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The Tax Prophet Newsletter   Issue #81 January, 2010

REDUCE TAXES!
CHECK OUT THE TAX PROPHET'S Action Guides


In This Issue:
Introduction
Expenditures
Shareholders
Conclusion


Taxing Corporate Political Expenditures

Introduction

The Supreme Court decision Citizens United v. Federal Election Commission opened the floodgates for corporations to buy politicians and overwhelm our elections with campaign contributions.

Here are creative ways Congress might use the tax code to stymie the effort:

Expenditures

Political expenditures are never tax-deductible; therefore, after-tax dollars must be used. Although the Supreme Court's decision treats corporations as individuals for First Amendment (free speech) purposes, corporations act through officers and directors.

Congress could treat political expenditures as either additional taxable compensation (salary) or dividends to those who authorize the expenditures.


Shareholders

Congress could require shareholder approval for political expenditures and if they agreed, the payments would be considered taxable shareholder dividends.

A separate box on Form 1099 DIV would state the amount, with a warning that these expenses are not tax-deductible.


Conclusion

The tax code can be an effective weapon against unlimited corporate campaign spending.

By requiring a shareholder vote and treating any funds expended as taxable shareholder dividends, Congress will effectively create turmoil within the company, thereby scaling back a potential corporate take-over of our election process.



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All contents copyright 2010 Robert L. Sommers, attorney-at-law. All rights reserved. This newsletter provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet is a registered trademark of Robert L. Sommers.