From the “You can’t make this stuff up” category…
The New York Post (with beach pics) and New York Times are reporting that the most powerful taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. -law writer in the world, House Ways and Means Chairman Charlie Rangel, has not reported on his tax return rental income that the veteran congressman has earned from his rental unit in the Dominican Republic. Whether he owes any federal tax on the unit is unclear, but aides say he would likely owe at least some to New York City and state.
From the Times article:
Representative Charles Rangel has earned more than $75,000 in rental income from a villa he has owned in the Dominican Republic since 1988, but never reported it on his federal or state tax returns, according to a lawyer for the congressman and documents from the resort.
Mr. Rangel, chairman of the House Ways and Means Committee, which writes the federal tax code, bought the beachfront villa at the Punta Cana Yacht Club and has received twice-yearly payments from the resort, which rents the property for $500 or more per night.
Records from the development, now called the Punta Cana Resort and Club, indicated that Mr. Rangel’s rental profits varied from year to year, from $2,700 in 2004 to $7,600 in 1994.
A lawyer for Mr. Rangel, Lanny Davis, said on Thursday that the congressman would most likely file amendments to his tax returns for the years in question.
Mr. Davis said Mr. Rangel’s accountant believed he would most likely owe back taxes to the state and New York City.
But Mr. Rangel will probably have no federal tax liability, Mr. Davis said, because he considered the villa an investment rather than a vacation home, and was therefore entitled to deduct depreciation on the property, as well as taxes the resort management paid to the Dominican Republic.
Mr. Davis declined to release copies of the congressman’s tax returns and said he was gathering documents showing how often Mr. Rangel stayed at the home during the past two decades, a critical question because the Internal Revenue Service does not allow a property owner to deduct as much depreciationDepreciation is a measurement of the “useful life” of a business asset, such as machinery or a factory, to determine the multiyear period over which the cost of that asset can be deducted from taxable income. Instead of allowing businesses to deduct the cost of investments immediately (i.e., full expensing), depreciation requires deductions to be taken over time, reducing their value and discouraging investment. on a second home that the owner uses more than 14 days per year.
The best line of the article is where Mr. Rangel has a John McCain-esque moment:
Mr. Davis said the congressman did not realize he had to declare the money as income, and was unaware of the semiannual payments from the resort because his wife, Alma, handled the family finances and conferred with their accountant, John Viardi, on tax matters.
This issue for Rangel is on top of the problem reported last month by the Times relating to his four rent-stabilized apartments. Maybe Rangel “just doesn’t get it” and is too “out-of-touch” with middle-class America to be writing our tax laws.
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