October 27, 2006 How To __ __ __ An Election
Jon S. Corzine promised to run a clean campaign, to not associate with Democratic Party bosses, like Menendez, and, if elected, not to raise our taxes!
During the campaign there was the small matter of making a loan of $470,000 to his former girlfriend and then forgiving it several months later. Of course, Corzine did not see the problem that his girlfriend was the leader of one of New Jersey’s biggest labor unions. So, it might have looked like he was trying to buy favoritism. Both John and his girlfriend disavowed any such intentions.
Now we find out that a charitable foundation owned by Corzine, lent $50,000, in Spring, 2004 to a minister who was campaigning to become a bishop in the African Methodist Episcopal Church. The minister is also the executive director of the Black Minister’s Council of New Jersey. Approximately six months later, on January 1, 2005, Corzine forgave the loan. Had the loan been forgiven one day earlier on or before December 31, 2004, the transaction would have had to have been disclosed on the foundation’s 2004
Form 990 PF income tax returns and would have been scrutinized during the gubernatorial campaign. The loan, however, was reported on the 2005 tax return filed September 7, 2006. It was reported in �� because the loan was forgiven in ��-simple as that, said Tom Sheer, Corzine’s chief of staff. There was no effort to hide this, ever, at any point in time!
The sixteen (16) council members of the Black Minister’s Council endorsed Corzine’s gubernatorial candidacy in September, 2005. Asbury Park Press 9/1/05
How to Kill the 10% Penalty Exception
Watch out if you roll over a deceased spouse’s IRA into yours before you are 59 1/2. In its first decision, the US Tax Court held that a surviving spouse who rolled over her deceased husband’s IRA into her own IRA must pay the IRC 72(f) 10% penalty on a withdrawal she made from the IRA before reaching age 59 1/2. The Court reasoned that once she transferred the funds to her own IRA, the withdrawal could not be characterized as a distribution made to a beneficiary upon a decedent’s death, which would have qualified for an exception to the penalty. Gee 127 TC 1(2006)
Free Use of Rental Property Backfires
In a recent Tax Court case, a taxpayer who rented out part of his home also let his daughter and family live there rent free. He included the portion of the house the daughter lived in as business property and deducted the expenses. The Tax Court stated the portion of the loss pertaining to the space the daughter and her family occupied was not allowable as it was personal use because a fair rent was not charged. Lofstrom 125 TC No.13
We advise all clients to charge relatives a rent that is no less than 20% below market , which use will not be deemed personal use according to a 1983 Tax Court Case.
Security Officer Training Tax Audit
New York has added a new tax credit for the costs of training security officers. The training program must be adnministered by the New York State Office of Homeland Security. Taxpayers desiring the credit must file an application with the Office of Homeland Security to receive an allocation of the credit. For more information, visit the New York State Office of Homeland Security website at www.security.state.ny.us
Florida Repeals Intangibles Tax
Wow! Rarely does a state repeal its tax on something. Florida made history when it repealed the Intangible Personal Property Tax effective January 1, 2007.
If you have any questions about the foregoing or any other financial matters, please call us.
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