Clinton Writes-Off $13.2m Campaign Loans, Also Must Write-Off Any Tax Deduction

Bloomberg:  Clinton Writes Off $13.2 Million Loan to Campaign, by Jonathan D. Salant:

Hillary Clinton formally wrote off the $13.2 million she lent her presidential campaign, closing a chapter on her failed race for the White House and helping ease the way for her Senate confirmation as U.S. secretary of state. ...

The money will now be considered a campaign contribution, which isn’t tax-deductible, FEC spokesman Bob Biersack said. Nor can she deduct the money as a bad debt or as a job-hunting expense because political campaigns don’t qualify under the tax code, said Paul Caron, associate dean of the University of Cincinnati law school and editor of TaxProf Blog.

For prior TaxProf Blog coverage, see Romney Writes-Off $45m Campaign Loans, Also Must Write-Off Any Tax Deduction:

Ted Seto (Loyola-L.A.) raised the tax consequences of the write-off on the TaxProf Discussion Group.  Ira Shepard (Houston) delivered the bad news for Romney:  § 271 precludes any § 166 bad debt deduction “by reason of the worthlessness of any debt owed by a political party," which is defined to include a political campaign organization.

Alan Westheimer (Houston) then asked whether Romney could deduct the $45 million as § 162 job-seeking expenses.  Sarah Lawsky (George Wshington) noted that "§ 162(e)(1)(B) denies a deduction for 'participation in, or intervention in, any political campaign on behalf of (or in opposition to) any candidate for public office.' It may not, however be necessary to go as far as § 162(e). In McDonald v. Commissioer, 323 U.S. 57 (1944), decided before the language in § 162(e) was enacted, the Supreme Court held that campaign costs were not deductible business expenses. (A number of later cases follow McDonald.)  Kristin Gutting (Charleston) added:  "See Estate of Rockefeller v. Commissioner, 762 F.2d 264 (2d Cir. 1985). In Rockefeller, Nelson Rockefeller sought to establish that in seeking VP he was merely engaging in the same trade or business he was currently in ("an executive in federal and state governments" or "an executive in public office"). The court held that Rockefeller's tasks and activities as VP were not the same as those associated with the other positions that he held. Therefore, the costs in seeking VP were not deductible."