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Originally published Tuesday, August 28, 2012 at 8:38 PM

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Inslee admits mistake in 2009 taxes; McKenna reiterates he won't release his

Gubernatorial hopeful Jay Inslee corrected an error in his 2009 taxes on Tuesday, filing an amended return to remove a $5,500 deduction on the sale of a country-club membership. Meanwhile, opponent Rob McKenna reiterated that he will not release any tax returns.

Seattle Times staff reporter

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Gubernatorial hopeful Jay Inslee corrected an error in his 2009 federal taxes on Tuesday, filing an amended return to remove a $5,500 deduction on the sale of a country-club membership.

The amendment was filed a week after Inslee, a Democrat, released five years of federal income-tax returns and challenged his Republican opponent, Rob McKenna, to do the same.

Inslee corrected the return after consulting with his accountant, who originally prepared the forms, campaign spokesman Sterling Clifford said.

"It was a mistake," Clifford said.

The amendment came on the same day that McKenna reiterated he will not release any tax returns during the campaign. Aides to McKenna had said he was considering releasing returns, but Tuesday he called it a "phony issue."

The deduction on Inslee's returns has raised questions since he and his wife, Trudi, released their income-tax returns last week.

The return counted the July 2009 sale of a membership in the Wing Point Golf and Country Club as a long-term capital loss because the couple sold it for $6,000 — less than the $11,500 they paid for it in 1988.

Independent tax experts questioned that classification.

Scott Schumacher, a University of Washington tax-law professor, said the sale could only be counted as a deduction if the Inslees had bought the membership as a business investment with the intention of selling it later for a profit.

"Personal losses are generally not deductible, and a country-club membership would most likely be treated as a personal asset," Schumacher said.

Among those curious about the deduction was Jay Inslee's brother-in-law; according to Clifford, that's who first brought the issue to Inslee's attention.

The Inslee campaign used the scrutiny over the deduction to highlight McKenna's refusal to release his returns.

"You only have the opportunity to raise this question because Jay Inslee did the right thing and released his tax returns," said Clifford, who called the returns essential to transparency.

"It's not for us to say what information voters deserve," he said.

McKenna addressed the issue earlier in the day in a conference call with reporters.

"Anyone who wants to know what my salary is, what property I own, what debts I have can look at that on my F1 (financial-disclosure reports)," he said.

Those state filings show the value of bank accounts and investments. But they display income and assets only in broad ranges.

Staff reporter Andrew Garber contributed to this report.

Brian M. Rosenthal: 206-464-3195 or brosenthal@seattletimes.com.

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