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October 17, 2006

Election Guide 2006

It's now less than three weeks before nationwide elections to elect all 435 of our representatives to the House of Representatives and 33 senators to the Senate. I have compiled a voting guide to help you decide how to vote.

If you think we should worry more about how we treat the terrorists we have captured than we worry about the lives and safety of our American citizens, vote Democratic.

If you think we can talk our enemies out of their efforts to obtain nuclear weapons, vote Democratic.

If you want your taxes raised, vote Democratic.

If you want same sex marriages legalized in the United States, vote Democratic.

If you think sending an explicit instant message to a page is worse than the President receiving blow jobs from an unpaid intern in the Oval Office, vote Democratic.

If you believe in partial birth abortions, vote Democratic.

If you want illegal immigrants to pay in-state tuition at state run universities while American citizens from other states pay much higher out-of-state tuitions at the same universities, vote Democratic.

If you believe the terrorists will not try to attack us here in the United States once we leave Iraq, vote Democratic.

If you believe illegal immigrants should be given citizenship ahead of those who came here legally, vote Democratic.

If you believe we should have no religious symbols on public property; we should not have 'In God We Trust" on our money; our schools should not allow Christmas carols be sung during the Christmas holidays; the phrase 'under God' should be taken out of the Pledge of Allegiance; vote Democratic.

If you believe the Boy Scouts must allow homosexual scout leaders, vote Democratic.

Make sure you vote!

Posted by Rick | October 17, 2006 09:57 PM | Political Science

October 14, 2006

Harry Reid's Land Deal = Malodorous

There is something smelly about the Las Vegas land deal Senator Harry Reid (D-NV) and Jay Brown, Reid's longtime friend and former casino lawyer, were involved in between 1998 and 2004.

The AP story by John Solomon and Kathleen Hennessey reported this week :

-The deal began in 1998 when Reid bought undeveloped residential property on Las Vegas' booming outskirts for about $400,000. Reid bought one lot outright, and a second parcel jointly with Brown. One of the sellers was a developer who was benefiting from a government land swap that Reid supported. The seller never talked to Reid.

-In 2001, Reid sold the land for the same price to a limited liability corporation created by Brown. The senator didn't disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown's company. He continued to report to Congress that he personally owned the land.

-After getting local officials to rezone the property for a shopping center, Brown's company sold the land in 2004 to other developers and Reid took $1.1 million of the proceeds, nearly tripling the senator's investment. Reid reported it to Congress as a personal land sale.

The complex dealings allowed Reid to transfer ownership, legal liability and some tax consequences to Brown's company without public knowledge, but still collect a seven-figure payoff nearly three years later.

I have an LLC and understand the reasons for transferring property into an LLC. I have various partnerships, one is even with an attorney, and I understand the potential pitfalls of partnerships. Everything in the transaction seems very normal until this:

They also said they have no documents proving Reid's stake in the company because it was an informal understanding between friends.

and then this:

Reid isn't listed anywhere on Patrick Lane's corporate filings with Nevada, even though the land he sold accounted for three-quarters of the company's assets. Brown is listed as the company's manager. Reid's office said Nevada law didn't require Reid to be mentioned in the filings.

"We have been friends for over 35 years. We didn't need a written agreement between us," Brown said.

An old friend taught me a long time ago that "friends are friends, and business is business." The point being that in business, you need to take care of business. Senator Reid, who is also an attorney, had a $400,000 investment, $400,000, that he transferred to an LLC which did not have his name on it! And he is an attorney? If this guy were my attorney and he allowed this to happen he would lose his license for sheer stupidity.

Why would Harry Reid transfer $400,000 worth of land into a company without getting any documentation of his interest in the company? If Jay Brown or the Reid's had died after the transfer to the LLC who would have known that the Reid's were 75% owners of the assets of the LLC? Or if Jay Brown had filed for bankruptcy or fallen behind on his taxes, the Reid's could have lost their entire investment and would have had little or no recourse.

This begs the question: What were they hiding? And if they weren't hiding anything, you have to ask, "Is Harry Reid really that stupid?"

The AP report talks about minor differences in the amount of property taxes the various parties paid on the land, but there are potentially much larger tax ramifications involved that no one has pointed out. Solomon and Hennessey stated:

Reid and his wife, Landra, personally signed the deeds selling their full interest in the property to Brown's company, Patrick Lane LLC, for the same $400,000 they paid in 1998, records show.

But contradicting the above statement, they reported:

The senator's aides said no money changed hands in 2001 and that Reid instead got an ownership stake in Brown's company equal to the value of his land. Reid continued to pay taxes on the land and didn't disclose the deal because he considered it a "technical transfer," they said.

If, in fact, no money changed hands and the Reid's were not recorded partners in the LLC, questions must be raised about the state and federal tax consequences of a company receiving $400,000 worth of land and giving nothing in return.

In talking to a CPA I am very familiar with, it was pointed out that, if the Reid's didn't have any recorded interest in the Patrick Lane LLC and were not paid $400,000 for transferring the property in 2001, the land value ($400,000) that the Reid's transferred into the LLC became taxable income to the LLC. Did the Patrick Lane LLC pay taxes on that income? Doesn't sound like it. No mention was made in the AP report that the Reid's received, or filed, a K-1 tax form from the LLC and I am surmising that one was not issued.

Something, as they say, is rotten in Denmark.

Posted by Rick | October 14, 2006 03:22 AM | Political Science

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