Posted on 08/13/2006 8:29:28 PM PDT by NormsRevenge
LOS ANGELES
U.S. Rep. Gary Miller has avoided paying millions of dollars in taxes on real estate deals under a tax break that protects people forced to sell their property, but officials dispute they ever made him sell his land, a newspaper reported Sunday.
Miller, R-Diamond Bar, sold 165 acres to Monrovia, a suburb about 10 miles east of Los Angeles, in 2002 for a profit of more than $10 million, according to the Los Angeles Times.
Following the sale, he told the Internal Revenue Service and the state he was forced to sell under threat by the city of eminent domain, a process by which government agencies can force sales in the public interest.
That allowed him to avoid paying capital gains on the sale for two years, during which time he could reinvest the proceeds and avoid taxes altogether.
In an interview, Miller contended that Monrovia threatened him during the bargaining process with eminent domain, giving him no choice but to sell, the paper said.
"The base of the deal was either you sell to us or we'll have to condemn it," Miller said.
But city officials told the Times they never strong-armed him into selling.
Glen Owens of the Monrovia planning commission said the city was buying the undeveloped hillside land from Miller for a wilderness preserve using state funds that forbid such forced sales of land.
"The state doesn't go along with eminent domain," Owens said. "You have to have a willing seller."
A letter from the city manager at the time said "Under the guidelines of the Challenge Grant Program, all property owners must be willing sellers."
And in video footage of a February 2000 City Council meeting, Miller is shown pleading with city officials to buy his land. "Why don't you buy my property? I've asked you repeatedly," the Times quoted him as saying.
In 2004, Miller reinvested the profits from the Monrovia sale, buying lots and a building in Fontana and Rancho Cucamonga.
The following year, Miller sold his Fontana land to the city. This year, he sold the building, also to the city.
In both cases, he again claimed the IRS exemption, saying the sales were forced, the newspaper said. As such, the Fontana sales allowed Miller to continue to shelter portions of the profits from his original Monrovia sale.
Records and interviews with Fontana officials indicate Miller's sales there also were voluntary, the Times reported.
Miller had no comment to the Times after Monrovia challenged his claims, and the IRS and the state's Franchise Tax Board both told the newspaper they do not discuss individual cases.
Miller's spokesman Kevin McKee told the Times in an e-mail that "Mr. Miller and the city of Monrovia agreed upon the purchase price and a friendly condemnation."
Reached by The Associated Press Sunday, McKee said Miller had no comment on the Times story.
Monrovia officials acknowledged that early drafts of the sale included a so-called "friendly condemnation," which allows a buyer to claim a forced sale for tax reasons. But that phrase was stricken when the deal became final.
Miller, a millionaire land developer from the Inland Empire, represents the 42nd District, which includes parts of Orange, San Bernardino and Los Angeles counties.
I read about this in the LA Times. I did not know you can get a tax break if your a victim of Eminent Domain.
2 earlier posts re; land deals
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Another L.A. Times Unfounded Slur on a Republican Politician
http://www.freerepublic.com/focus/f-news/1683172/posts
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Official's Tax Break: on Firm Ground? (Eminent Domain claimed for tax benefits)
http://www.freerepublic.com/focus/f-news/1682989/posts
Gary Miller is a land developer, I am sure he had adequate legal counsel and tax guidance that should have addressed any concerns re: land deals.
We'll see what shakes out soon enough.
More examples that the present system is contorted, used, and abused - sort of like a kinky xxx-rated movie.
Hehe..how long have you been waiting to say that?
L
Providing that these allegations hold true, I say, "Screw him to the wall".
Why ... I just thunk it up all by myself.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all federal income, SS/Medicare payroll, and gift/estate taxes outright replacing them with with a national retail sales tax administered by the states.
H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
- sort of like a kinky xxx-rated movie.
Nope, ain't gonna provide no links to that one. U'r on your own there buddy.
A Taxreform ping for you all.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all federal income, SS/Medicare payroll, and gift/estate taxes outright replacing them with with a national retail sales tax administered by the states.
H.R.25,S.25
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.Refer for additional information:
sounds good to me. If government forces you to sell, it should be tax free
Annaheim, Asuza and...Rancho Cucamonga?
That's the general neighborhood where he reinvested monies or so it was reported.
Couldn't agree more. When rotten apples in our midst are found, we have to clean house. end of story.
And if the seller falsely claims that the government made them sell, what should happen?
Well, what about the 300,000 or so other disputes over tax exemptions the IRS will deal with this year? What a beautiful system we have here. Its sheer brilliance and righteousness approaches a poetic mastery unmatched in fiscal achievement. Its simplicity is a work of art to regal the legislative eye. Its . . .
Make them pay ten times as much
["Mr. Miller and the city of Monrovia agreed upon the purchase price and a friendly condemnation."
Reached by The Associated Press Sunday, McKee said Miller had no comment on the Times story.
Monrovia officials acknowledged that early drafts of the sale included a so-called "friendly condemnation," which allows a buyer to claim a forced sale for tax reasons. But that phrase was stricken when the deal became final. ]
Sounds to me like the city agreed "in early drafts
to call it "condemned" -- which would mean a forced sale -- so Miller would get the tax break. That would have allowed the city to pay him a lower price. It was all part of the negotiated price of the property -- the city agreed to use its power or ED threat to benefit Miller's tax situation. That's no different than a city issuing tax-free muni bonds -- they pay lower interest because the purchaser of the bond won't have to pay taxes on that interest.
Then the city quietly removed the "friendly condemnation" phrase in the final deal ? Sounds like the city screwed him unless they raised the price accordingly. We can't know without knowing what the price was "with condemnation" and "without condemnation". $10M "with" and $13M "without" would result in the same after-tax compensation to Miller. So the city saved $3M in purchase price, Miller would walk away with the same $10M either way, and the IRS lost $3M in taxes.
This is the problem with the tax system now -- as long as you jump through all the hoops properly, you can take advantage of the system in ways not intended by the spirit of the tax laws. If all the income taxes, deductions, credits, etc. were tossed out in favor of a simple NRST like the FairTax, this kind of maneuvering wouldn't be necessary.
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