PURPOSES.
Q THE PAYMENTS SUCH AS THE ONES YOU DESCRIBED WERE MADE AND DEDUCTIONS WERE TAKEN, THEN THAT DEDUCTION COULD BE DISALLOWED BY THE INTERNAL REVENUE SERVICE?
A YES. THAT EXAMPLE I GAVE YOU IS JUST ONE. ANY KIND OF A PAYMENT MADE TO AN OFFICIAL OF A GOVERNMENT WOULD NOT BE AN ALLOWABLE DEDUCTION, PROBABLY, AND THIS QUESTION SEEKS TO DETERMINE IF ANY OF THESE PAYMENTS WERE MADE.
Q NOW, WITH RESPECT TO QUESTION THREE, COULD YOU TELL ME THE RELEVANCE OF THAT QUESTION TO FEDERAL INCOME TAX LIABILITY OF A CORPORATION SUCH AS COASTAL STATES?
A OKAY. QUESTION THREE DEALS WITH CORPORATIONS DONATING FUNDS, ET CETERA, TO POLITICAL CANDIDATES OR PARTIES, ET CETERA. A CORPORATE PAYMENT TO A POLITICAL CANDIDATE IS GENERALLY NOT AN ALLOWABLE DEDUCTION, SO IF WE WERE TO DETERMINE IF ONE HAD BEEN MADE, IT WOULD BE NOT AN ALLOWABLE DEDUCTION FOR INCOME TAX PURPOSES.
Q CAN YOU DO THE SAME THING WITH QUESTION FOUR?
A NUMBER FOUR IS ALONG THE SAME AREA. IT REFERS BASICALLY TO THE DONATION OF CORPORATE PROPERTY OR THE USE OF CORPORATE PROPERTY, AND THE SAME WOULD HOLD TRUE FOR NUMBER FOUR AS IN NUMBER THREE. IT WOULD STILL BE CONSIDERED A CONTRIBUTION AS SUCH TO A POLITICAL PARTY AND IT WOULD NOT BE A DEDUCTION FOR INCOME TAX PURPOSES.
Q COULD YOU GIVE ME AN EXAMPLE OF PROPERTY THAT COULD BE
A YES. IF A CORPORATION WAS TO DONATE A BUILDING OR WAS TO DONATE THE USE OF A BUILDING TO A POLITICAL CANDIDATE FOR A PARTY, THIS IS THE TYPE OF SITUATION THAT WOULD BE COVERED IN THIS QUESTION.
Q WOULD THE USE OF A CORPORATE AIRPLANE BE THE SAME KIND OF THING?
A YES, ANY CORPORATE PROPERTY.
Q I TAKE IT, THEN, THAT THE FAIR RENTAL VALUE OF THAT BUILDING OR AIRPLANE WOULD NOT BE A PROPER BUSINESS EXPENSE?
A WE WOULD HAVE TO LOOK INTO THE PARTICULAR EVENT TO DETERMINE THE AMOUNTS, BUT IT WOULD BE CONSIDERED A PAYMENT IN KIND.
Q HOW WAS QUESTION FIVE RELEVANT TO THE TAX LIABILITY OF COASTAL STATES GAS?
A QUESTION FIVE CONCERNS A CORPORATION PAYING A SALARY OR PAYING AN INDIVIDUAL WHO DOES WORK FOR A POLITICAL PARTY OR A POLITICAL CANDIDATE, ET CETERA. THE SALARY OF A CORPORATE EMPLOYEE LOANED TO A POLITICAL CANDIDATE OR A POLITICAL PARTY IS NOT GENERALLY ALLOWABLE DEDUCTION FOR FEDERAL INCOME TAX PURPOSES. IF WE WERE TO DETERMINE THAT ANY CORPORATION HAD LOANED ITS EMPLOYEES TO A CANDIDATE, WE WOULD HAVE A SERIOUS QUESTION AS TO WHETHER OR NOT IT WAS AN ALLOWABLE DEDUCTION.
Q QUESTION SIX?
A QUESTION SIX DEALS WITH CORPORATIONS MAKING ANY LOANS, DONATIONS OR OTHER DISPERSEMENTS DIRECTLY OR INDIRECTLY TO OFFICERS OR EMPLOYEES FOR THE PURPOSE OF PASSING IT ON TO INDIVIDUALS, POLITICAL CANDIDATES OR WHAT HAVE YOU, POLITICAL PARTIES.
A BONUS TO A CORPORATE OFFICER THAT WAS GIVEN WITH THE UNDERSTANDING THAT IT WOULD BE PASSED ON TO A POLITICAL PARTY OR CANDIDATE IS GENERALLY NOT AN ALLOWABLE