http://www.abcnews.go.com/Politics/wireStory?id=2555635According to this article Harry Reid "sold" property to a partnership. and reaped a "windfall".
In 2001, Reid sold the land for the same price to a limited liability corporation created by Brown. The senator didn't disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown's company. He continued to report to Congress that he personally owned the land. <snip>
After getting local officials to rezone the property for a shopping center, Brown's company sold the land in 2004 to other developers and Reid took $1.1 million of the proceeds, nearly tripling the senator's investment. Reid reported it to Congress as a personal land sale.
<snip>
The senator's aides said no money changed hands in 2001 and that Reid instead got an ownership stake in Brown's company equal to the value of his land. Reid continued to pay taxes on the land and didn't disclose the deal because he considered it a "technical transfer," they said.
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1)There is no such thing as a "technical transfer" this is an ABC opinion and not a fact.
2)According to Title 26 of the US Code (the part dealing with Income taxes). A transfer of property to a partnership (or in the case an LLC) for a partnership interest is a non-taxable event. No gain or loss is recognized on the transfer, and, there is no tax consequence; until the partnership sells it. Any one can transfer money, property, intellectual property etc to a partnership for a partnership interest with no tax consequences.
3)Also according the the US Code if that same property is sold with in 7 years all of the income would go to Reid. He would be taxed on the entire income from the sale of the property. This is not an option on his part, nor on the part of the partnership this is a
legal requirement by the US Tax Code. This is done to avoid a scenario where an individual transfers property which paid $400000 for 5 years ago and is now worth $1100000 to a partnership of 7 people. in that situation the gain on the sale of the property would be $1100000-$400000 or $700000 each partner would be taxed on $100000 of income. The partner who contributed the property however could walk off with the $700000 in cash (like the republicans do)
4)If harry Reid said he paid his taxes on the sale then he would have paid the taxes on the entire $700000.
On first blush this is an entirely legitimate transaction....
If you want cites to the code I can provide the but it is a bit "technical" in trying to understand them.
As an aside I am a CPA and have been doing this stuff for some time. I do not know however if any disclosure requirements were violated with respect to campaign laws related to pols.
But this shouldn't be a problem except for RW Liars.....
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