[EL] Treatment of independent political expenditures on a company's financial books

[Ellen Aprill]

- The Supreme Court did treat deductibility of lobbying expenses as a
subsidy in Cammarano v United States, 358 U.S. 498 (1959) and said the
government did not have to subsidize First Amendment activity.  The decision
is a bit odd to us tax folks, for the reason Eugene points out – we tax
businesses on a net, not gross, basis and do not think of other business
deductions (salaries, rent, etc) that define net income as a subsidy.



>From 1962 until 1993, businesses were allowed to deduct direct lobbying
expenses – in 1993, Congress reintroduced the rule that no lobbying expenses
could be deducted.



Tax treatment does not necessarily tell us what book treatment would be –
the rule may well be settled; I am wondering if anyone knows the accounting
treatment – are these amounts deducted on the books, capitalized, amortized,
or some other treatment.



   Ellen



*From:* law-election-bounces at department-lists.uci.edu [mailto:
law-election-bounces at department-lists.uci.edu] *On Behalf Of *Volokh, Eugene
*Sent:* Wednesday, September 28, 2011 2:44 PM
*To:* law-election at uci.edu
*Subject:* [EL] Treatment of independent political expenditures on a
company's financial books



               That may well be so, though I’m not sure that I would treat
the deductibility of business expenses as a “subsidy.”  My point, though,
was just to suggest that there is already likely a longstanding practice
with regard to this, given that corporations have long been able to speak
out about ballot measures.  It seems to me the rule with regard to corporate
speech about candidates ought to be the same.



Of course, now that I think of it, since in half the states corporations had
been able to speak out about candidates even before *Citizens United*, there
may have been a well-settled practice with regard to deductibility of those
expenses as well.



Eugene



*From:* Fredric Woocher [mailto:fwoocher at strumwooch.com]
*Sent:* Wednesday, September 28, 2011 2:30 PM
*To:* Volokh, Eugene; law-election at uci.edu
*Subject:* RE: [EL] Treatment of political contributions on a company's
financial books



Constitutionally protected "speech," yes.  But wouldn't taking a tax
deduction for these expenditures as a "business expense" make them
taxpayer-subsidized?  I don't think the Constitution requires that.



Fredric D. Woocher

Strumwasser & Woocher LLP

10940 Wilshire Blvd., Ste. 2000

Los Angeles, CA 90024

fwoocher at strumwooch.com

(310) 576-1233




------------------------------

*From:* law-election-bounces at department-lists.uci.edu [mailto:
law-election-bounces at department-lists.uci.edu] *On Behalf Of *Volokh, Eugene
*Sent:* Wednesday, September 28, 2011 10:07 AM
*To:* law-election at uci.edu
*Subject:* Re: [EL] Treatment of political contributions on a company's
financial books

               I take it this refers largely to independent political
expenditures, or to contributions to independent organizations that make
such expenditures, since *Citizens United *did not strike down the ban on
direct contributions to candidates.  And I would think such an independent
expenditure supporting or opposing a candidate would be treated the same way
as independent expenditures supporting or opposing ballot measures, which
have long been seen as constitutionally protected, no?



               Eugene



*From:* law-election-bounces at department-lists.uci.edu [mailto:
law-election-bounces at department-lists.uci.edu] *On Behalf Of *Ellen Aprill
*Sent:* Wednesday, September 28, 2011 10:04 AM
*To:* law-election at uci.edu
*Subject:* [EL] Treatment of political contributions on a company's
financial books



As has been discussed on this list, Section 162(e) makes these amounts
nondeductible for tax purposes.  Especially now that Citizens United has
held that corporations can make political contributions and in light of the
Super-Pacs, I was hoping that someone on the list knows how auditors treat
these amounts for purposes of financial reporting.

Thanks.



   Ellen
-- 

Ellen P. Aprill

John E. Anderson Professor of Tax Law

Loyola Law School

919 Albany Street

Los Angeles, CA 90015

213-736-1157
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