After ignoring Hastert land deal, Time highlighted Reid real estate controversy
SUMMARY: Time reported that Democrats "got an unwelcome distraction this week when Senate minority leader Harry Reid ... found himself embroiled in a real estate scandal," but the magazine has ignored reports from June that House Speaker J. Dennis Hastert made almost $2 million on the sale of land in Illinois after reportedly taking an active role in the inclusion in a transportation spending bill of an earmark for a highway project near the property.
In an October 13 online article on Republicans' recent decision to "concentrate on defending their 10-seat majority" in the Senate, Time staff writer Massimo Calabresi reported that Democrats "got an unwelcome distraction this week when Senate minority leader Harry Reid [D-NV] ... found himself embroiled in a real estate scandal." An October 11 Associated Press article first reported on the story, asserting that Reid made $700,000 "on a Las Vegas land sale even though he hadn't personally owned the property for three years" and that "Reid did not disclose to Congress an earlier sale in which he transferred his land to a company created by a friend and took a financial stake in that company." But while Calabresi devoted the second half of his article to the Reid land deal, Time has altogether ignored reports from June that House Speaker J. Dennis Hastert (R-IL) made almost $2 million on the sale of land in Illinois after reportedly taking an active role in the inclusion in a transportation spending bill of an earmark for a highway project near the property. By contrast, there are no allegations that Reid used his office in any way that might have affected the value of his land.
On June 15, the Chicago Sun-Times reported:
House Speaker J. Dennis Hastert pocketed almost $2 million from real estate deals adjacent to his Plano home in booming Kendall County, one of the fastest growing areas in the nation.
The transactions prompted questions Wednesday from the Sunlight Foundation, a new watchdog group, about whether Hastert, who earmarked $207 million in federal dollars for the proposed Prairie Parkway, had his profits swollen because of the highway.
In an October 6 column for The New Republic Online, American Enterprise Institute resident scholar Norman Ornstein and Center for American Progress senior fellow Scott Lilly wrote that Hastert "played an unusually active role in shepherding" the 2005 transportation bill, to which he earmarked the funds for the Prairie Parkway, "a more aggressive role than he played at any other point in his speakership."
But in the five months since the story first broke, Time has yet to mention the Hastert land deal. Nonetheless, in a six-paragraph article on Republicans' "increasingly defensive stance" three weeks prior to the midterm elections, Calabresi devoted three paragraphs to the fact that Reid has "found himself embroiled in a real estate scandal."
From Calabresi's article, posted October 13 on Time.com:
Democrats in the Senate, meanwhile, got an unwelcome distraction this week when Senate minority leader Harry Reid, who would take charge of the Senate if Democrats win, found himself embroiled in a real estate scandal. On Wednesday, the Associated Press reported that Reid had failed properly to report a land deal in his home state of Nevada that nearly tripled his initial investment in six years. Reid has asked the Senate ethics committee for review.
The profit came out of an unusual collaboration with a former casino lawyer, Jay Brown. Reid and Brown initially bought adjoining plots in Las Vegas' booming suburbs in 1998. They transferred the land to a company called Patrick Lane in 2001; Reid's share was valued at the same amount, $400,000, as he had originally paid for the property. Three years later, he was paid $1.1 million when Patrick Lane sold the land to a shopping mall developer. Though Reid and Brown claim they were joint owners of the company, they say no documents exist to prove Reid's position in it, since it was an informal relationship based on the two men's 35-year friendship. Reid's office says the Senator's annual payments of real estate taxes are evidence of his continued interest in the company.
"Obviously, Republicans are in danger of losing the House and the Senate and are desperate to push out any story that takes their troubles off the front page," Reid's spokesman, Jim Manley, said in a statement. "The fact is Senator Reid owned the land from 1998 to 2004 and he fully disclosed that fact. If the Ethics Committee requests a technical correction to Senator Reid's disclosure forms we are happy to provide one."
The MSM is 1) obsessed with appearing they provide "balance" in their reporting, most likely because of the parade of Repub corruption of late and 2) they fear the Karl Rove Repub power fist, the one that says my way or forget your plans of wealth and domination along with us.
Time is obligated to report the news - and it is NEWS that a politician makes money the old-fashioned way - honest investment backed by patience - since that doesn't seem to work at all for Repugnants. Why, a couple more stories like this, and THEN the Hastert mess for comparison, and even conservatives will feel bound to vote for a Dem?
to a lot of Republican radio the last couple weeks, and for all of the "let's wait til the facts are in" attitude regarding the Foley case, the Reid land deal was tried and convicted in minutes, and as far worse than the poor congressman being seduced by those foul tempting pages.
I guess any attribution of intelligence to the mass of cons would qualify me, eh?
I mean, after all, the essence of the story should be the fact that a politician, regardless of party affiliation, behaved honorably with respect to money, yet (unlike der Bungle's oil or baseball, or Hastert's real estate) managed to actually earn an honest profit.
Too, I would extend my condolences to you for the time and silence you sacrificed to determine that Repugnants truly ARE.
The Pugs are tripping all over themselves to denounce Reid for his land deal.
And I've yet to hear even ONE of them exlain what it is that they think that he's done wrong.
F*cking amazing, isn't it?
reid's land deal cost me nothing and hastert's deal cost the taxpayers of this country 207 million dollars.
That seems to be Karl Rove's favorite tactic. If you've seen the movie "Lucky Sleven", you'll know what it is. Bruce Willis, a hit man, descibes it as "Stepping to the right while everybody looks left". In other words, they point to something over there, and while you're looking, they slip a knife between your ribs.
and i'm a cpa who specializes in fed. tax law. what sen. reid did is quite common: he exchanged property solely for an equity interest (stock or partnership) in a related legal entity. we refer to this as a "351 exchange", for the section of the Internal Revenue Code it falls under. since it isn't treated as a sale, there would have been none for him to report.
his basis (what he paid for the land) would be the corp's or ptshp's basis in the property, since Sect. 351 requires that the property be valued at the lower of cost or Fair Market. in most instances, cost is lower. unless the parcel was found to be a toxic waste dump, sen. reid's cost would be both the company's basis in the land, and his basis in the company, upon the completion of the transfer.
the reason sen. reid didn't own the land, prior to its sale to an unrelated third party, was because Sect. 351 requires that all title to the property be transfered to the company, in order to have it treated as a non-taxable exchange. it appears sen. reid followed the law.
further, the reason sen. reid wouldn't have reported the ultimate sale of the land is because he no longer owned it, the company did. if it was a ptshp. or S Corp., he would report his pro-rata share of the gain on his 1040, but not the sale itself. if the land wasn't treated as a capital investment by the company, the gain would be treated as ordinary income, and again, sen. reid would report his pro-rata share on his return.
even worse for sen. reid, he might not even have gotten the cash amount of his share of the profits, even though he'd be required to pay taxes on it. just because the entity disposed of the land, doesn't mean it was required to distribute the proceeds to the owners. i don't if that's the case, but i have certainly seen that situation a zillion times before.
further, while not recommended, unwritten partnership agreements aren't unusual, the courts are routinely clogged with cases attempting to resolve arguments resulting from them. i urge anyone cosidering entering into one, to put the agreement in writing.
as long as sen. reid reported these items, and reported the value of his investment in the company, i am at a loss as to what, if anything, he might have done wrong
Senate Democratic leader Harry Reid announced Monday he is amending his ethics reports to Congress to more fully account for a land deal that allowed him to collect $1.1 million for property he hadn't personally owned for three years. Reid acted several days after The Associated Press reported the senator didn't disclose to Congress that he first sold the land to a friend's company back in 2001 and took an ownership stake in the company. He didn't collect the seven-figure payout until the company sold the land again in 2004 to others.
Reid said his amended ethics reports will list the 2001 sale.
"I directed my staff to file amended financial disclosure forms noting that in 2001, I transferred title to the land to a Limited Liability Corporation," Reid said in a statement issued by his office.
Reid said he believed the 2001 sale did not alter his ownership of the land but that he agreed to file the amended reports because "I believe in ensuring all facts come to light."
Reid blamed the AP story as a "latest attempt" by Republicans to affect the election. AP reported last week that it learned of the land deal from a former Reid adviser who had concerns about the way the deal was reported to Congress.
Reid also announced he failed to disclose two other land transactions on his prior ethics reports and would account for those on his amended reports.
NOTE THE TWO OTHER LAND TRANSACTIONS HE FORGOT ABOUT. REID EQUATES AP WITH "REPUBLICANS.” I AM A MEMBER OF THE VAST RIGHT WING CONSPIRACY--NOT AP! THIS REID CHARACTER IS A LOON.
He swapped the land for ownership in a legal entity as CPINVA (whose synopsis is MUCH more accurate) called it. The sole asset of the company was the land. How is that a sale in any other than a technical sense? It is exactly as Reid said. This is a tax manuever. Reid may have been sloppy, it may have been a technical violation for which he would deserve some criticism. The loon here is you.
The post was not created by me, I simply copied and pasted the AP article. Incidently, Reid just gave a statement indicating he would be correcting some other "clerical errors".
i've noticed this in other reports on this issue: they report that sen. reid made "1.1 million dollars" from this land deal.
not true, unless he got the property as a gift in the first place. as i understand it, he originally paid $400k for it, prior to transferring it to the LLC. that would have been his basis, and then the LLC's, for determining gain or loss on disposal.
for the sake of discussion (because i've not seen either tax return), let's assume that sen. reid received a 50% ownership interest in the LLC, upon his transfer of the land. as i noted above, he reports his pro rata share of all income/expenses/gains/losses from the LLC on his personal return. this information would be reported to him on a Form K-1, prepared and filed by the LLC.
i've not included any sales costs, for ease of explanation.
the final transaction:
sale price 1.1 million basis 400k ------------- Gain on Sale 700K Sen. Reid's ownership x .5 --------------- Pro-rata amount 350k =========
sen. reid would have reported a $350k long term capital gain, on his personal F1040, and paid the appropriate taxes. again, bear in mind, he may well not have received that in actual cash, so he'd be paying taxes on a gain he hadn't physically received.
this is solely based on the information made public so far. however, absent some other unknown coming to light, aside from poor clerical work, i don't see that he's committed any truly egregious breach of congressional ethics (if that isn't an oxymoron! :)) here. lots of smoke, no fire.
as to the other land deals, i've no comment, since i know nothing of them other than what's been posted here.
looks like TIME is backpedaling following its "end of the revolution" prediction.....now an insecure TIME can blame the potential Dem's election collapse on Reid for undermining the "culture of corruption" strategy....either way, TIME predicts the outcome. Nice.
other than to follow up with both barrels after ignoring the Hastert mess? We brought this on ourselves hollering "culture of corruption" instead of just letting the facts speak for themselves. Time Warner may not have made much of Hastert's deal but it was publicized to a limited degree. Remember who is in charge of the Department of Justice/FBI ... Alberto Gonzales. No party is going to be corruption free, and few politicians are going to be mistake free. Just wait, the FBI will find someone else every week between now and election day, and the stories will be as relatively innocuous as the Reid deal and will be made to sound as bad as Abramoff DeLay Ney and Duke Cunningham.