He and one or more persons set up a LLC and he transferred the land (not really sold it, except on verbal statement ), having a value then alleged to be $400,000. The LLC later sold the land and his share was $1,100,000. That's an "obscene" profit of $700,000. More than Big Oil makes. He would have reported the profit on his personal tax return. That's the way a LLC works. As an accountant, I am advising he did those things in the best manner for investment purposes. Neveryheless, how sweet it is....
The real sticking point here for the esteemed Senator from Nevada is the status of his "shares" from the LLC.
I'm pretty sure he reported the transaction on his tax return - not even he is that bold. But he sold the LLC the land he'd bought several years earlier for what he paid for it - $400K.
Now, a few years pass, and he gets his share of the sale, $1.1M.
What I'm betting is, he reported the income against the basis of his outstanding shares in the LLC, for purposes of calculating the capital gain. I think he used a different, inflated figure for the shares of the LLC, thereby lowering, or maybe even eliminating, any tax consequence for this transaction.
In effect (no, in reality!) he laundered this money.
There are many, many other aspects of this saga that will not pass the smell test, of course, but this is probably one of his biggest problems, and if somebody at Justice has any sense of justice and a good pair of balls, they'll bring RICO charges against him for this little indiscretion.
I doubt, in the end, that will happen, but one really has to wonder just how many skeletons this guy has in his closets.
At least, this is how I'm viewing things on this story.
CA....
Actually, the amount of profit and how it was accounted for are irrelevant, unless Reid was doing some additionally underhanded things. The issue in this case is disclosure -- as a "silent" partner in the LLC, he was able to push legislation that favored a business interest that was not disclosed to the ethics committee or to the general public.
Thanks for clarifying that for me. However, I take issue that he earned an obscene profit. In order to be obscene, the profit must be earned by a Republican, and H. Reid is no Republican!