 100785
ronniecat
<carst...@yahoo.comTAKE-OUT-THE-LITTER> swore to tell the truth, the
whole truth and nothing but the truth, but instead wrote:
>I think there are a number of problems with these programs. For example,
>there have been reports of some homes being so "enhanced" that the people
>they were built for could no longer afford the taxes and maintenance. Some
>apparently had to go into bankruptcy and others had to sell and move. I
>think these shows are real money-makers for the producers, but I doubt that
>the long-term benefits to the recipients even remotely approach the scenes
>that are shown on TV.
Articles have also popped up on handicapped mailing lists and
discussion forums about problems with some of the gee-whiz high-tech
setups they install for handicapped people. Apparently in some cases
where the software or hardware fails, there's no warranty protection
and no cash for repairs so the systems sit there, useless - or
sometimes, worse than useless (an example I seem to recall was a heavy
automatic door which had failed - it was far too heavy for someone in
a wheelchair to open manually alone).
>These shows are manipulative.
I'm extremely uncomfortable with the patronizing, halo-wearing nature
of these shows, Extreme Makeover in particular, but nearly went
through the TV the night they were remodeling the home of a deaf
family and while the hosts were patting each other on the back, one
tearfully said, "These are people, just like us."
I'd like to see them say that about an ethno-cultural minority family
and be on the air the next week.
ronnie
--
return address altered. remove my collar to reply.
"Other cultures are not a failed attempt at being you."
- Wade Davis
http://www.hearingloss.blogspot.com * a weblog about deafness
EnEss
"tiny dancer" wrote:
> And Eness, I think the siblings have a case against the family who took
> them
> in possibly, but not ABC nor the show.
It's not clear to me that the kids have a case against *anyone* here, which
is sad. IMO, I think it would all depend on whether there was a contract
between ABC and the Higgins family, or w/ the Leomitis stipulating that they
could keep the gift of the home only as long as the children were residing
there. If there is such a stipulation, the Higgins children might have a
case against the Leomitis, and ABC might have a case against them too. But
if the Ls have no legal authority to keep the kids with them, that could
possibly override any contract gifting the house to the couple on the
condition that the children reside w/ them. If the contract is thrown out,
that could leave the kids out in the cold as far as any claim against the
Ls. The same goes for ABC.
If the Higgins children have nothing from ABC in writing saying that the
house is a gift to them, they may have no case whatsoever against ABC...or
the Ls. It all depends on specific wording on everythinng that was put in
writing to the Higgins children and the Ls. It also depends on whether the
family court w/ jurisdiction gave the Ls legal authority to have the Higgins
children reside with them and have guardianship over them. W/o knowing any
of these details, it would be impossible for any of us to guess as to what
recourse, if any, is open to the Higgins children.
EnEss
> I dunno.... I was watching the Dan Abrams show, and I saw and heard the
> eldest sibling and the lawyer. Dan asked if the foster parents kicked the
> kids out, and the man and the lawyer refused to answer that question. I
> may
> be wrong, but something tells me the siblings' story isn't on the up and
> up.
> I'm thinking that maybe the kids became obnoxious, refused to follow the
> house rules, etc. Maybe they said things like, "Look, we got you this
> house, so you need to cut us some slack. If it weren't for us, you
> wouldn't
> even *have* this house, so don't be telling us what we can and can't do!"
> Maybe they got mad at the foster parents and moved out one by one, vowing
> to
> "get back at them". I think they're going after ABC and the show because
> those entities have the deepest pockets.
That was my intuition on it as well, Linda. Of course, possibly the Higgins
children are all under advice from their attorney not to state anything
publicly about any of the details of this case. But if you read between the
lines, it does sound like the kids left voluntarily and maybe they don't
want to go on the record w/ that in fear it might damage their case.
I think it was a major goof of ABC and Purdee Homes to put the deed to the
home in the name of the Leomitis only. If the intent of the gift was to
establish a secure living space for the Higgins children, gifting a house to
non-related parties w/ no obligation or legal authority to provide a home to
the children or to share the gift w/ them was plain stupid. But I don't know
that stupidity and short-sigtedness makes ABC or Purdee Homes liable.
Sagejelly
I'd like to know a little more about the family situation. Did the
parents leave no will and make no provisions for the children? Who is
the legal guardian here and why doesn't that person have a role in any
of this?
Kris Baker
"ronniecat" <ronn...@mycollar.ronniecat.com> wrote in message
news:v714g15vkurl2snu5...@4ax.com...
Beautifully said!
If they're poor, the only reason they're poor is because they don't
have a nicer house. If they're deaf, the only reason they're poor
is because they don't have a nicer house.
All of those "systems" are donated....and the donor (manufacturer)
gets lots of free advertising. That's ALL these shows are about:
advertising of products. This Old House led the way.
They're cheap to produce, and appalling.
Kris
Kris Baker
"MaryL" <carst...@yahoo.comTAKE-OUT-THE-LITTER> wrote in message
news:OhdMe.2510$Ix4.2014@okepread03...
>
Thank you. Of course they are.
If they "gave" a new home to a middle-income family, people would whine
about them being "undeserving". But do it to a poor family, and you're a
hero. (I use the term "poor people" on purpose, to include anyone who
"deserves it because I am _____", fill in the blank.)
A family near us just had a makeover (they were "deserving" because the
father had cancer)....and were leant some posh RVs for "breaks". At the
end, they left them unlocked with the keys inside, and one got stolen.
Remember all the whining by the people who got the free Oprah cars? Wait
until all of these people find out how much tax they owe on their "free"
home. It's income, it's higher-valued, etc, etc.
Kris
I "deserve" a new free home because I could decorate
it really well
Carmen
Hi,
On 15-Aug-2005, "MaryL" <carst...@yahoo.comTAKE-OUT-THE-LITTER>
wrote:
> "EnEss" <star...@global.net> wrote in message
> news:nZcMe.1513$Z%6....@newssvr17.news.prodigy.com...
> > "tiny dancer" wrote:
> >> 'Extreme Makeover' Family Sues ABC
> >> LOS ANGELES, August 12, 2005
> > <snip>
> >
> > I don't know the answer to any of these questions. But it does
> > seem to me
> > ABC and the company that donated the house used really bad
> > judgment. As
> > for those orphaned kids, I feel really bad for them. But I'm not
> > sure
> > anyone "owes" them anything.
>
> I think there are a number of problems with these programs. For
> example,
> there have been reports of some homes being so "enhanced" that the
> people
> they were built for could no longer afford the taxes and
> maintenance. Some
> apparently had to go into bankruptcy and others had to sell and
> move. I
> think these shows are real money-makers for the producers, but I
> doubt that
> the long-term benefits to the recipients even remotely approach the
> scenes
> that are shown on TV. These shows are manipulative.
We've gotten a look at it locally. One of the soldiers here at
Campbell got an Extreme Makeover house done this summer. It was
someone we knew because Luis and my husband go to the same prosthetist
in Nashville (that's where I first met him) and he and my husband are
both still on active duty so they bump into each other on post from
time to time.
Luis lost a leg, and the stairs in his house were a bit narrow. No
big deal really. The soldiers who end up as amps aren't wusses. The
first time I met Luis at the prosthetist's office he was walking out
with his brand new shiny running leg slung over his shoulder as we
were walking in to pick up some attachments for weightlifting and a
specially made one for doing pushups (the guys have dubbed it "the
Doorstop").
The plan was to tear his house down and make it all one level, build a
rehab room for exercise and the like. Good idea. (Yes, there are far
more racked up folks out there the show could/should have picked. I
agree. Going on.) By the time the house was done they had lost their
damn minds. It had a $44,000 fishtank wall in it. Saltwater. $6,000
a year in maintenance costs. Why? Because a local small business was
willing to go into debt (did you know that ABC doesn't shell out the
money for this stuff? It's donated!) for the poor brave soldier's
little girls who loved the fish in Finding Nemo and temporarily lost
their heads. They're also donating the first year of maintenance.
A local mortgage company paid off the mortgage on the house they tore
down (~$66,000) and the one they have now is probably worth about
$250,000 to $300,000 - in a neighborhood where the average house sells
for $125,000 for a decent one like the one he had (3 and 2, ~1800 sq
ft). Unless I miss my guess, tax time is going to be very ugly this
year, and Luis and his family won't have the house very long.
An unforeseen outcome of all the publicity is he's now going through
an MEB. (Medical Evaluation Board) His command figured he was doing
his job just fine so why push an MEB, but all the publicity brought to
light the fact that here he was, an amp still on active duty without
having been medically determined fit to stay on active duty. Now he's
at risk of being medically retired (he has 16 years in, less than the
20 for regular retirement).
--
Lab Law 6: Carbon monoxide doesn't smell like anything. Be careful.
Carmen
scooter34
EnEss wrote:
>
> I think it was a major goof of ABC and Purdee Homes to put the deed to the
> home in the name of the Leomitis only. If the intent of the gift was to
> establish a secure living space for the Higgins children, gifting a house to
> non-related parties w/ no obligation or legal authority to provide a home to
> the children or to share the gift w/ them was plain stupid. But I don't know
> that stupidity and short-sigtedness makes ABC or Purdee Homes liable.
>
> NS
> (add sbc before global to email)
But recall that the Leomitis home was demolished and a new one erected
to accomodate the Higgins children. The gift would clearly be to the
Leomitis family, as they are the property owners. The Higgins children
had no legal right to the home, as they don't own the land that it was
sitting on. Not to mention that it was a replacement for the LEomitis
home that was torn down.
scooter34
(who got her degree from the Jack McCoy School of Law)
eartha...@yahoo.com
'Extreme' tax bill
Penngrove family may face hundreds of thousands in income taxes;
property tax doubles
Wednesday, March 23, 2005
By JOSE L. SANCHEZ JR.
THE Santa Rosa PRESS DEMOCRAT
Last year, the Pope family got an "Extreme Makeover" of their aging
Penngrove house worth an estimated $1.5 million.
Now they are facing an extreme tax bill.
Their property tax doubled to $6,500 a year, and private tax experts
say the family also might face six-figure income tax bills.
For the Popes, who live on a modest income, it's a frightening
possibility.
"This is very scary for us," Caroline Pope said. "What if this house
gets taken away?"
They are dipping into their small savings to pay the higher property
taxes, she said.
As for income taxes, federal and state tax officials say they've made
no determination about what tax liability "Extreme Makeover" families
may face.
However, several private tax experts said there is a significant chance
the families will have to pay federal and state income tax on what they
received from ABC's "Extreme Makeover: Home Edition."
The show, which premiered in December 2003, remodeled the homes of 31
families, 21 of them from California, during its first two seasons.
In July, while the Popes enjoyed a vacation in Washington, D.C.,
Endemol Productions, the show's producers, demolished most of their
100-year-old farmhouse and rebuilt it as an elegant country mansion,
aided by about 70 local companies and 1,500 volunteers.
Caroline and Matt Pope knew their property taxes would go up. But they
have not been expecting to get a big income tax bill, she said.
Endemol officials have said families like the Popes won't be subject to
income taxes on their new homes and furnishings because of the way
their participation in the show was structured.
But some tax law experts question Endemol's interpretation of the U.S.
Internal Revenue Code, saying "Extreme Makeover" projects aren't exempt
from income taxes, which cover prizes.
In the case of the Popes, experts said, combined state and federal
income tax liability could total $664,500.
That figure is based on local architect Mark Quattrochi's estimate that
the Popes received about $1.5 million in goods and services. Quattrochi
designed the house and was intimately acquainted with the details of
the project.
The Sonoma County assessor recently valued the house at $603,600. The
assessment excludes several hundred thousand dollars worth of
improvements intended to protect the Popes' 14-year-old daughter,
Shelby, who is allergic to sunlight.
Caroline Pope is a special education assistant at Penngrove Elementary
School, and her husband is a consultant for Moss Adams, an accounting,
tax and business consulting firm. They have a second daughter, Madison,
who is in grade school.
"Why would they (the tax agencies) want to come after us?" Caroline
Pope asked. "This is something that came from the heart of a
12-year-old girl," she said, referring to the letter her daughter wrote
to the show two years ago.
The new home is 833 square feet larger, has deep wrap-around porches, a
covered pool and a family room/wine cellar.
But living in a millionaire's house doesn't mean the family is living
like millionaires, Pope said.
"We are struggling. Those are the facts," she said.
After seeing their PG&E bill zoom up from $120 to $500 a month, the
Popes turned off their new hot tub. With no money for a gardener, the
thousands of dollars in new landscaping they received is looking
somewhat the worse for wear these days, she said.
Neither ABC or Endemol responded to requests for comment about the tax
situation.
Endemol officials have said they help the families avoid federal income
tax by leasing their properties and then declaring the value of the
improvements as rent.
According to Endemol, that is permitted under U.S. tax code provisions
that exclude from taxation income from rentals 14 days or shorter and
tenant improvements, under certain circumstances.
Maybe, maybe not, the tax experts say.
"The question is: Is there a legitimate rental going on here or is it a
disguised prize that is taxable," said Frederick Stein, a senior tax
analyst at RIA, a New York-based company that provides advice and other
services to tax professionals.
Prizes from TV shows always have been taxed, he said, noting Richard
Hatch, the first winner of the CBS show "Survivor" is in trouble with
the Internal Revenue Service for failing to report his $1 million in
winnings.
"There is a reasonable chance that these people are going to have
trouble," Stein said, referring to "Extreme Makeover" families. "I'm
not sure it's a 50-50 chance, but there is a fair chance."
Other experts reached similar conclusions.
"If the IRS decides to go after it, I think there will be tax due,"
said Robert Maize Jr., a Santa Rosa attorney certified as a tax law
specialist.
As for the state Franchise Tax Board, Maize said, its employees know
the state is "desperate" for revenue.
Denise Azimi, a spokeswoman for the board, said it would "follow
federal laws in this area and defer to the IRS for guidance."
JoAnn Ritko Pozzi, a Petaluma certified public accountant, said there
is a "definitely a basis on which they could pursue" a tax payment.
Whether the IRS will do so is another matter, she said, noting tax
officials may choose to avoid the bad publicity associated with going
after people like the Popes, who were selected for "Extreme Makeover"
because of their daughter's condition.
"It may depend on whether people raise enough of a stink about it," she
said.
POPE HOUSE COSTS
Property tax: Doubled to about $6,500 annually
Income tax: Family could face state and federal income tax liability of
$664,500
Assessed value: New county assessment placed at $603,600
PG&E costs: When monthly bill went from $120 to $550, family turned off
the new hot tub.
Kris Baker
<eartha...@yahoo.com> wrote in message
news:1124217023.5...@z14g2000cwz.googlegroups.com...
Not only that, but even IF they could afford the income taxes,
how can they *maintain* that place?
Soon, it will be as run-down as the home they previously owned...
and worth little.
And....it's only 833 square feet larger? Huh?
There's no difference between receiving this house, and winning
on The Price Is Right. It's taxable income.
IF that production company wanted to do a "poor" family
(in this case? Two working parents?) a favor, why don't
they just fix the place up and make it easier to keep?
Kris
tiny dancer
"Sagejelly" <Sage...@aol.com> wrote in message
news:1124210327.0...@g14g2000cwa.googlegroups.com...
The *children* are all nearly grown. IIRC, the youngest was 14, the eldest
around 22. There was probably only two of them under the age of 18.
td
eartha...@yahoo.com
>
> Not only that, but even IF they could afford the income taxes,
> how can they *maintain* that place?
>
> Soon, it will be as run-down as the home they previously owned...
> and worth little.
>
> And....it's only 833 square feet larger? Huh?
>
> There's no difference between receiving this house, and winning
> on The Price Is Right. It's taxable income.
>
> IF that production company wanted to do a "poor" family
> (in this case? Two working parents?) a favor, why don't
> they just fix the place up and make it easier to keep?
>
> Kris
I can't beleive this loophole of not paying income on a rental of less
than 14 days. You mean all those people who rented their homes out
during the Salt Lake City Olympics for $$$$, didn't have to pay taxes
on it. I'm assuming this is a one-time occurrence during the year, and
not multiple rentals of less than 14 days. Boy they found a good
loophole in this provision. Lets see what happens when one of the
contestants goes to battle with the IRS over it.
Quote from article:
Sagejelly
I don't even understand the concept of property tax. Why the heck am I
paying tax on a house that I purchased with income that was already
taxed to begin with?
This is why I made a C in high school Economics.
Kris Baker
Because it funds the schools that you attended, where they
taught you Economics ;)
Kris
Sagejelly
I think I'm due a refund! ;)
Bo Raxo
<eartha...@yahoo.com> wrote in message
news:1124225548.1...@z14g2000cwz.googlegroups.com...
>
>
> >
> > Not only that, but even IF they could afford the income taxes,
> > how can they *maintain* that place?
> >
> > Soon, it will be as run-down as the home they previously owned...
> > and worth little.
> >
> > And....it's only 833 square feet larger? Huh?
> >
> > There's no difference between receiving this house, and winning
> > on The Price Is Right. It's taxable income.
> >
> > IF that production company wanted to do a "poor" family
> > (in this case? Two working parents?) a favor, why don't
> > they just fix the place up and make it easier to keep?
> >
> > Kris
>
> I can't beleive this loophole of not paying income on a rental of less
> than 14 days. You mean all those people who rented their homes out
> during the Salt Lake City Olympics for $$$$, didn't have to pay taxes
> on it. I'm assuming this is a one-time occurrence during the year, and
> not multiple rentals of less than 14 days. Boy they found a good
> loophole in this provision. Lets see what happens when one of the
> contestants goes to battle with the IRS over it.
>
Maybe its not taxed as income because such rentals are usually hotels, and
local jurisdictions typically have their own taxes on such things.
As for these people who have property tax bills on their improved homes,
they might be able to arrange some kind of reverse mortgage to fund the tax
liability from equity. These are usually age restricted, but if there is no
existing mortgage it seems like a no-risk proposition for a lender, so
perhaps something could be arranged. Put it on a long term (say, 20 years)
and at the end of the term if they still own the house, roll it over in to
another one. In most markets, especially one like Santa Rosa, the value of
the home and the land it sits on will rise faster than the debt will
accumulate, so there won't be negative amortization. And even if there is,
having 100% equity to start with means they will likely end up with more
money in their pocket at the time of sale than they would have had if they
had just kept their old house as it was.
Now the income taxes, that's a whole 'nother story. How that chunk would
get covered, I don't know. They could go to their state legislators and
their congressional representative and try to get a relief bill passed to
exempt them - legislators carry one-off special favors like this all the
time, it isn't *that* unusual to introduce a bill that specifically benefits
some individual or business. Since these families are all sob stories to
begin with, it wouldn't be much risk for the legislator who sponsored it.
Bo Raxo
Kris Baker
"Bo Raxo" <invasio...@thepentagon.removethis.com> wrote in message
news:thNMe.7703$WD....@newsread1.news.pas.earthlink.net...
>
> <eartha...@yahoo.com> wrote in message
> news:1124225548.1...@z14g2000cwz.googlegroups.com...
>>
>>
>> >
>> > Not only that, but even IF they could afford the income taxes,
>> > how can they *maintain* that place?
>> >
>> > Soon, it will be as run-down as the home they previously owned...
>> > and worth little.
>> >
>> > And....it's only 833 square feet larger? Huh?
>> >
>> > There's no difference between receiving this house, and winning
>> > on The Price Is Right. It's taxable income.
>> >
>> > IF that production company wanted to do a "poor" family
>> > (in this case? Two working parents?) a favor, why don't
>> > they just fix the place up and make it easier to keep?
>> >
>> > Kris
>>
>> I can't beleive this loophole of not paying income on a rental of less
>> than 14 days. You mean all those people who rented their homes out
>> during the Salt Lake City Olympics for $$$$, didn't have to pay taxes
>> on it. I'm assuming this is a one-time occurrence during the year, and
>> not multiple rentals of less than 14 days. Boy they found a good
>> loophole in this provision. Lets see what happens when one of the
>> contestants goes to battle with the IRS over it.
Actually....hardly anyone got big bucks for renting their homes
out (except for a few corporate bazillionnaires who already had
the tax advantages). The hotels were filled "just right", and no
one camped out. It was great watching the people move BACK
into their homes, a week before the Olympics started.
> Maybe its not taxed as income because such rentals are
> usually hotels, and local jurisdictions typically have their own
> taxes on such things.
It's not taxable, because on the other hand, they'd be claiming
depreciation for the two weeks to offset that income.....thus
creating An IRS Nightmare From Hell that would cause the
IRS to hire a few hundred administrative employees ;)
"Endemol officials have said they help the families avoid federal income tax
by leasing their properties and then declaring the value of the improvements
as rent. According to Endemol, that is permitted under U.S. tax code
provisions that exclude from taxation income from rentals 14 days or shorter
and tenant improvements, under certain circumstances."
Endemol is full of BS. There's a difference between leasing for two weeks
and doing a "tenant rehab", and tearing a place down and rebuilding it.
> As for these people who have property tax bills on their improved homes,
> they might be able to arrange some kind of reverse mortgage to fund the
> tax
> liability from equity. These are usually age restricted, but if there is
> no
> existing mortgage it seems like a no-risk proposition for a lender, so
> perhaps something could be arranged.
Problem is, Bo, like Carmen pointed out, you end up with a house that's
outrageously larger and more expensive than the surrounding neighborhood
homes, owned by homeowners who've been stuck with a bunch of advertising
crap that the producers didn't have to pay for but looked "wowee zowee" on
TV. One of the major evaluation processes during a mortgage analysis is
ability to repay the large amount (and the property won't appraise for as
much as it would in another location, due to the surrounding area).
The old laws of real estate still apply:
Location, location, location AND "always own the cheapest home in the area,
not the most expensive".
Kris
Bo Raxo
"Kris Baker" <kris....@prodigyyy.net> wrote in message
news:96OMe.3277$hF1....@newssvr30.news.prodigy.com...
>
> "Bo Raxo" <invasio...@thepentagon.removethis.com> wrote in message
> news:thNMe.7703$WD....@newsread1.news.pas.earthlink.net...
> >
>
> > they might be able to arrange some kind of reverse mortgage to fund the
> > tax
> > liability from equity. These are usually age restricted, but if there
is
> > no
> > existing mortgage it seems like a no-risk proposition for a lender, so
> > perhaps something could be arranged.
>
> Problem is, Bo, like Carmen pointed out, you end up with a house that's
> outrageously larger and more expensive than the surrounding neighborhood
> homes, owned by homeowners who've been stuck with a bunch of advertising
> crap that the producers didn't have to pay for but looked "wowee zowee" on
> TV. One of the major evaluation processes during a mortgage analysis is
> ability to repay the large amount (and the property won't appraise for as
> much as it would in another location, due to the surrounding area).
>
> The old laws of real estate still apply:
>
> Location, location, location AND "always own the cheapest home in the
area,
> not the most expensive".
>
I don't know much about real estate, but if you have a six hundred thousand
dollar house, it's fully paid for, and you need to generate 1% of that
amount per year to pay the tax bill, it seems to me there is plenty of
equity in the house to do that. Remember, I'm not talking about a
traditional mortgage, but a reverse mortgage. Those are AFAIK based on the
property having enough value to more than cover the loan amount at the time
of sale. 20 years of 1% of equity per year, plus interest costs, would add
up to far less than half the value of the home at present value - much less
the value of the property 20 years from now. And in California, assessments
are frozen (barring improvements) as long as the property doesn't change
hands (good ol' Prop 13).
But as I said, I don't know much about real estate, other than that I can't
afford it where I live, so perhaps there is some reason this wouldn't work.
Bo Raxo
Kris Baker
Problem is, a real reverse mortgage isn't available until you're
62 or older. The home must be owned "free and clear" (no
mortgages, although it can be used to pay one off).
Also, it's considered income so can affect any SSI, disability,
or welfare payments.
Good idea, but won't work for these people.
Kris
Bo Raxo
Yes, I know they are age restricted, but that's not a law - its just the way
the product is set up by the lender. A lender could waive that rule if they
wanted to. I was under the impression these homes had the mortgage paid off
by the show's producers. Are any of these people on welfare? Seems
unlikely someone on welfare would own a home - can you even get welfare if
you own a home?!? As for disability, I could be wrong but I'm under the
impression it is affected by earned income, not passive income (as from an
investment).
In any event, it seems crazy to me that these people own a home, have two
incomes (even if small), and are under a hardship trying to come up with
$540 a month in property taxes, to take the Santa Rosa example. Maybe they
have big medical costs or something that crimps their income, but $540 a
month for a place to live (plus insurance) is very cheap for California. If
you can't swing that, with two people working, you're in pretty bad shape
financially.
Kris Baker
The "good" reverse mortgages fall under Federal rules (HUD/FHA),
have the lowest cost and have structured rules. There's private ones
that let you spend the money any way you want, but they're pricey.
I'm not sure a lender *would* lower the age requirement, Bo, because
payment isn't due until the last surviving owner of the home dies.
They're not going to want to wait 50 or 60 years to get their money
back.
> In any event, it seems crazy to me that these people own a home, have two
> incomes (even if small), and are under a hardship trying to come up with
> $540 a month in property taxes, to take the Santa Rosa example. Maybe
> they
> have big medical costs or something that crimps their income, but $540 a
> month for a place to live (plus insurance) is very cheap for California.
> If
> you can't swing that, with two people working, you're in pretty bad shape
> financially.
The $540 isn't bad, but it sounds like their utility bills went up x6,
among other costs. I know CA utilities aren't cheap to begin with.
How many people do you know, that when their outstretched
hand is "gifted", don't pull it back?
I always think that there's a lot of greed and gullibility in the "get
it for free" mentality. When they find out that there's fine print,
they're angry...and after all, "they cheated me out of my free house
which I deserved because I am [fill in the blank]".
Kris
JonesieCat
> 62 or older. The home must be owned "free and clear" (no
> mortgages, although it can be used to pay one off).
> Also, it's considered income so can affect any SSI, disability,
> or welfare payments.
>
> Good idea, but won't work for these people.
>
> Kris
Reverse mortgages are considered income for tax purposes?! I had no idea.
JC
eartha...@yahoo.com
THE TV SHOW `EXTREME MAKEOVER'
MEG McCONAHEY
THE Santa Rosa PRESS DEMOCRAT
EXTREME MAKEOVER OUTTAKES
The designers on "Extreme Makeover: Home Editioni" have big ideas and
some of them are clever, like rescuing an old outhouse and turning it
into a working poolside bathroom complete with chandelier, said Mark
Quattrocchi, whose Santa Rosa architectural firm Quattrocchi Kwok
created and drafted the real house plans. But other schemes proved so
unwieldy or downright unrealistic, they didn't make the cut.
* One of the show's producers was stuck on the idea of building a huge
enclosure around the swimming pool with walls and a rolling skylight,
something he had seen in an in-flight magazine. "They wanted to be able
to push a button for the cameras and see this whole roof open up," said
Quattrocchi. "They're big on stuff you can do on camera that moves or
rotates."
But the heavy-handed idea didn't fly with architects, who insisted on
the sculptural sails, which provided protective shade for Shelby while
still allowing her the freedom of being outside in the breeze.
* One executive producer thought it would be fun to design a house so
different from the original that when the Popes walked in the door they
would be completely lost in their own home. "They wanted them
disoriented and lost to get a reaction," said Quattrocchi. "That's the
exact opposite of what we wanted to do." Architects prevailed, and the
house more or less follows the original layout.
* A senior producer whose credentials included "Fear Factor" and
"Survivor" dreamed up the idea of installing a plasma TV in place of a
window in Shelby's room. The teen could only have looked out at her own
yard on a TV screen connected to a closed circuit camera. A cool
gimmick but rather cruel for a girl hungry for the outdoors. "When
pig's fly, we'd do that," laughed Quattrocchi. Instead, the room has a
real UV-protected window and several virtual windows that are really
lit glass panels, including one in the ceiling that mimics a skylight.
* Another unrealistic idea from show producers was to build a covered
driveway from the street to the steps of the house, all just to give
the Popes' big return a showy effect for the TV cameras. Architects
compromised with a circular drive and a short, covered porte cochere.
* The show's on-camera interior designer, Tracy Hutson, is shown
shopping at Sears, emerging with multiple shopping carts filled with
goods. While Sears is a major sponsor and product provider for the
show, Hutson in fact also spent three hours picking out furniture and
accessories donated by Old Town Furniture, West End Furniture and
Furniture Depot in Santa Rosa. Owner Paul Quattrocchi (Mark's uncle),
said Hutson helped herself to everything from wooden steamer chairs to
a large bird cage.
* Some local volunteers and tradesmen complained after the show aired
that ABC grabbed too much credit. (For a list of participating
companies and donors, many of them local, see the network Web site - -
www.abc.com.)
But the show's stars can also feel slighted by the editor's knife.
Paige Hemmis, who designed and built a trellis bed for Shelby Pope, was
disappointed at how quickly her handiwork passed by on the screen. "You
work so hard and they barely show it," she said in a later phone
interview.
Caroline Pope says there are times when she drives up to her Penngrove
home and has to mentally stop and remind herself that this, indeed, is
her address.
Set far back from the road beyond a lone redwood, her tall,
single-story home dressed up with cedar shingles and stonework reminds
her more of the romantic Awahnee Hotel in Yosemite than the century-old
farmhouse with peeling paint that stood on the same foundation only
three months ago.
A bit like the Little Princess who awakens in her cold garret only to
find it sumptuously transformed with fine linens and a feast, Caroline
and Matt Pope and their two daughters returned from an unexpected
vacation in July to find their 1,450-square-foot fixer- upper had been
turned into a $1.5 million showplace.
The "remodel," which involved tearing the house down to its foundation,
completely rebuilding it and adding 833 square feet, was orchestrated
by the ABC TV show "Extreme Makeover: Home Edition."
The bulk of real work was carried out by some 1,500 local volunteers
and 70 businesses marshaled by Design Concepts, a family- run general
contracting firm with deep roots in Sonoma County.
It was a letter written by the Pope's older daughter, Shelby, that
grabbed the attention -- and the heartstrings -- of the shows'
producers. The 13-year-old suffers from a severe sensitivity to
sunlight. Even exposure through a window can cause her skin to break
out in painful blisters. The girl who once loved camping had to dodge
the daylight as it streamed into her house; she was frequently confined
to her small room, darkened with heavy drapes. Her only refuge outdoors
was the shade of an old plum tree.
Now the house is filled with safe light from Pella windows glazed with
a ultraviolet (UV) protectant.
Deep covered porches, including a wide deck right off Shelby's bedroom
outfitted with camping gear and a landscaped back yard with swimming
pool shaded by overlapping sails made of a UV-ray blocking material,
now give the Petaluma Junior High student a freedom to move about her
own house that she hasn't known since she was diagnosed with the sun
allergy at age 6.
Despite the extreme differences, the house still pays respect to the
old cottage it replaces, with high ceilings, wide, white interior trim
and hardwood floors.
Casual style
The fact that the house so easily fits the casual family life of the
Popes is no happy accident. Nor is it due to some on-the-spot stroke of
genius by the show's design team, which appears on camera poring over
crude sketches on butcher paper right after the Popes were whisked away
to Washington, D.C., in July.
In fact, a team of 10 real designers from the Santa Rosa architectural
firm of Quattrocchi Kwok had been working on detailed plans and pulling
building permits for several weeks. They resisted the show's idea of
playing up the Wine Country with an imposing Tuscan villa.
In fact, the Pope's 2-acre property was a former chicken ranch typical
of the south county in the early 20th century.
"We really felt this should be a Sonoma County farmhouse," said
architect Mark Quattrocchi. "It's compatible with the rural quality of
the site and yet it's fine enough in detail to make you feel like this
is just a little special."
General Contractor John Rechin came up with the idea of the shingle
siding. A more formal entrance was added with a UV-treated covered
entrance so Shelby can safely get from house to car.
Three weeks before they were roused out of their home with a bullhorn
with the big news, the Popes had been given the heads up that they were
one of five families being considered for a makeover. They were asked
to take off for several hours to allow program producers to check out
the house. That's when architects, PG&E, building department officials,
mechanical and electrical contractors, framers, well diggers and other
major players descended to take notes.
Quattrocchi said designers were able to discern things about the
family's tastes, both from a questionnaire they filled out for the show
and from exploring their environment. One thing they were all struck
by, said Debra McGuire, who drafted the plans based on her colleague's
input, was how "unafraid" the Popes were about color. Their kitchen
cabinets were deep purple with black and white floors, the library red.
Sensed family's tastes
Caroline Pope said architects, and the interior designers for the show,
keenly sensed their tastes.
"If I knew this was all out there, and I had the money," she said, "I
would pick this."
She is standing in her front "parlor," painted a deep pomegranate red.
The room is simply, but tastefully, furnished with a sectional couch
the two girls love to sprawl on. There's a home theater with
surround-sound speakers neatly hidden in an rustic armadio.
A wall that had once separated the small room from another room the
Popes had been trying to convert into a library is now gone, with only
a two-sided fireplace to divide the spaces. The couple's own efforts to
remodel the library were stalled when they ripped up the old linoleum
to refinish the floors and uncovered a sticky glue that had been tough
to remove.
Cherrywood shelves filled with classics and reference books donated by
the Oxford Press, consume one back wall in the library, given the
elegant touch with silk burgundy window coverings.
Gone is the white batten board wainscotting. Throughout the house, the
walls are a rainbow of reds, yellows, pale and olive greens and
lavender, reflecting the family's love for bold hues.
A little space was shaved from Shelby's old room to enlarge the
kitchen, which used to be a narrow boxcar shape. It's now bright with
apple red tile backsplashes offset by slate gray concrete countertops
by Sonoma Cast Stone. The antiqued ivory KraftMaid cabinets with copper
pulls have an old farmhouse styling. And a second two-sided gas
fireplace gives two hearths to cozy up to, whether the Popes are dining
at a long farm table inside or al fresco on the patio.
In reconforming the space and adding square footage, architects found a
square of dead space between the living room and library that they
carved into a computer nook that can be closed off with glass pocket
doors.
Ingenious touches
The actual on-camera show designers did come up with some ingenious
touches, said Quattrocchi, like a note board made of wine corks and a
coat and cap rack in honor of Shelby's ubiquitous headwear, fashioned
out of a twisty old vine.
Shelby's 10-year-old sister, Madison, who has an artistic spirit, now
has the window seat she coveted for curling up with a book. But the
real surprise was the walls -- a fanciful paint-by-numbers project with
outlines of flowers and small creatures that she can fill in herself.
For Shelby, show designer Paige Hemmis created a room that gives her
the sensation of sleeping outside. A self-taught carpenter who has her
own business fixing up old houses for resale, Hemmis distressed 4-by-4
posts and built a trellis bed, then smothered it with flowering vines.
Now the girl who had to fear the sun can lie in bed and gaze up at the
clouds, thanks to a lit glass panel above her bed that looks like blue
sky peeking out of a skylight. Two other glass panels appear to look
out at a meadow.
Shelby, a serious writer who is often pouring over her journal, says
she's enchanted. "It sort of reminds me of that play `A Midsummer
Night's Dream.' It's really like being outside."
eartha...@yahoo.com
Television: Tax Trouble for ABC's 'Extreme' Winners?
Newsweek
-Daniel McGinn
May 17 issue - Last fall Trent Woslum, a National Guardsman who was
deployed in Iraq, got an e-mail from his wife. She'd been contacted by
a new TV show called "Extreme Makeover: Home Edition," which wanted to
do a big renovation of their southern California home-free of charge.
By mid-December the family had new furniture, appliances and even a
backyard baseball diamond. Estimated value: as much as $250,000. The
production company gave the Woslums a letter saying its accountant
believed the family didn't have to pay taxes on their windfall, but
when the family's own accountant read it, he grew wary. "I'm living in
fear and trepidation," says accountant Brett Porter. If the IRS looks
closely, he worries, the family could owe thousands in taxes. "There's
no way I'd be able to pay," says Woslum, whose savings ran dry during
his deployment.
It's common knowledge that lottery or TV game-show participants must
pay taxes on their winnings. On "This Old House," homeowners routinely
pay taxes on donated products. But the producers behind ABC's
"Extreme," which picks cash-strapped families for a seven-day home
renovation, think they've found a way around the taxes. According to
documents obtained by NEWSWEEK, the show leases participants' homes,
paying $50,000 for 10 days' rental. Instead of cash, the show gives the
family flat-screen TVs and appliances. Since the IRS allows tax-free
rentals of less than 15 days, the homeowners don't owe taxes on their
new goodies. And by renting the home from the family, producers
apparently believe the renovations are tax-free under a "leaseholder
improvement" loophole.
But NEWSWEEK ran that logic by a half-dozen outside tax professionals.
While some called it clever-even "elegant"-most scoffed at the
show's approach, saying the IRS would be highly unlikely to agree with
all aspects of it. "When you look at the big picture, these provisions
were not meant for this," says Jim Seidel of RIA. The result: if
audited, the "Extreme" families could be hit with huge tax bills. The
IRS, ABC and the show's producers and accountant declined to comment.
For Woslum, the problems go beyond taxes. He describes leaky bathrooms
and cracked stucco. One of the snazziest additions-a carwash
shower-has never worked; he claims producers used air compressors to
make it appear functional for the show. Rivals aren't surprised. "You
can't do a quality job in one week," says Norm Abram of "This Old
House," which spends up to 12 months on projects. He worries that the
"Extreme" winners are really "victims of the program." As for the
taxes, if the Woslums are audited they may sue the producers. Sounds
like the makings of a great reality show-for Court TV.
eartha...@yahoo.com
Q: Some (let's be honest here - ALL) of the makeovers on "Extreme
Makeover - Home Edition" cost big bucks to accomplish. Do the
recipient families have to pay federal income taxes on these windfalls?
-Jackie
A: Families who cried on camera when introduced to their newly
renovated homes on "Extreme Makeover: Home Edition" and similar
shows might have been crying again last week, when federal income taxes
were due. That's because the renovations done to the house - and
paid for by producers and sponsors - are taxable.
But don't worry too much about the families, at least those who've
participated in the two big renovation shows. The producers who changed
their lives do their best to shield them from an unbearable tax burden.
Variety reported last week that producers for "Extreme Makeover: Home
Edition" have "an innovative scheme" for getting around the tax
burden. Basically, the show leases the house for two weeks. That makes
all of the changes and improvements tax-exempt. That sounded sketchy to
tax professionals who talked to Newsweek. But a year later, Endemol
exec David Goldberg told Variety, "we haven't had any issues with
it."
FOX's copycat show, "Renovate My Family," also deals with the
same issue. But instead of sidestepping taxes, they send a 1099 form to
the families. One family found out that their renovations were worth
$529,148 - income they'd have to pay taxes on. But Rocket Science
isn't leaving them hanging; the company is paying the taxes,
"offering $215,000 to cover their tax liabilities," Variety
reported. -A.D.