It turns out that several prominent Detroit businessmen made substantial loans or outright gifts to now ex-Mayor Kwame Kilpatrick.
Roger Penske, Dan Gilbert, Jim Nicholson and Peter Karmanos gave Kwame $240,000.
Also, it turns out magnate Matty Maroun gave Kwame a gift of $50,000. Maroun owns considerable Detroit property and the bridge that is the international crossing between Detroit and Windsor. He also made some major donations to Kirkpatrick's mother, Congresswoman (for life / D-Detroit) Carolyn Kilpatrick. Pay to play anyone or just business as usual in the D?
The loans were apparently part of a deal, agreement or simple understanding in return for him to resign as mayor of Detroit, not to mention ending a serious Democrat scandal in Michigan in an election year, and possibly even agreeing not to attend the Democrat convention due to potential embarasment over Obama's endoresement and friendship with Kwame -
You could say that Kwame, like Blagojevich, knew the position he held was a valuable thing, and he got some value for leaving and both sparing the City, Obama, and the Democratic establishment some high-profile embarrassment during a crucial election. At least Kwame made some cash and a nice well-paying job after his exit in exchange for his valuable thing.
It should be interesting to see what happens if the court decides to have the businessmen testify under oath as to the reasons for their generous gifts, and if any of them were quietly promised either favors if they made these "gifts" or disfavor if they failed to do so.
Sunday, November 01, 2009
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2 comments:
Tax attorney that I am, you've gotten me into curious speculation regarding the potential tax consequences.
If indeed the money transfer was a loan, then what was the interest rate? [It had better be equal or greater than the Blended Annual Rate promulgated by the Treasury under Internal Revenue Code Section 7872, else the interest is imputed as income to both borrower and lender.].
And if it really was not a loan, then (A) it was a gift subject to Gift Tax & Estate Tax implications; or (B) there was consideration in return.
The IRS can have a lot of fun with this one, and if Kwame doesn't have the deep pockets, then Roger, Dan, Jim and Peter certainly do.
Yes, the applicable Federal Rate can be very useful. it will be interesitng to see if there is any documentation to go with these "loans".
The consideration may be - if you quit you'll be taken care of.
The fun question is who, if anyone, set them up to make the payments to his former honor?
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