DATELINE: October 23, 2007, Chicago
Much ado has been made about the tax consequences associated with the recent auction of a letter by Rush Limbaugh of a letter penned by Senator Harry Reid and signed by Democratic lawmakers. Limbaugh raised over $2.1 million for the Marine Corp--Law Enforcement Foundation. He then matched that amount with his own contribution to the charity. We'd like to analyze the tax consequences of this transaction, but can't do so without the facts. Given that fact, our very Jack Siegel wrote Mr. Limbaugh to request critical facts. Here is the text of that e-mail.
Dear Mr. Limbaugh:
There has been discussion in the tax community whether the E-Bay auction of the Harry Reid letter might carry adverse tax consequences to you or the Casey Foundation. I would like to clarify that discussion, but need two facts. First, did Clear Channel give you the letter or just let you read it? Second, did you or Clear Channel give the letter to the Marine Corps—Law Enforcement Foundation to auction, or did you or Clear Channel auction the letter as its owner and then donate the proceeds to the Marine Corps—Law Enforcement Foundation? I am also curious as to whether you or Clear Channel sought tax counsel in structuring the transaction.
As a noted blogger on nonprofit and philanthropic legal issues, I would like to a post on the tax issues associated with the transaction, but rather than speculating, I’d like to know the facts. You could really help me by providing a copy of the agreement with e-Bay.
At the end of the day, I’d like to know whether the drive-by tax lawyers are correct in their speculation. I suspect that you and this transaction may show up on many law school tax exams this semester.
Thank you.
Jack B. Siegel
Charity Governance Consulting LLC
