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Biden’s ‘aggressive’ use of a tax loophole he’s trying to shut down
Biden, in his 2017 and 2018 returns, had taken advantage of a tax loophole that President Barack Obama had sought unsuccessfully to close.
Biden and his wife, Jill, saved as much as $500,000 in taxes as a result of the maneuver.
But the Bidens also had routed their income from books and speeches through S corporations. In doing so, they potentially avoided an additional 3.8 percent in Medicare taxes, some of which had been imposed on high-income individuals as part of the Affordable Care Act.
At issue is whether the tax returns included an appropriate estimate for “reasonable compensation” that would be subject to the self-employment and Medicare taxes.
The Bidens’ 2017 tax return showed about $145,000 in earnings for Joe Biden and $100,000 for Jill Biden subject to such taxes, out of income of about $10 million in S corporation revenue. Their 2018 return showed $300,000 in earnings for Joe Biden and $200,000 for Jill Biden subject to the Medicare taxes, out of about $3.2 million in income.
In other words, about 2 percent of the S corporation income in 2017 and about 13 percent in 2018 was listed as "wages". That caught the attention of tax specialists.
In one case examined by the Congressional Research Service, an accountant transferred his 25 percent interest in an accounting firm to an S corporation. He continued to work for the firm but at a much-reduced rate that was subject to taxes. He was officially paid a $24,000 salary, far below his market value, but the S corporation received $200,000.
Courts concluded that the $24,000 salary did not meet the test of “reasonable compensation.”
The IRS automatically audits a president’s returns only for the years he is in office, so the tax returns under question would not necessarily face scrutiny.
A White House official said the IRS "declined" to do any audits of the Biden tax returns for 2017, 2018 or 2019.
SO WHY DID THE IRS DECLINE TO AUDIT THE BIDEN'S TAX RETURNS FOR 2017, 2018, AND 2019?
https://www.washingtonpost.com/politics/2021/11/30/joe-bidens-aggressive-use-tax-loophole-hes-trying-shut-down/