What do you think about Inspiration 4?

[mikegarrison]

Look at the crew:

1 guy who is paying for it all. (But from personal already taxed money? Or is his business paying for it? That didn't work for Laliberté.)

1 woman who is going because she works for St. Jude Hospital. Probably a good case here that this is a "business trip" she shouldn't have to pay taxes on.

1 guy who is going due to a lottery. (He didn't actually win the lottery, but the winner nominated him to go instead.) *Somebody* owes taxes on this, for sure.

1 woman who won the trip in a game-show-like contest. Game show winners have to pay taxes on their winnings....

[pmborg]

12 hours ago, Pawelk198604 said:

I wonder does Inspiration 4 participants get Astronaut wings?

Hello,

• The preparation of Inspiration4, is being awesome.
• The launch will be in 5 days (15 September 2021), if weather collaborate this time.
• There is a new TV Series about Inspiration4 with all crew and family, explaining the crew selection and also with Elon Musk interviews on netflix, for those that can watch I recommend!
• The Idea is to inspire that every body, and not only an astronaut can go to space.

NOTE:

No they will not get the wings, after the journey, they will not be Astronauts.

Cheers!

Edited September 10, 2021 by pmborg

[tater]

1 hour ago, mikegarrison said:

If I get a service award from my company, they give me the gift but they also pay a small amount to the IRS to cover the tax obligation I would otherwise have faced for getting that gift. It can be done this way.

I'd think in this particular case there is no possible other way, if considered income, there's no way any of the 3 could afford 37% of whatever a Dragon seat is (NASA pays 50-something million). Nor could they pay the lower tax if it was somehow considered a capital gain. I'm sure he covered it else they'd not be going—unless the started the charitable foundation, and they are employed by the foundation, and it then becomes a business trip—the netflix show IS the business in a sense, profits donated.

(threw a text at a lawyer to get his take)

[JoeSchmuckatelli]

Well - think about this: you have a wealthy friend who, to celebrate her 50th birthday, takes you and several friends on a two month mega yacht cruise of the Mediterranean.  No one would ever consider that income to you. 

The Cirque du Soleil thing was the CEO claiming a business expense?  So he claimed it was related to work, and thus taxable. 

 

But a vacation paid for by a rich friend, acquaintance or even perfect stranger?  Very gray area - especially with the 'win a contest' angle. 

Edited September 10, 2021 by JoeSchmuckatelli

[tater]

Lawyer friend is an IP guy (engineer turned lawyer). Said he doesn't know/do tax law, but he agrees with you, @mikegarrison that he'd assume the starting point is that it's income. Any wrangling has that as a baseline.

[mikegarrison]

3 minutes ago, JoeSchmuckatelli said:

Well - think about this: you have a wealthy friend who, to celebrate her 50th birthday, takes you and several friends on a two month mega yacht cruise of the Mediterranean.  No one would ever consider that income to you.

That's not necessarily true. Gifts certainly can end up having to be reported as taxable income.

[tater]

1 minute ago, JoeSchmuckatelli said:

Well - think about this: you have a wealthy friend who, to celebrate her 50th birthday, takes you and several friends on a two month mega yacht cruise of the Mediterranean.  No one would ever consider that income to you. 

The Cirque du Soleil thing was the CEO claiming a business expense?  So he claimed it was related to work, and thus taxable. 

 

But a vacation paid for by a rich friend, acquaintance or even perfect stranger?  Very gray area - especially with the 'win a contest' angle. 

Interesting point. Probably at small values it gets ignored, larger values they start paying attention.

 

(thinking of the trips with friends thing, not business in terms of small being overlooked)

 

[mikegarrison]

In the US, gifts are taxed. https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

Gifts of $15000 or less are excluded, but a "mega yacht cruise of the Mediterranean" might well exceed that. A spaceflight certainly exceeds it.

[tater]

Contest for sure, lottery winnings get taxed.

Quote

probably easier to make a company and have them be employees doing it as their job

^^^ fresh text from lawyer

[mikegarrison]

19 minutes ago, tater said:

fresh text from lawyer: "probably easier to make a company and have them be employees doing it as their job"

Yeah, except that as the Canadian case shows, the courts will likely be alert to attempts to evade taxation by declaring the trip to be for business reasons when it is clearly not. As the Canadian courts pointed out, there are tests that can be applied.

Was the person selected to go because they had this job? Or did they get this job because they were selected to go?

If they decided not to go, would the company send someone else to do the job instead?

Is this a job the company identified a need for someone to do, and then filled that need? Or was it invented in order to fit this specific person into a supposed business role?

That last question is actually what got me started thinking about this. This crew has a "mission commander", a "pilot", a "medical officer", and a "mission specialist". But clearly they did not say "we need a pilot, let's go hire one". No, they had this guy who was given a winning lottery ticket, and they said, "OK, you can be the pilot". Likewise, did they say to themselves, "we need a medical officer"? Or did they say to themselves, "We are talking someone from St. Jude, so let's name her our medical officer".

That latter one is possible -- they might have seriously considered having a medically trained person onboard as part of the team makeup. But surely they didn't say to themselves, "We need a pilot, and the way to do that is by holding a random lottery!" (Especially since the "mission commander" actually is a pilot.)

Edited September 10, 2021 by mikegarrison

[JoeSchmuckatelli]

Astronaut pay is not related launch to cost per kilo. 

 

They get taxed as per the income they get as cash payments - not on the value of the work they do. 

 

So - if they form a company and are paid as employees (remember they have to do a lot of training - so at the very least need a furlough / sabbatical from their regular jobs - let's say the going rate for astronaut is $100k /year - then they pay their own taxes on that not the amount SX would charge another space tourist. 

Here's a likely scenario: billionaire guy approached SX to find out how much it would cost to get a trip to orbit.  They brainstorm this and come up with a way to make it not so 'playboy billionaires doing outrageous things - esque".  They hand it off to the lawyers to make it work (and they have good lawyers) - so the tax angle is considered. The tiny writing of the "contest" is a chance at an offer of employment - pending certain qualifications (like passing a physical). The actual flight is a joint venture between SX and the billionaire with both sharing costs. The passengers are employed by the joint venture. 

So they get normal income with the flight as part of the job.  No Canadian problem 

Edited September 10, 2021 by JoeSchmuckatelli

[mikegarrison]

7 minutes ago, JoeSchmuckatelli said:

Astronaut pay is not related launch to cost per kilo. 

 

They get taxed as per the income they get as cash payments - not on the value of the work they do. 

 

So - if they form a company and are paid as employees (remember they have to do a lot of training - so at the very least need a furlough / sabbatical from their regular jobs - let's say the going rate for astronaut is $100k /year - then they pay their own taxes on that not the amount SX would charge another space tourist. 

Here's a likely scenario: billionaire guy approached SX to find out how much it would cost to get a trip to orbit.  They brainstorm this and come up with a way to make it not so 'playboy billionaires doing outrageous things - esque".  They hand it off to the lawyers to make it work (and they have good lawyers) - so the tax angle is considered. The tiny writing of the "contest" is a chance at an offer of employment - pending certain qualifications (like passing a physical). The actual flight is a joint venture between SX and the billionaire with both sharing costs. The passengers are employed by the joint venture. 

So they get normal income with the flight as part of the job.  No Canadian problem 

No way any reasonable judge or jury is buying that they are raffling off a "job" that only exists for one space flight. BZZZZT! Does not pass any sort of test of reasonableness.

[JoeSchmuckatelli]

41 minutes ago, mikegarrison said:

Was the person selected to go because they had this job? Or did they get this job because they were selected to go

Turns out, these questions don't matter.  Family business is totally allowed to hire an idiot nephew and call him Vice President and Chief Flight Officer - even if the only thing he's good for is peeing in the flower pots.  He gets taxed on what he's paid. some perks like 'private plane flight' might be viewed as a benefit of the job and thus income. 

But change the job.  Now the idiot nephew is 'Purser' on the mega yacht and his 'job' is scuba tours and jetski adventure hosting.  He still only gets taxed on the pay and perks unique to him - but not for taking paying customers out for fun.  Thus no cost of the mega yacht is considered income. 

4 minutes ago, mikegarrison said:

reasonable judge or jury is buying that they are raffling off a "job" that only exists for one space flight

Actually - this is the kind of thing that can pass a legal test.  C. McAulliffe was a NASA employee who would have likely only done one space flight.  She wasn't chosen for mission critical skills - but rather for the educational and PR aspects. 

 

No way in hell she'd have been taxed for any value of the cost of mission

Edited September 10, 2021 by JoeSchmuckatelli

[mikegarrison]

4 minutes ago, JoeSchmuckatelli said:

Turns out, these questions don't matter.  Family business is totally allowed to hire an idiot nephew and call him Vice President and Chief Flight Officer - even if the only thing he's good for is peeing in the flower pots.  He gets taxed on what he's paid. some perks like 'private plane flight' might be viewed as a benefit of the job and thus income. 

But change the job.  Now the idiot nephew is 'Purser' on the mega yacht and his 'job' is scuba tours and jetski adventure hosting.  He still only gets taxed on the pay and perks unique to him - but not for taking paying customers out for fun.  Thus no cost of the mega yacht is considered income. 

This is not true.

https://www.taxslayer.com/blog/tax-implications-of-hiring-your-family-members/

There actually are determinations made whether such people are really employees. You definitely are allowed to hire family members, but you have to actually show that you treat them like employees.

Edited September 10, 2021 by mikegarrison

[JoeSchmuckatelli]

Sure - but the test for whether someone is an employee is really light.  The government (and thus the law) actually wants to find an employment relationship exists more often than not - to make sure that they get the tax money. 

[mikegarrison]

10 minutes ago, JoeSchmuckatelli said:

C. McAulliffe was a NASA employee who would have likely only done one space flight.  She wasn't chosen for mission critical skills - but rather for the educational and PR aspects. 

That was the mission.

She wasn't selected to go, and then they invented a job of sending a teacher into space. It was the other way around. They decided to send a teacher into space, and then they selected her.

That's why I said I actually think it's likely legit that Hayley Arceneaux actually *is* going on a business trip. She was selected because of her job -- to represent St. Jude. Her job was not invented to fit her.

Edited September 10, 2021 by mikegarrison

[tater]

1 hour ago, mikegarrison said:

Yeah, except that as the Canadian case shows, the courts will likely be alert to attempts to evade taxation by declaring the trip to be for business reasons when it is clearly not. As the Canadian courts pointed out, there are tests that can be applied.

The netflix show IS the business in this case. The business is literally 4 people going to space, and filming it, etc for TV. It's not going to space, and happening to do something. Probably doesn't hurt that it's for charity, not profit.

If I bought an entire flight someplace where every seat was first class (>$15k) RT, is giving people rides really giving them money? I bought the plane trip, it's paid for. I paid tax on the money I spent, the aircraft owner also pays taxes on their profit. Monetarily nothing changes if the plane flies with just me on it, or if I take 3 guests, or 30 (I suppose the fuel economy changes, putting more money in the airline pocket, but to ME nothing changes).

It's an interesting thought experiment (reminds me of that show years ago where the law prof would have people in a circle, and assign them roles in a case, and work it out).

[mikegarrison]

5 minutes ago, tater said:

The netflix show IS the business in this case. The business is literally 4 people going to space, and filming it, etc for TV. It's not going to space, and happening to do something. Probably doesn't hurt that it's for charity, not profit.

If I bought an entire flight someplace where every seat was first class (>$15k) RT, is giving people rides really giving them money? I bought the plane trip, it's paid for. I paid tax on the money I spent, the aircraft owner also pays taxes on their profit. Monetarily nothing changes if the plane flies with just me on it, or if I take 3 guests, or 30 (I suppose the fuel economy changes, putting more money in the airline pocket, but to ME nothing changes).

It's an interesting thought experiment (reminds me of that show years ago where the law prof would have people in a circle, and assign them roles in a case, and work it out).

Gifts are valued by "fair market value". Also, if you buy the whole plane flight and invite 10 people, *each* of those 10 people has that $15K exemption. It's not $15K for the whole bunch.

[tater]

40 minutes ago, mikegarrison said:

Gifts are valued by "fair market value". Also, if you buy the whole plane flight and invite 10 people, *each* of those 10 people has that $15K exemption. It's not $15K for the whole bunch.

Yeah, I was trying to think of something (first class) that would be more than $15k each RT (that's about 1 way transcontinental RT).

I understand that it could be taxed that way, but it really is odd, since the money that bought the service was taxed, and the service provider also pays tax, and the money is spent even if the trip is an empty plane.

I find it interesting. Imagine education. Say tuition is >$15k by some multiple. On the one hand, you are paying for the certification that you learned that material—but someone could sneak in the back, watch all the lectures, do all the problem sets, and gain 100% of that knowledge. They get no certification, but they do actually receive the value—if you consider the education the value, not the credentials (we all know the latter is what matters in the real world most of the time, but you get the idea).

MIT does this now, you can take their courses online, if you did a whole semester of classes for a full range of credit hours (but no credits actually earned), should you be taxed for the experience? Travel is an experience as well. Back to the "wings" idea—if the credential "astronaut" (wings, certificate, etc) was considered the value, then the flight related to it would not matter at all if you didn't get official credit. The guys in some other country who took a PDE class at MIT didn't get credentialed (and if they did they would have been given the cost of that education in $ as a gift), but they learned PDE, after all.

Edited September 11, 2021 by tater

[mikegarrison]

2 minutes ago, tater said:

MIT does this now, you can take their courses online, if you did a whole semester of classes for a full range of credit hours (but no credits actually earned), should you be taxed for the experience? Travel is an experience as well. Back to the "wings" idea—if the credential "astronaut" (wings, certificate, etc) was considered the value, then the flight related to it would not matter at all if you didn't get official credit. The guys in some other country who took a PDE class at MIT didn't get credentialed, but they learned PDE, after all.

Yeah, but as I can personally attest, having an MIT diploma is actually quite valuable.

[tater]

36 minutes ago, mikegarrison said:

Yeah, but as I can personally attest, having an MIT diploma is actually quite valuable.

Exactly! That is where the value is, the credentials.

I'm texting my friend and he hates tax law... he said "it's all fun and games until the IRS audits you and takes a different position."

Still, it's an interesting thing to think about. Where does value lay that can be taxed (if the experience is gifted, since it apparently has no taxable value if not gifted)?

Someone could sit in on a class in person, even take exams—not get credentialed because they did not enroll and pay. The experience is not valued/taxed. So why would a travel experience necessarily have value.

I'm not arguing any particular take, it's just interesting to think about, and not necessarily terribly rational (it's taxes, after all, arbitrary rules).

[mikegarrison]

30 minutes ago, tater said:

Exactly! That is where the value is, the credentials.

Well, no.

"The value" is primarily in the knowledge and education. However, the credentials are also valuable, especially in the marketplace. Because they make it easy for someone to assess whether you have the knowledge and education. Instead of testing you themselves, they can rely on the fact that someone else tested you and is vouching for you. (And then there is at least one more source of value, which is all the non-classroom experiences you have in college. The people you meet, the other experiences you have, etc.)

[tater]

2 minutes ago, mikegarrison said:

Well, no.

"The value" is primarily in the knowledge and education. However, the credentials are also valuable, especially in the marketplace. Because they make it easy for someone to assess whether you have the knowledge and education. Instead of testing you themselves, they can rely on the fact that someone else tested you and is vouching for you. (And then there is at least one more source of value, which is all the non-classroom experiences you have in college. The people you meet, the other experiences you have, etc.)

Obviously the education/experience/connections is the real value to actual people, but I mean from a tax standpoint.

That's the bizarre disconnect in that if you were gifted tuition, that's taxable (with some exceptions), but the official value is the credentials since the same school literally gives away the educational content online. The contacts and non-classroom stuff is harder to monetize (from a tax standpoint), but some loner could benefit from the education/credentials, and also ignore other people as an edge case. They'd still have taxable tuition if a scholarship, yet zero tax implications for the same loner edu online sans credentials.

Taxes are somewhat bizarre, and I'm sure they negotiated it in whatever way Isaacson's tax attorneys built for him, but it's fun to think about, and gives me something to text my friend about while we share pics of the cocktails we've been making since we're too lazy tonight to drive the few miles between houses and his wife is on call so he's home with kids anyway.

[RyanRising]

5 hours ago, pmborg said:

NOTE:

No they will not get the wings, after the journey, they will not be Astronauts.

Cheers!

Wait, what? Why not? They’ll have flown both in space and in orbit by any reasonable definition of those terms.

[kerbiloid]

6 hours ago, mikegarrison said:

Look at the crew:

1 guy who is paying for it all. (But from personal already taxed money? Or is his business paying for it? That didn't work for Laliberté.)

1 woman who is going because she works for St. Jude Hospital. Probably a good case here that this is a "business trip" she shouldn't have to pay taxes on.

1 guy who is going due to a lottery. (He didn't actually win the lottery, but the winner nominated him to go instead.) *Somebody* owes taxes on this, for sure.

1 woman who won the trip in a game-show-like contest. Game show winners have to pay taxes on their winnings....

So, as there is no crew onboard, why occupy the place with the control panel?

There should be XBox or PS instead.

5 hours ago, mikegarrison said:

Gifts of $15000 or less are excluded, but a "mega yacht cruise of the Mediterranean" might well exceed that. A spaceflight certainly exceeds it.

What about a "biological object under observation"?

It's for science, like the whales hunting.