{"id":1,"date":"2012-02-01T21:24:34","date_gmt":"2012-02-01T21:24:34","guid":{"rendered":"http:\/\/old.sommers-taxapedia.com\/archives\/?p=1"},"modified":"2012-08-29T14:24:18","modified_gmt":"2012-08-29T14:24:18","slug":"mitt-romneys-tax-world-part-1-of-3","status":"publish","type":"post","link":"https:\/\/sommers-taxapedia.com\/archives\/mitt-romneys-tax-world-part-1-of-3\/","title":{"rendered":"Mitt Romney’s Tax World (Part 1 of 3)"},"content":{"rendered":"

Introduction<\/strong><\/p>\n

Under political pressure, presidential candidate Mitt Romney reluctantly released his 2010 federal income tax return. His gross income was an eye-popping $21.6 million, although his tax bite was $3.1 million, or about 15% of his adjusted gross income.<\/p>\n

Romney used a variety of controversial, but currently legitimate, tax breaks to lower his payroll and income taxes below the average percentage paid by workers earning $50,000 – $100,000.<\/p>\n

2010 Income Tax Return<\/strong><\/p>\n

Romney’s tax return contains $21,646,000 of adjusted gross income, $4,500,000 of itemized deductions, mostly charitable deductions and state income taxes, taxable income of $17,127,000 and a tax of $3,106,000.<\/p>\n

He earned $540,000 in speaker’s fees and another $114,000 in director’s fees from the Marriott corporation. His tax return runs 203 pages, including 67 pages of supplemental attachments.<\/p>\n

Miscalculations<\/strong><\/p>\n

Romney’s tax returns are so complicated that he overpaid about $44,000 in taxes, because his accountants incorrectly calculated the gain on the sale of Goldman Sachs stock, according to the New York Times.<\/p>\n

His accountants used a $9,800 basis in the calculation of a stock sale for $286,500 when the actual basis was closer to $316,000; in fact, there should have been a capital loss of about $20,000.<\/p>\n

Carried Interest<\/strong><\/p>\n

Unlike doctors, lawyers, plumbers and teachers, all of whom pay taxes at ordinary income rates, those managing investment partnerships and hedge funds are taxed on their personal services at 15%, the long-term capital gain and corporate dividend rates.<\/p>\n

This is because they claim that they are investors in the enterprise and receive a percentage of the partnership, rather than individuals performing personal services.<\/p>\n

Romney’s ability to characterize his participation in the various Bain Capital investments as carried interest help lower his tax rate to 15% federal. Approximately 73% of his gross income was classified as carried interest.<\/p>\n

Stock Donation<\/strong><\/p>\n

Romney donated appreciated stock to charity and received a charitable deduction at the full fair market value of the stock. The gain on the appreciation goes untaxed.<\/p>\n

In contrast, if he were required to sell the stock and pay the tax, the charitable deduction would be reduced by the amount of tax paid.<\/p>\n

In 2010, Romney donated $1.46 million in stock to his private foundation, the Tyler Foundation.<\/p>\n

Operating a private foundation has a distinct advantage: contributions are deducted in full, but the funds can remain in the foundation for future distribution to charity. In contrast, those without private foundations must make full payment directly to a charity to claim a deduction.<\/p>\n

Charitable Deduction<\/strong><\/p>\n

In a potentially embarrassing admission, Romney contributed to the Mormon church $1.525 million or about 7.2% of adjusted gross income, instead of the tithe of 10% that is required.<\/p>\n

In contrast, on his 2011 tax return, he donated the full 10% of his adjusted gross income, which suggests that he shorted his church about $640,000 in 2010 and could be the real reason why he resisted releasing his return.<\/p>\n","protected":false},"excerpt":{"rendered":"

Introduction Under political pressure, presidential candidate Mitt Romney reluctantly released his 2010 federal income tax return. His gross income was an eye-popping $21.6 million, although his tax bite was $3.1 million, or about 15% of his adjusted gross income. Romney used a variety of controversial, but currently legitimate, tax breaks to lower his payroll and …Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,5],"tags":[9,28,29],"class_list":["post-1","post","type-post","status-publish","format-standard","hentry","category-general-tax-information","category-tax-trust-scams","tag-mitt-romney","tag-son-of-boss","tag-tax-shelter"],"_links":{"self":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/1","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/comments?post=1"}],"version-history":[{"count":13,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/1\/revisions"}],"predecessor-version":[{"id":14,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/posts\/1\/revisions\/14"}],"wp:attachment":[{"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/media?parent=1"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/categories?post=1"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sommers-taxapedia.com\/archives\/wp-json\/wp\/v2\/tags?post=1"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}