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Clarence Thomas Had a Loan Canceled--with Ethical and Tax Consequences

In 1999, a wealthy friend of Justice Clarence Thomas, Anthony Welters, loaned him $267,230 to buy a fancy motor home that Thomas fancied. He paid some interest on the loan for several years, but a Senate investigation now shows that the loan was eventually forgiven, so Thomas never paid it back.

This raises a number of ethical and legal issues. First, the Supreme Court's ethics rules require justices to report loan forgiveness on their ethics forms. Thomas never did that. Second, IRS treats debt forgiveness as taxable income to the borrower. It also treats missed loan and interest payments that the creditor does not demand be paid as taxable income. It is not known if Thomas declared the $267,230 as income and paid federal tax on it. If he did not, he violated federal tax laws, though depending on when the loan was forgiven, the statute of limitations may have run out already.

No matter what, it is clear that Thomas has nothing but contempt for the law, something one would not expect from a Supreme Court justice. Sen. Ron Wyden (D-OR), who is leading the Senate investigation, has called upon Thomas to inform the Senate Finance Committee about the details of the loan, whether it was forgiven and when, and if it was forgiven, if he paid tax on the implied income. We will see if Thomas responds, but based on his past behavior, it is very likely that Thomas will ignore the request. If Wyden issues a subpoena, Thomas will probably ignore that as well. His view is always "What are you going to do about it?" Would Thomas recuse himself from a Supreme Court case on whether or not a Supreme Court justice, such as Clarence Thomas, has to obey a Congressional subpoena? Don't bet on it. (V)

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