A Brief Analysis of Governor Palin's Tax Returns for 2006 and 2007

Abstract

Governor Palin's 2006 and 2007 tax returns create several teaching opportunities for basic tax classes. This paper analyzes five substantive issues created by the returns and by a legal opinion letter written by Roger Olsen on some of the issues.

The five issues are: (1) the proper treatment of $17,000 paid to Palin by the state of Alaska as her travel allowance; (2) the proper treatment of $43,000 paid to Palin as a travel allowance for her husband and children; (3) the proper treatment of a $9,000 loss claimed for her husband's racing activity; (4) whether the Palins are subject to the penalties for negligence; and (5) whether Mr. Olsen's letter meets the standards for tax practice in Circular 230.

Keywords: Palin, hobby loss, circular 230, covered opinions, travel reimbursements, income tax, civil penalties, negligence, tax returns, tax return preparation

JEL Classification: K20, K40