Unintended Consequences

There are unintended consequences potentially hiding in the most altruistic or generous of decisions. Take a friend of mine for example. My friend is a homeowner. One of their parents owns multiple homes. For some reason, the parent thought it would be a good idea to sell one of the homes to my friend at just over what the parent originally paid for the home.

Considering that the purchase price of the home was around $300,000 and the home’s current value is $1.5 million, that is a lot of generosity in that decision. There is also an unintended consequence. That consequence is known as a “Gift of Equity.”

What does that mean in English? The difference between the home’s market value and the below market sale price in my friend’s situation is $1.2 million dollars. Now the parent probably would not have to pay gift tax, although they would have to file a Gift Tax Return, IRS Form 706. It isn’t the most difficult form to complete, although it can be a bit challenging. When would the parent be subject to the gift tax? Only if the cumulative total of gifts that had to be reported in their lifetime exceeded the Basic Exclusion Amount (BEA). In 2022 the BEA is set at $12,060,000. My friend’s parent would pay no gift tax.

Raising the question, where is the real consequence? It comes when my friend goes to sell this home. Assuming the market value of the home had increased to $2,000,000 (the house is in Southern California after all), that would mean a capital gain of $1,700,000 on the transaction. The tax on that gain would be $404,600 on their federal and around 12% for California. One of the reasons that California has those big budget surpluses that Governor Gavin Newsom keeps talking about is that the state of CA treats long-term capital gains like ordinary income.

In fact, if my friend sold the home before a year and a day from the purchase date, that federal tax bill would increase to over 40%. That’s because short-term capital gains are treated as ordinary income on the federal return.

Was this big tax bill avoidable? Yes! If the parent doesn’t make a gift of equity and instead lets my friend inherit the home, there would be no gift of equity. My friend’s cost basis in the home would be the fair market on the date the parent passed away. They could sell the house immediately and pay NO tax on the sale. When hearing this, my friend chose to not buy the house at below market value.

The moral of the story. Before making a major decision, consult with the appropriate expert.

The Veterans Administration replies

I emailed my letter to the Secretary of Veterans Affairs. To my surprise, I got a response. Here it is: Good morning Mr. Milinsky,

The Secretary has received your email dated June 14, 2022. He has forwarded your inquiry to Veterans Health Administration leadership for review and direct feedback, and someone will contact you shortly. Thank you for your communication.

**Please note that this email address does not accept replies.

Office of the Secretary

Department of Veterans Affairs

810 Vermont Ave NW

Washington DC 20420
***
Looks like a form email response. Will wait to see if I ever hear from "VA Health Administration leadership."

More of how the Veterans Administration West LA Medical Center sucks.

I am mailing this letter tomorrow:

June 10, 2022

Honorable Denis Richard McDonough

Dear Secretary McDonough,

I want to personally thank you for the utter incompetence of the West Los Angeles VA Medical Center. What I’ve seen over the last few weeks boggles the mind.

Let’s begin with what happened today, although its origins are in what occurred last month. I had been scheduled to report to the VA Medical Center on a Friday morning to be admitted for the weekend. The purpose of the admission was to begin treatment with a prescription medication that I’ve never used before. In order to begin this medication, the patient must be on a heart monitor during the first six doses.

I arrived on time, waited almost two full hours only to learn that the physician who had arranged my admission had not even bothered to write the orders for my admission and the prescription itself. So I left.

I was contacted by the Cardiology Clinic to reschedule this admission. I went over my prior experience and was assured there would be no problems this time. I agreed to try again and the admission was scheduled for today. I again arranged to have Friday and Monday off, and to pay for extra hours for my mother’s caregivers to be on-hand during the hours I normally handle things my 83 year old mother needs.

I arrived at 9 a.m. and was assured that the doctor’s orders for the admission and the prescription had been written, and were in the system. A little over three hours later I was approached by a case-manager. She left me know that there was no bed available for me today. When I asked how this could have happened, she told me that the Cardiology clinic had not let her office know that I was scheduled to be admitted today.

I was and remain livid over this fiasco. Over the loss of hundreds of dollars in wages. Over the inability of one office to communicate with another in the Medical Center. They have computers, instant messaging, phones and so on and yet there was another communication breakdown that wasted my time and money.

The case-manager asked me if I was going to call the doctor later. I said I was not going to be calling. When she looked at me quizzically, I let her know that in my mind there is no point in making that call.

This comes on the heels of the inability of the Primary Care Clinic’s Silver Team to refill my prescriptions on a timely basis. I have been without the medication that enables me to sleep for more than two hours at a stretch. I called everyone I could think of about this problem. I had sent instant messages to my primary care physician in March, May and June about this. I did receive an apologetic phone call from a doctor under my primary care physician’s supervision who said he was refilling my prescriptions. However, I just checked the website and can see that he did NOT refill my sleep medication.

The quality of care being provided at the West LA VA Medical Center as of this date is abysmal. What are you going to do about it?

Sincerely,

California Primary Election Guide - June 7th, 2022

By request, the Centrist Party is being pulled out of mothballs to publish a guide to the key races in Tuesday's primary election. For those who are not familiar with the Centrist Party, I created it years ago. I'm the only member currently and all endorsements are mine and mine alone.

United States Senate - Full Term and Short Term

There are two elections for the U.S. Senate on the June ballot. One is for the remainder of the term of Vice-President Kamala Harris. Governor Newsom appointed Alex Padilla to that seat. This short-term election is for the remainder of that term, which ends on 1/3/2023. There are 8 candidates in that race. All 8 of whom are also on the ballot for the full term in the U.S. Senate that will begin on 1/3/2023. The difference is that there are 15 additional candidates on the full-term ballot.

Incumbent Alex Padilla was appointed to replace Vice-President Harris and he has done a good job. He will undoubtedly be one of the two candidates who will advance to the general election. I'd like to see him face another Democrat in the general election and that is why I'm going to vote for Dan O'Dowd in the election for the full Senate term. I will vote for Alex Padilla in the short term election. I will admit I will almost certainly vote for Senator Padilla in the general election for the full term. I just don't want Republican Mark Meuser to be the general election opponent of Senator Padilla. It will make the race far more expensive than it needs to be, and our political capital should be used in other, more critical races for control of the Senate across the country.


California Governor


Gavin Newsom will almost certainly be reelected as our state's Governor. He has made serious missteps along the way. The French Laundry restaurant fiasco comes to mind. I do not like his "rules don't apply to me and other elites". I'm a firm believer that leadership is about setting an example rather than following the "do as I say, not as I do" dictum.

That being said, he is the only good choice in this race.


Los Angeles Mayor

There were a number of candidates vying to replace outgoing Mayor Eric Garcetti. It is now a two-person contest, with other candidates having become irrelevant. Billionaire developer Rick Caruso and Congresswoman Karen Bass. I live in the district represented by Karen Bass. She has done a fine job in Congress. The negative ads being run by Caruso and the police union that strongly supports him are filled with hypocrisy. They take issue with Ms Bass having missed 562 votes while in Congress. That turns out to be le less than 9% of all votes she could have participated in. Meanwhile Caruso was absent from 38% of Los Angeles Police Commission meetings while he was a member of that group. The ads accuse Ms Bass of taking money from "sleazy" special interest groups and try to link her by association with indicted members of the L.A. City Council. There is no linkage between Ms Bass and the corruption of those who were indicted. Meanwhile, Caruso is guilty of using funding from another special interest group that I consider to be sleazy, that being commercial real estate developers.

Karen Bass is the only good choice here.

The Failings of the Veterans Administration - An Update

11 days have passed since I wrote about my extreme difficulties in trying to obtain refills of medications from my VA Primary Care Physician.

Prior to today I used the VA website to send messages to my Primary Care Physician (PCP) on March 10, April 19 and May 25th. I have yet to receive a response to any of those messages. I am trying to get some medications refilled. One of them is the one that helps me sleep at night. I've been without it for a month now. I cannot sleep more than 2 hours at a time without it. I'm exhausted both physically and mentally.

I called the VA operator today, hoping to get an email address or a phone extension for Steven Braverman, MD, who is the Medical Director of the West Los Angeles, VA. After nearly 30 minutes on hold "due to their experiencing extremely high call volume" I was able to reach an operator. She tried to calm me down and put through a request to refill the three medications that have completely disappeared from my medication list. Why did they disappear? Because the PCP never bothered to write a new prescription. One of the medications is the one that aids in preventing me from having a stroke due to my irregular heartbeat. Fortunately I still have a week's supply of that one left.
It is unconscionable that nearly 3 months have passed without a response to a secure message regarding a medication refill. I wasn't going to schedule my admission to the VA Medical Center for a change in medications for my heartbeat until these prescription problems were resolved, but I was talked into scheduling that admission for next weekend. I am now considering calling and canceling that admission as my trust in the VA system has been seriously eroded.

I need to do more work but I simply cannot continue today, knowing I face a full day of work tomorrow. So instead of being productive today and making some progress on my work backlog, I'm going to have to go home and rest. Something I would not be having to do if these incompetent imbeciles at the West Los Angeles VA Medical Center could do their jobs.

From the FWIW file, I'm going to send this post to the Medical Director of that VA Medical Center. The one who points out in their LinkedIn profile that they oversee a facility with 5,500 employees and a budget of $1 billion. I wonder if he will respond. Want to bet on it? I'm betting against.

Edited to Add: I refuse to spend over $300 to send a message with this blog to that individual. So I'll just send it to my elected representatives.