EFTA00846636.pdf

From: "jeffrey E." <[email protected]> To: Jeffrey Epstein <[email protected]> Subject: Date: Thu, 10 Sep 2015 08:59:11 +0000 When I was researching my article about Dennis Hastert's indictment on charges that he improperly withdrew large sums of money from a bank, one question I had was whether any tax was owed on the payments Mr. Hastert was said to have made. For tax purposes, were the payments gifts? Fees? A settlement? Hush money? Any of these options would have tax implications — implications that could provide additional justification for the prosecution, since one of the key motivations of anti-money laundering laws is to prevent people from evading taxation by making large payments in cash. Tax experts I spoke with agreed that the payments would constitute a settlement or extortion. In either case, the responsibility for reporting the payments would lie not with Mr. Hastert but with the payments' recipient, identified in the indictment as "Individual A." "The legal requirement to be a gift is that it's made out of detached and disinterested generosity," said Michael Graetz, a tax law professor at Columbia. So, if events occurred as described by government prosecutors, these payments were not gifts. however The tax law of extortion is surprisingly simple: Proceeds from extortion are taxable income. That's what the Supreme Court held in a 1952 decision, Rutkin v. United States. While extortion payments would be taxable for Individual A, they would actually be partly deductible for Mr. Hastert, said Paul Caron, a tax law professor at Pepperdine University. It's right there in I.R.S. Publication 17, Chapter 25: You get to deduct losses because of theft, to the extent those losses exceed 10 percent of your adjusted gross income. Blackmail and extortion count as theft. But to claim the deduction, Mr. Hastert would have to convince the I.R.S. or a court he had been extorted, which could be difficult. "Sometimes judges will find a way to disallow deductions for what they find unsavory behavior," said Joe ICristan, a tax accountant with the Roth C.P.A. firm. He noted a case in which a divided Ninth Circuit panel denied a tax deduction for extortion to a man who said he paid hush money to his mistress. please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by EFTA00846636 return e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA00846637