When Romney released his tax returns this week, it made big news. Prospective voters headed over to the site to review the returns, some out of curiosity, some to verify that they were really, truly there (they are).
On the web site, voters got a glimpse of more tax returns. The Republican vice presidential nominee, Paul Ryan, had amended his 2011 tax return with the IRS and the Form 1040X is available online. The return indicates that Ryan and his wife failed to report $61,122 in income – or about 20% of their income – from their 2011 form 1040. The majority of that income was trust income.
As someone who works with trusts and estates, this sounds perfectly plausible to me. Trust and estates income can be irregular at best and, as a taxpayer, you might not receive your form K-1 (more or less, the trusts and estates equivalent of a W-2) until late-ish. This is especially true if the trust or estate was on extension or on an odd fiscal year or both. In that case, filing an amended return makes sense although I have to agree with my colleague, Peter Reilly, that I think a much more prudent approach would have been to file for extension – despite the grief that taxpayers gave Romney over the same move.
So all of that seems very expected – except for this little nugget. Last month, USA Today reported that, while being vetted by the Romney campaign, Ryan amended two years of his financial disclosure statements to include the same trust. That trust was inherited by Ryan’s wife in 2010 after the death of her mother and produced income of between $15,001 and $50,000 in 2010, and between $100,001 and $1 million in 2011. The value of the trust is said to be between $1 million and $5 million.
What all of this means is that the trust – and a decent sized one to boot – has been in place for at least two years (if funded during lifetime, since it is a Living Trust, the Ryans could have known about it for many years). Assuming that the Ryans, both of whom are clearly pretty sharp folks, had decent advisors, they would have been aware of the existence and income potential of the trust for at least the past two years even if the trust didn’t get funded until 2011 (again, I’m not sure that’s what happened but am giving them the benefit of the doubt based on the statements made on their amended returns by their accountant). And yet, they failed to report it not once – but twice.
Sloppy, not financially savvy or flawed? I can’t tell which. None of those answers would be a good one.
