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Politics : Politics for Pros- moderated

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To: ig who wrote (504067)	8/24/2012 9:57:32 PM
From: Sr K	Read Replies (2) of 794165

It may not be the income tax returns that have lasting effect, but the gift tax returns. Which might not get released anyway, because they were filed 16 years ago and no candidate or "precedent" includes anything about them. By Mark Maremont One of the mysteries surrounding Mitt Romney’s taxes is how the former private-equity executive managed to get $100 million into a family trust for his children without incurring federal gift taxes. A potential clue may be found in a previously unreported 2008 presentation made by a partner at law firm Ropes & Gray LLP, which represents the GOP presidential nominee. It focuses on how private-equity executives could minimize gift and estate taxes by giving family members some of their “carried interest” rights, a major form of compensation that entitles private-equity executives to a slice of the firm’s future investment profits. This is complicated stuff, but bear with us even if you’re not a tax geek. Much remains unclear about Mr. Romney’s taxes given his limited disclosure and the complexity of his personal finances. The attorney at Ropes & Gray wrote that in the 1990s and early 2000s estate-planning lawyers “commonly advised” that executives could claim a value of zero on these transfers of carried-interest rights for federal gift-tax purposes. He said the practice ended by 2005. . The Romney family trust was created in 1995. A campaign official several months ago referred to it as worth “roughly $100 million.” In an email to The Wall Street Journal, the Romney campaign earlier this year said that the candidate had never paid gift taxes on transfers to the family trust, saying “the original contribution and all subsequent contributions have been under the limit on lifetime gifts.” Federal gift taxes are intended to ensure that people don’t evade estate taxes by giving substantial sums to their heirs. At the time the Romney family trust was created, the lifetime limit on gifts was $600,000 and until recently was $1 million. The tax on gifts exceeding the maximum has ranged between 35% and 55% since the late 1990s. Because Mr. Romney no longer owns the assets in the trust, the sums held in the trust aren’t included in the campaign’s estimate that Mr. Romney is worth between $190 million and $250 million. But Mr. Romney and his wife, Ann, include the trust’s income on their tax returns and pay taxes on it. . blogs.wsj.com

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