---

Kokua Line

By June Watanabe

Thursday, July 16, 1998

Ability to win court case
basis for a tax loss claim

Is there a provision for filing a loss for income tax purposes due to the failure of Jimmy's Travel? If so, what kind of proof is required by the IRS?

The tax law generally allows "shortchanged customers" to report their loss as a bad debt deduction, said Internal Revenue Service spokesman Barney Byrd.

First off, a debt has to be "genuine."

It is deemed so "if it arose from a debtor-creditor relationship based upon a valid and enforceable obligation to pay a fixed or determinable sum of money," Byrd said. State law would define a debtor-creditor relationship, he said, but, in general, if you "were able to obtain a court judgment against the business that took (your) money, then defaulted on the promised travel, a debtor-creditor relationship would exist."

Also, "obtaining an actual judgment isn't necessary, only the ability to show that one could be had," Byrd said.

Bad debts are either business -- originating in the course of operating a business -- or nonbusiness, he said.

Information on nonbusiness bad debts can be found in IRS Publication 550, "Investment Income and Expenses;" information on business bad debts in Publication 535, "Business Expenses."

Call toll-free, 1-800-829-3676 to order the publications. Or, they can be downloaded from the Internet at http://www.irs.ustreas.gov.

I read that Duty Free Shoppers owes millions of dollars in back rent and the state is letting them pay a little at a time. If that's the case, why are they putting up new shops at Honolulu Airport, at lobby areas near Gates 24 and 25. Is the state helping them?

The state is not helping DFS Hawaii, which operates eight duty-free shops at the airport, said state airports Administrator Jerry Matsuda.

Regarding the back payment, "They will be paying us all they owe," he said. "They're paying 100 percent."

Negotiations over a payment plan probably "will come to a conclusion within the next two months," Matsuda said.

As for the work going on, that was "a business decision" by the company to make improvements as a means of increasing revenues, he said. That work happens to coincide with the airport's long-range capital improvements plan, he said.

"It is their money," Matsuda said. In the case of the state, if DFS can increase its revenues, "it will benefit us."

We are a group of retired seniors, 60, 70 and 80 years old. We are contemplating including the game of bingo in our daily recreational activities. Can you please apprise us what the law is in Hawaii on playing bingo?

All forms of gambling are illegal in Hawaii, except social gambling. That means you can play bingo, as long as you follow all the conditions as set forth in Hawaii Revised Statutes (Section 712-1231), a Honolulu Police Department spokeswoman said.

Among the conditions, players must: compete on equal terms with each other; not receive anything other than personal winnings; not pay any other person or entity anything of value, including use of premises, refreshments, lodging, etc.; not play in any business establishment of any kind, or in public parks, public buildings, public beaches, school grounds, churches or any other public area; and be the age of majority.

Mahalo

Chivalry still lives. Many thanks to Scott of Mac Made Easy and two young men who pushed our Toyota Tercel when it wouldn't start at Manoa Marketplace on June 5. A special mahalo to Mr. Ichikawa for jump-starting the car and getting two distressed ladies back on the road. -- Gini

---

Need help with problems? Call Kokua Line at 525-8686,
fax 525-6711, or write to P.O. Box 3080, Honolulu 96802.
Email to kokualine@starbulletin.com