Barack Obama's Tax Returns: Lingering Questions

Earth Hour interfered with income tax preparation at our house last night, but we are pleased to report that we won't be attempting to characterize political contributions as charitable contributions on our US-1040. Barack and Michelle Obama did just that a couple of years ago when they deducted a $13, 107 political contribution to the Congressional Black Caucus as charitable contribution on their 2006 tax return.

Deducting political contributions is strictly prohibited by the IRS, and I am still scratching my head about this incredible gaffe by two Harvard educated lawyers knowledgeable about both law and politics. Additionally, the return was professionally prepared by a firm that touts its tax expertise on its website. What exactly is going on here?

While Obama's campaign says that an amended return has been filed, that return should also be released. The "Oops, I made a mistake" rhetoric on Obama's part is growing tiring, but we would note that Barack himself never addressed this issue, leaving that to his official campaign spokesmen. Seeing this major mistake, Obama should come clean with the the identities of the $4,700 he deducted as gifts to "miscellaneous recognized charities" on his 2006 return." Obama's campaign also has disgorged hundreds of thousands of dollars in political contributions due to Tony Rezko donations, and given that money to what is reported as charities. Just what are those charities? After a mistake of the magnitude of the 2006 deduction mistake, it is amazing that no one has even raised this question, or that Obama, for all his talk about transparency, never revealed information about the miscellaneous charities or the gifts from his campaign.

The New York Times article, Obamas’ Tax Returns Show Donation Spike, states that:

“The 2006 return also show a charitable deduction for a $13,000 donation to the Congressional Black Caucus. It is illegal to deduct political contributions as charitable contributions. The campaign said Mr. Obama had filed an amended return to eliminate that item as a deduction.”

http://www.nytimes.com/2008/03/26/us/politics/26taxes.html?ref=politics

Isn’t he a lawyer, isn’t he supposed to be the preeminent law student? How is it that he turns out to be so ignorant and so incompetent that he takes an illegal tax deduction right as he is running for President? How could he not understand enough of the law, or of the government, or of U.S. history, to not make such a mistake?

Let’s really look at Mr. Obama’s tax returns. First of all, the returns for 2006 and 2005 look too good to be true. I question whether or not Mr. Obama amended these returns and recreated the original returns to reflect the amended ones filed on Form 1040X.

The reason I pose this question is that it seems odd that Mr. Obama did not incur any expenses relating to his business as an author (other than legal fees and commissions). Does he mean to tell us that he incurred no additional expenses such as office supplies, travel, and telephone? Why would he leave these expenses off his tax return when in fact they would certainly be legitimate deductions? The only reason I can think of, other than attempting to make the public see that he is extremely patriotic, is that he used the facilities at the senate for his own personal use in writing his book.

Also, why didn’t Mr. Obama deduct any property taxes on his home in 2005? He must have incurred them because he paid over $60,000 in mortgage interest.

Blog posted on Barack Obama’s Campaign page 3/27/08

Posted by: Tom CPA | Mar 27, 2008
http://taxprof.typepad.com/taxprof_blog/2008/03/obama-releases.html

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