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The Knucklehead of the Day award

Today's winner is New York Democratic Congressman Charles Rangel. He gets the award for the following-

Representative Charles B. 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.

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.

One of the leading members of Congress who helps set federal tax law not paying their taxes properly. Taxes must only be for the little people.

I think Lanny Davis is being overly optimistic. If Rangel received income from the rentals, and didn't report it, He's going to be on the hook for both back taxes and penalty from the IRS.

Who does the congressman blame for the tax discrepancies?

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.
I wonder how Alma Rangel feels about taking a bullet for her husband. For not reporting his income properly, Congressman Charles Rangel Chairman of the House Ways and Means Committee is today's Knucklehead of the Day.

Hat tip- Betsy

Update- Rangel's tax problems may just be starting.Today's NY Times reports that the mortgage interest on the villa was waived for more than a decade. Where can I get that kind of deal? Thank you to Wizbang commenter Corwin who pointed me to the more recent article.


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Comments (9)

OK, MSM...any of you want t... (Below threshold)
RB:

OK, MSM...any of you want to ask Chollie how many homes HE owns???

Lanny is probably right. Ra... (Below threshold)
mcg Author Profile Page:

Lanny is probably right. Rangel will owe interest and penalties only if his net tax for those years is corrected up. If he neglected to report expenses and depreciation as well, it might balance out. Often rental properties do not generate net income because the rent covers carrying costs. The idea is that the primary gain comes only when you sell for a capital gain.

I think Mr DAvis is wrong.... (Below threshold)
corwin:

I think Mr DAvis is wrong.Today's NYT reports on Mr rangel's having his interest forgiven on a real estate purchase and lack of filings on rental properties.This is big problems ahead

The other side of the depre... (Below threshold)
cirby:

The other side of the depreciation coin is supposedly that if he spent more than two weeks there in any year, he can't deduct the mortgage as a business expense in many cases.

Gonna be funny as hell if i... (Below threshold)
GarandFan:

Gonna be funny as hell if it's found that Charlie managed to remember taking depreciation on the asset, but ignoring the generated income. But ya'll know that the Democrats are sooooooooo involved with the plight of the common man that they can't be expected to know and conform to every "nuance" of the US Tax Code. Anyway, good help is hard to find nowdays. Looks like Charlie is either in line for:
1) new wife
2) new accountant
Hey! You don't suppose that Charlie's wife and accountant are trying to 'set him up', do ya?
Mayber got something going on the side? Not saying it's so. Just, you know, "asking questions".

He's also been using a rent... (Below threshold)

He's also been using a rent-controlled apartment in the city as a campaign office. In case it's not obvious, rent-controlled apartments are only allowed to be used for primary residences. If I recall correctly, he had like 4 of them in one building...yes, 4 primary residences.

And, boy howdy, look at all the media coverage they've got on him....*tumbleweed*

"But Mr. Rangel will pro... (Below threshold)

"But Mr. Rangel will probably have no federal tax liability, Mr. Davis said, because..."

Oh, goody for him. I feel much better now. As if that even matters to anyone BUT Rangel. As he was lauded by Democrats for his new tax reform proposals a year ago, I'll bet he forgot to mention that all you have to do to avoid it is not claim income.

Just one point: Civil Frau... (Below threshold)
Codekeyguy Author Profile Page:

Just one point: Civil Fraud is the omission of income before the offset by expenses. There has to be a 25% understatement of total income for it to hit.
So, if his total reported income was $300,000 or less, he has the fraud threat over his head.

And to think that hollywood... (Below threshold)
Spurwing Plover:

And to think that hollywood know nothing JULIA ROBERTS said that the demacrook party is OF THE PEOPLE,BY THE PEOPLE FOR THE PEOPLE and comming from some ding-bat too igorant to tell time or read DICK AND JANE




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