Paul L. Caron
Dean


Wednesday, October 31, 2018

The Tax Consequences Of A Haunted House

Ghost BustersCharles Edward Andrew Lincoln IV (Tax LL.M. 2018, Boston University), The Tax Consequences of a Haunted House:

If a seller has been estopped legally from denying the existence of ghosts and poltergeists on the premises—thus meaning the house is haunted a matter of law, then how should the haunting be added in to the cost basis for tax purposes? More generally, if a house is legally haunted, what does this mean for tax purposes?

In the famous popular 1st year law student case—colloquially known as the Ghostbusters case—Stambovsky, v. Ackley, the New York Court of Appeals deftly wrote, “as a matter of law, the house is haunted” If a seller has been estopped legally from denying the existence of ghosts and poltergeists on the premises—thus meaning the house is haunted a matter of law, what does this mean for tax purposes?

To answer this, one must set up a premise of what tax consequences usually are and how they arise. This is a philosophical question. Indeed, there is debate on the origins of what conceptual metaphysical origin brought up tax basis and adjusted basis.

https://taxprof.typepad.com/taxprof_blog/2018/10/the-tax-consequences-of-a-haunted-house.html

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Comments

Can someone help me out here, please? I thought that basis changes increases only if the taxpayer spent money to increase its value. If the value increased on its own, that doesn't change the basis, so how could a ghost change the basis? Unless the taxpayer spent money to make the house haunted?

Posted by: brad | Nov 4, 2018 11:22:43 AM