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Good way to give our current President a pass. Ooops. I missed that part about "a moral president".
A President may not give the public all the information he/she has, and that may be often due to security and classified level, but a moral President won't let the WH admnistration leak the information either, for political gain. "Transparency" simply means honesty in one's dealings so that the citizens know and are assured that they can trust their President to mean what he says and say what he means.
Hmmm, like that young lady whose husband opposed the war in Iraq? The president cannot stop leaks, especially if they come from congress or the senate or even if they come from someone in his immediate circle that has an axe to grind.
In this instance, duplicity is the opposite of transparency, applicable to all of the last term of our current President.
1 duplicity : contradictory doubleness of thought, speech, or action; especially : the belying of one's true intentions by deceptive words or action
While thoswe are waiting for the details of one man's tax information, why don't we ask for Obama's overseas investment information as in China, for example. That should be revealing on several fronts.
That would not be a bad idea except that he is ALREADY the president and he did not request that his running mate show more tax information than he did either
This video is asking why Romney chose to invest in other countries [including China] other than
the United States. He still won't answer. 2 minutes and 29 seconds.
Yes, he wants to strip average people from medical benefits, but Zurich depository Company has come in hhandy for his hypocrisy and blatant lies
While his wife's part-owned dressage horse was competing in the Olympics, former Massachusetts Gov. Willard M. Romney was stateside, engaged in an eye-poking contest with Senate Majority Leader Harry Reid, D-Nev., who told The Huffington Post that Romney hadn't paid income taxes in a decade.
The lawyers among our readers will recognize this as hearsay. Reid said that his undisclosed source was a Bain investor. Reid's source might have heard Romney brag to that effect but has no hard data. Rich people get their tax planning ideas from their friends.
Instead of responding that he'd paid some tax and proving it, Romney challenged Reid to name his source and stood by his refusal to release more returns. The Obama campaign unveiled a new television ad speculating that Romney had paid no taxes. The ad shows a clip of Romney volunteering to go back and look to see what he paid. Then it hits him over the head with the Marriott son-of-BOSS shelter.
Prominent Republicans ranging from Rep. Ron Paul, R-Texas, to George Will have publicly urged Romney to release his old tax returns. "He should release the tax returns tomorrow. It's crazy. . . . Take the hit for a day or two," said publisher William Kristol, who was responsible for promoting former Alaska Gov. Sarah Palin as his party's 2008 vice presidential nominee.
This article discusses all the tax questions you need to know until Romney files his 2011 tax return, at which time he will release it as promised.
Let's go over the issues so far, which are too numerous to keep track of without a score card: Private equity. Issue: Cayman residence of funds.
The places where some of Bain Capital's numerous private equity funds are organized -- Bermuda and the Cayman Islands -- are tax havens. The widespread use of tax and banking havens by large U.S. multinationals and investment funds as an escape hatch from U.S. tax, banking, and securities laws, while offensive, is tolerated and even encouraged by U.S. law and administrative practice. Mainstream newspapers howl that Romney has assets in the Caymans, but the reality is worse. Bain Capital invests in the United States and other countries, including China, but it organizes its funds in the Caymans to keep investor lists secret while availing itself of British corporate law. Every other investment fund does the same thing. The practical effect of Cayman registration is that if investors were of a mind to lie to their home governments about the existence of or income from their Bain investments, the secrecy of investor lists makes it easier to do so. As the Romney campaign pointed out, all these investors still owe tax to their home governments (including the U.S. government) on their Bain income.
Profits interests. Issue: Zero valuation of profits interests on receipt and partner treatment thereafter.
Managers of hedge funds, private equity funds, and other investment funds do not get regular salaries. They get part of the profits from the funds they manage, which are organized as partnerships. Their slice of the profits is called a profits interest (sometimes called carried interest). It is not taxed as wages.
A profits interest in an investment fund partnership is a naked strip of partnership income. It is not an equity interest in partnership assets. It is not "carried" because fund managers don't borrow and don't even purchase their profits interests. Rather, they are granted a share of the profits as a condition of employment. They then enjoy partner treatment -- meaning a low capital gains rate on private equity profits.
Fund managers depend on the indulgence of the IRS for special treatment of profits interests. IRS administrative guidance states that when a fund manager receives a profits interest, he may elect to value it at zero and be treated as a partner. Romney made these elections, as did his wife (Rev. Proc. 93-27, 1993-2 C.B. 343).
Zero valuation is not available for profits interests in partnerships holding highly liquid, readily priced assets. Profits interests in investment funds can be priced. Even profits interests in private equity funds can be priced. The person on the street could not imagine that a share of the profits in a newly created private equity fund is worth nothing.
A profits interest is effectively an option. An option can be priced using the Black-Scholes formula. The Blackstone public offering proved that. Blackstone had to price the managing partners' profits interests for the public investors. Yet Treasury allows guys like Romney to elect to value a profits interest in the same type of fund at zero, even though its own guidance implies that this treatment is wrong.
Romney reported taxable income of $22 million for 2010, of which capital gains represented $13 million. He will report taxable income of $21 million for 2011, $11 million of which is capital gains. Of these capital gains, $7.4 million came from profits interest in 2010, and $5.5 million came from profits interest in 2011. Bain funds' gains are passed through to Romney as though he were a partner. Retired partner status. Issue: Retired partner's entitlement to profits from deals he was not involved in.
Mitt Romney has a golden handshake with Bain Capital that entitles him to profits interests from new Bain funds created within 10 years of his 1999 retirement (leaving aside the question of when he actually quit). Each fund runs for five to 10 years, so Romney will be collecting profits from recently formed funds for quite a while. His retirement deal is effectively a slow buyout of his partnership interests. (For discussion, see Tax Notes, Jan. 2, 2012, p. 47, Doc 2011-27083, or 2012 TNT 1-1.)
How can all that possibly be compensation, when he had nothing to do with the later deals? A long-standing tax rule ensures that guys like Jack Welch paid tax at ordinary rates on all the goodies they got in retirement -- use of a corporate jet, basketball tickets, sodas at 7-Eleven, what have you. That rule says that everything an executive got "in recognition of the performance of, or the refraining from performance of, services" is compensation (reg. section 1.83-3(f)).
Treasury twisted this rule in proposed regulations on profits interests to permit a manager to be granted additional profits interests for prior services. There is no requirement of a direct relationship between the manager's work and the profits he is awarded as compensation (REG-105346-03, Doc 2005-11235, 2005 TNT 98-31).
The proposed rules have been withdrawn, pending enactment of legislation that would treat all income and gain from profits interests as compensation, taxable at regular rates. Fund managers have successfully lobbied to prevent legislation, but it will be enacted eventually. IRAs. Issue: Can profits interests or special classes of shares in private equity target companies be contributed to IRAs?
Romney has a gigantic IRA, which may hold as much as $100 million in assets. We do not know what it contains. We can only speculate. Given the applicable contribution limits, it is hard to see how the IRA got so big, even if Bain deals were hugely profitable. Regardless of what is in the IRA, serious valuation and self-dealing questions are raised.
Some speculation is that Romney contributed profits interests from Bain deals to his IRA, valuing them at zero. Only cash can be contributed to IRAs. A retirement account is not the alter ego of its owner. So Romney's IRA should be viewed as having purchased any profits interests (or special classes of shares) that it may contain.
Prohibited self-dealing is a real question in these arrangements. A private equity fund manager might put a profits interest in a newly formed fund he manages to his IRA. The tax law interprets a casual contribution of such an interest to retirement accounts as a purchase.
Case law holds that it is not an act of prohibited self-dealing for an individual to cause an IRA to purchase shares in his own newly formed entity. It's a chicken-and-egg problem. An existing business owned by the individual would be a disqualified person when its equity was acquired by his IRA (section 4975). (For discussion, see Tax Notes, Jan. 30, 2012, p. 494, Doc 2012-1561, or 2012 TNT 19-2.) The zero valuation election for profits interests does not apply to transfers to IRAs. Romney valued his profits interests at zero. He may have sold them to his IRA during a period when contribution limits were much higher than they are now. The IRS could argue that the purchase is undervalued for purposes of plan contribution limits, so that profits interests should be valued at their higher option value.
Romney's IRA might contain special classes of shares of Bain target companies that were available only to Bain employees. As in an estate freeze, Bain employees were allowed to buy common shares with low current value and spectacular growth prospects. Investors got preferred shares with fixed yield and fixed value. The low-valued common shares could grow to high values within IRAs. (See The Wall Street Journal, Mar. 29, 2012.)
Special classes of common shares of the companies that Bain funds bought would be permitted IRA assets. Private equity funds buy companies, which then pay those funds huge fees and dividends. The funds pay their managers profits and fees. The connection between the IRA's investment in the target company and the manager's receipt of fees is too attenuated to cause a self-dealing problem.
But Bain employees were expected to purchase shares in target companies, so causing their retirement accounts to make the purchase would raise a self-dealing question. The issue would be whether the IRA had assumed an obligation of the employee.
Another issue would be the value assigned to these shares when the Bain employees' IRAs purchased them. House Democrats asked Treasury and the Labor Department to look at whether the IRAs undervalued the special classes of shares in companies Bain bought (Tax Notes, Aug. 6, 2012, p. 659, Doc 2012-16553, 2012 TNT 150-8). Intramarital and intrafamily transfers. Issue: Can profits interests be transferred to spouses?
Ann Romney's grantor trust is not entitled to beneficial tax treatment for profits interests from Bain funds that she has had nothing to do with. Casual intrafamily transfers do not have the zero value protection of administrative guidance. That means the IRS could argue that Ann Romney's trust had an assignment income in the amount of the option value of the profits interests. (For discussion, see Tax Notes, Jan. 30, 2012, p. 491, Doc 2012-1562, or 2012 TNT 19-1.)
When the recipient of a gift is a spouse, the gift is ignored for transfer tax purposes. But some Romney assets are in family trusts. There is only a small gift tax exemption from transfers to family members -- an amount Romney would consider pocket change. He would have had to pay gift tax and file gift tax returns for those transfers. Swiss bank account. Issue: Did Romney report it properly?
A Romney grantor trust had a $3 million Swiss bank account at UBS that the trustee closed in 2010. Romney's campaign said that the account was disclosed on foreign bank account reports and that U.S. tax was paid on the interest from it. The trustee closed the account because it no longer served the investment purpose for which it was intended. The account was a bet on the Swissie (The Boston Globe, Jan. 30, 2012).
Nondisclosure was common among rich people before the 2010 enactment of the Foreign Account Tax Compliance Act. The penalty for failure to file an FBAR was bupkes, and the agency in charge of enforcing the law, Treasury's Financial Crimes Enforcement Network, had no interest in enforcing it. Very few FBARs were filed before 2010. At about 200,000 filings annually, the rate of FBAR compliance was estimated to be less than 20 percent before the IRS crackdown.
The IRS Small Business/Self-Employed Division, which until recently handled high-income individual returns, was not auditing very many rich people's returns. Like many of his peers, Romney has not been audited in the past decade, according to his campaign. Bermuda CFC. Issue: What does it contain?
Romney reported the existence of a Bermuda controlled foreign corporation, Sankaty High Yield Asset Investors Ltd., on his 2010 tax return. It was created in 1997 and transferred to his wife in 2003. It is not clear from this form what it does or what its assets are. But Romney failed to list it on some financial disclosure forms (Vanity Fair, Aug. 2012).
Fund managers used to use foreign corporations to defer tax on fee income (the fixed portion of manager compensation that is not dependent on profits). The law was changed to treat amounts deferred in foreign corporations as immediately taxable to managers if the investors got no deduction at the time of payment and the manager had no substantial risk of forfeiture (section 457A). Marriott tax shelter. Issue: Was it proper? No. Marriott International entered into a son-of-BOSS deal while Romney was chair of the audit committee of its board. The company lost a court case challenging the shelter on a motion for summary judgment. (See Marriott International Resorts LP v. United States, 83 Fed. Cl. 291 (2008), Doc 2008-18866, 2008 TNT 173-10, aff'd, 586 F.3d 962 (Fed. Cir. 2009), Doc 2009-23710, 2009 TNT 207-17.)
Son-of-BOSS is a partnership basis abuse shelter. The taxpayer went long and short on the same asset, claiming that the obligation to cover a short sale was not a liability that should reduce a partner's basis in its partnership interest (Notice 2000-44, 2000-2 C.B. 255, Doc 2000-21236, 2000 TNT 157-7).
In the Marriott case, the asset in question was mortgage notes, which Marriott sold, claiming a loss. The court, noting that SEC Regulation T required collateral to be posted, denied the loss on the ground that basis should be reduced by the obligation. Ann Romney's Olympic horse. Issue: Is Rafalca a business?
Probably not. Before the Romneys can claim any passive loss deduction for Ann Romney's share of Rafalca's expenses, the LLC that owns the horse, Rob Rom Enterprises, has to be engaged in a trade or business. For that, it has to satisfy the hobby loss rule for horses, which has a rebuttable presumption of a business if there is a profit in two out of seven years (section 183(c)). Rob Rom has owned Rafalca for six years.
Rafalca's rider said she would be bred when her show career was over. That may be a stretch, because the horse is 15 and has been in strenuous competition for 11 years. If she could produce a foal or two, it would have to be sold for $500,000 or more.
Moreover, the prize money in dressage competitions doesn't come close to covering the roughly $120,000 per year for Rafalca's upkeep and transportation from California to European competitions. So it is unlikely she would ever make a profit for her owners. (For discussion, see Tax Notes, Aug. 6, 2012, p. 627, Doc 2012-16145, or 2012 TNT 148-1.) La Jolla house. Issue: Is it appropriate to ask for a property tax reduction? The Romneys bought their teardown La Jolla, Calif., beachfront house for $12 million in cash in 2008. Because its value fell by 27 percent during the financial meltdown, they requested, and got, a county property tax reduction. The total amount of property taxes forgiven is $109,000 over four years (Los Angeles Times, Aug. 6, 2012).
Many other San Diego property owners successfully applied to have their property taxes reduced. Despite beachfront property retaining its value, Romney's neighbor's beachfront house is assessed at a fraction of its value. The Romneys still pay $97,000 per year in property taxes on the house.
It is often said that the rich get rich and stay rich by watching every penny. Romney certainly fits that description. He looks for every tax angle, to a degree that is unbecoming in someone who would be the executive in command of the administrative apparatus that enforces the tax law.
is a fool. But a wee bit more patriotism in the form of willingness to contribute to the commonweal of a country that enabled him Romney is on record as saying that Americans wouldn't want a candidate who overpaid his taxes -- implying that anyone who does to get rich might be in order. He doesn't realize that an elected official is not a private citizen anymore.
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Let me see if I get this straight: Someone who is "already" the President doesn't have to tell us anything more about himself and his affairs?
Even if he is a candidate (albeit the incumbent) again?
Interesting. Faulty, but interesting.
What is it that you would want to know of him that you have'nt required from other presidents or presidential wannabees? Damn they asked for his birth certificate and know they want his freaking school transcripts
What is it that you would want to know of him that you have'nt required from other presidents or presidential wannabees? Damn they asked for his birth certificate and know they want his freaking school transcripts
Just for starters, while we wait for the truth about Benghazi.
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