On Tuesday, Joe Magats, first assistant state’s attorney for Cook County, announced that he was dropping the charges against actor Jussie Smollett. Instead of a trial and punishment, Smollett agreed to forfeit his $10,000 bond and do community service.
Cook County prosecutors say this is a relatively normal type of alternative prosecution, one that prosecutors have recommended for over 5,700 offenders. It allows prosecutors to use their resources to prosecute violent offenders.
On Wednesday, I posted about how tax law played a central role in the college admissions scandal. As I’ve read through a little more of the affidavit, I decided to highlight two additional detail in this whole scandal, details that suggest that, for at least some of the participants, the tax consequences were very important.
Bruce Isackson and Facebook Stock
Bruce Isackson is the president of WP Investments, a real estate investment and development fund.[fn1] According to the affidavit, he used the fake athlete thing (soccer for the older daughter, rowing for the younger) to get two daughters into USC. He seems to have also paid for his younger daughter to get a better ACT score.
When I first read about the massive college admissions scam, I read it for roughly the same schadenfreude as everybody else. It was an interesting—and frankly, kind of pathetic—story of wealth and entitlement.
And then I read the affidavit supporting the criminal indictment. And I learned that, as much as this is a story of wealth and entitlement, it’s more than that: this is a story that revolves around taxes. And specifically, the abuse of a tax-exempt organization.
There seem to have been two main schemes to get participants’ kids into schools they wouldn’t have otherwise qualified for. The first involved cheating on entrance exams. The second involved bribing athletic directors and others to designate their kids as athletic recruits (often in sports the kids didn’t play), and , each of which had its own fee structure. But each scheme had something in common. The recipient of the payments was Key Worldwide Foundation. Continue reading “Key Worldwide Foundation and College Admissions Scams”→
On February 1, Amazon Prime Video started streaming Blues Brothers. Now, in spite of its being one of the great movies of the 20th century, and having one of the greatest soundtracks ever, I hadn’t seen it in years, and definitely not since I moved to Chicago. So I decided to watch it, both because I love the movie and because I wanted to see its view of Chicago now that I know this city.
I remembered that the plot revolved around Jake and Elwood trying to raise $5,000 for the orphanage they grew up in or the orphanage will be closed, but I’d forgotten that the $5,000 was to pay the orphanage’s property tax assessment:
I’d also never watched a movie with Amazon’s X-Ray feature before. And X-Ray announced that the motivation for their mission from God is a factual error, because Illinois doesn’t tax church property.
Every year, it seems like there’s something in the news about the Academy Awards swag bags (valued at $100,000 this year!) and taxes. And, since the Academy Awards are tonight, and since this is a tax blog, we might as well say something about the taxation of swag bags. And wouldn’t you know it: an article had a decently bad take on the taxation, giving me a hook for a tweetstorm, which I now reproduce here for your reading pleasure. Happy Academy Awards Day!
I assume by now that everybody knows that #AcademyAwards2019 swag bags are taxable income to the recipients. But there are at least one thing in this article that needs to be corrected, and another than needs pushback. 1/ https://t.co/icqjcIlr9e
A year and a half ago, I learned that in the 1940s, the IRS revoked the Ku Klux Klan’s tax exemption and sued it for almost $700,000 in back taxes. Two years later, the IRS filed a tax lien against the KKK’s assets. While that may not have been the death blow to the 1920s iteration of the KKK, it was certainly part of the death blow.
I’ve since learned a lot more about the whole story, including how the KKK could claim exemption in the first place. I’ve read dozens of contemporary (and retrospective) newspaper articles about the revocation. Heck, I’ve read through a couple Stetson Kennedy archives. I’m dying to write an article about this piece of history.
There’s only one problem: I don’t know why the KKK lost its exemption.
I’ve been following Gaylor v. Mnuchin, the parsonage allowance case, for years now. A couple months ago, I got to hear oral arguments the second time it went up to the Seventh Circuit. And I’ve been waiting eagerly since for the court to issue its decision.
As of 11:18 pm Central time on January 30, the court had not yet issued its opinion. But, in spite of the case being fully briefed and argued, one update to the case recently occurred: the state of Michigan changed its mind. Continue reading “Michigan and the Parsonage Allowance”→
It’s not even an election year, but the last couple weeks have been exciting for tax policy fans. First was Rep. Alexandria Ocasio-Cortez inserting the idea of a 70% top marginal rate into the public conversation. Then today, Sen. Elizabeth Warren proposed a wealth tax on taxpayers with household wealth in excess of $50 million. While she hasn’t released details, and the news reports aren’t completely clear, I’m assuming that households would pay 2% of their net worth in excess of $50 million, and an additional 1% on their wealth in excess of $1 billion.[fn1]
Like much of America, I watched a Fyre Festival documentary last week. I chose Hulu’s Fyre Fraud over Netflix’s Fyre: The Greatest Party That Never Happened because I only had time for one, and Fire Fraud had an interview with Billy McFarland. (I’ve since heard great things about Netflix’s documentary, too, so I’ll probably watch it eventually.)
About nineteen and a half minutes into the documentary, we’re introduced to Ja Rule; we see him in an interview (with Wendy, apparently), who says to him, “So you spent two years in prison.”
He responds, “Yeah, I went in on my state charge for the gun charge, and they ran it concurrent with my tax stuff.”