02/28/2001 – Even when I, El Rushbo, think I'm wrong, I'm right - the helpful advisory letters from CPAs notwithstanding. The other day, I wondered aloud about Hugh Rodham and the 400 grand that he accepted. I said, "Whether he gives it back or not, it's income. And if he did give it back, then there are gift tax consequences that surround the transaction."
A married couple can give anybody $20,000 tax-free every year. That's how some "super-rich" people begin divesting themselves of their estates. But anything over that amount is subject to a gift tax, which counts against your exemption at the time of your death. Right now, I think the first million dollars of your estate is exempt. After that, the government gets up to 55%.
So Hugh Rodham is giving 400 grand back to these two guys. Depending on marriage status, that's either $180,000 or $190,000 in taxes that are going to have to be paid by Hugh Rodham.
That is if the receipt of the bribe - excuse me, receipt of the payment - is considered income in the first place.
When I mentioned all this on the radio, a bunch of CPAs - well-intentioned no doubt - called and said, "Rush, I think you need to study a little bit more on these things that you don't seem to know too much about. Stick to politics, where you're never wrong, because when you start going into figures and mathematics and accounting and taxes, well, you leave a little bit to be desired."
Although I am very rarely wrong, I admit when I am, because I don't wish to be wrong. So I admitted what appeared to be my error on the air. Well, it seems I must now retract my retraction regarding the businessman pardoned and a cocaine trafficker who had his sentence commuted thanks to Hugh Rodham.
Wednesday's New York Post reports that Hugh Rodham could owe more than $230,000 in taxes on the bribe he took and then returned. Mrs. Clinton's brother is liable for federal taxes on the $400,000 he initially received - and for gift taxes on the money he agreed to return to the felons after his sister demanded that he pay back the fee.
The Post asked Gene Gavin, commissioner of the Connecticut department of revenue services, for advice. Gavin said, "The IRS commissioner should pursue this with all vigor, and if he doesn't, he's not doing his job." An IRS spokeswoman declined comment. Because Rodham gave the money back, under no legal obligation - and that's key here - he will owe another $76,050 in federal gift taxes, for a grand total of $234,450 in taxes.
Gavin said he stands by these numbers, noting that it doesn't matter if Rodham didn't end up keeping a cent. It's the transactions that are taxed. John Bogdansky, law professor at Lewis & Clark University, said that Hugh, "has got an income tax issue. He worked. He got paid. It's income." But Bogdansky thinks that Rodham might avoid paying gift taxes because of IRS rules allowing a lifetime exemption of $675,000 in gifts.
So, here we go again! Next time, trust the instincts of El Rushbo, your trained broadcast specialist.