Abel Maldonado’s Tax Controversy

image via sunnypatton.com

In California, Abel Maldonado is a familiar name.  He’s the former lieutenant governor and he’s currently running for Senate in the new Central Coast district.  Maldonado is also in the news because of his serious tax problems.

As far as the IRS is concerned, one of the worst things a business owner can do is make personal expenditures out of the business funds and try to write them off as legitimate business expenses.  The only reason anyone would attempt this is to make it appear that the income is lower because, if the income is lower, the tax bill is also lower.

This is at the center of the controversy between the Maldonado family farming business (Agro-Jal) and the Internal Revenue Service.  The IRS has billed them for $3.6 million and Maldonado refuses to pay.  These are some of the expenditures that the government contends had no legitimate business purpose:

  1. renovations to Maldonado’s residences
  2. fundraiser for his campaign for Senate
  3. unspecified catering expenses
  4. personal use of company vehicles
  5. golf club memberships
  6. horses

This certainly does not good for Maldonado’s campaign, even if he has legitimate arguments in tax court — it’s the perception that counts.  But maybe the IRS should give them the horses; seems like a farming expense to me!


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