Newt's Gonna Try and Write it Off!

Newt's Gonna Try and Write It Off!

Monday, May 12th 1997 — House Speaker Newt Gingrich gave us the first clue as to how he intends to ease the payment of his $300,000 loan from Bob Dole this weekend: he is exploring a way to write-off the fine as "a cost of doing business."

I expect that reporters will have a field day with this one in coming weeks.

I checked with an accountant who told me that he couldn't see any way that Mr. Gingrich could write off the loan and interest which could, together, total nearly $500,000 should Gingrich choose the option not to pay principal or interest until the full eight year term of the note expired and the loan was called. "The Speaker is not in business as far as his job as a congressman goes," said the CPA, " and because the fine was derived from his employment by the people of the United States and not from a business venture, it could not be interpreted as a business expense as far as I can tell."

He also told me that even if Gingrich were in business and got hit with a penalty it might be doubtful he could deduct the amount from his gross income.

I remain unconvinced and realized that it was perhaps the term "fine" that confused the matter. Was the Speaker planning ahead when he took such pains to make certain that the $300,000 was labeled a "repayment" of additional expenses incurred by the Congress because he submitted false testimony to the House Ethics Committee which extended its deliberations?

I think so -- and perhaps this is the reason it took so long to work out the terms of settlement with his congressional colleagues.

Were his lawyers exploring the tax-deductibility of "fines" versus "repayments all that time?"

It seems to me, that Mr. Gingrich could make a pretty good argument to the IRS that he incurred the obligation strictly as a result of his employment, and not as a result of malfeasance or criminal activity.

It doesn't take much to see how the Speaker might ultimately try this extrapolation and compare his "expense" to fees paid by doctors for licensure or money paid out by McDonalds employees or airline hostesses for uniforms and other tools of the trade.

Wouldn't that be something -- a new classification of deductibility for elected officials: "Fines Paid in the Course of Official Duty" -- or maybe "Monkey Business Expenses!"