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Deal tax disclosure raises more questions

September 7, 2010 — Most investors will only dream about the kind of year Roy and Marie Barnes had in 2006.

Over that year and the next, the former governor and his wife reaped an enormous profit on their investment in Alabama National BanCorporation, which had previously bought out the parent company of a bank Barnes founded. In 2006-2007 they reported a $3.4 million gain on an initial investment of $221,990.

In 2006, they also netted a $22,215 profit from sales of Home Depot stock, and more than doubled their money on a $31,306 call option.

The couple had an adjusted gross income that year of $1.9 million, and gave about 10 percent of it to charity, with First United Methodist Church, which they attend, as the greatest beneficiary.

We know all these details about their business, not necessarily because Barnes or his wife are eager to share the information, but because the Democratic candidate for governor posted his complete tax returns for the past 25 years, with all the schedules and detailed worksheets on his website

As the Democratic blogger who goes by the nom de plume of Peter Tondee has ably pointed out, the 2006-2007 period was also a very active financial period for Nathan Deal and his wife.

In previous years, the Deals had reported only modest capital gains, a steady income that appears to have come from his partnership in Gainesville Salvage Disposal, and losses every year – reaching a high of $82,040 in 2002 – on their farm.

But in 2006 all this was reversed. They reported $225,381 in capital gains, more than 10 times any previous filing, followed by $62,102 in capital gains in 2007. For the first time, they reported a net loss from their Schedule E (partnerships) of $233,240 (followed by losses of $53,520 in 2007 and $1 in 2008). And for the first and only time in 29 years of filings, they reported a profit from their farm, of $6,424.

Go figure that. Could the farm somehow be related to the other changes in Deal’s finances taking place at the same time? What about the very convenient pairing of $287,760 in capital gains in 2006 and 2007, with $286,760 in unprecedented losses from the partnership over the same period?

We can speculate until Election Day on what might have been going on during this turbulent period. Indeed, that’s what a lot of people are going to do, after Deal’s release last week of his Federal 1040 and Georgia 500 forms dating back to 1981, minus any of the detailed information which enables us to take a more textured look at the Barnes’ financial affairs.

What is true about lingerie is also true about stories like these. That which has been partially covered up can be a lot more alluring than that which is totally exposed. The Deal 1040s provide just enough information to raise new questions about his business affairs, without the details that might put the questions to rest, or at least enshroud them in a confusing cloud of numbers.

The Deal campaign said on its website last week that the release of this information, “combined with 17 years of financial disclosure reports, provide Georgia voters with a transparent look at Nathan Deal's income, his assets and his liabilities.”

In fact, however, trying to piece together a complete picture from these sources is basically an “apple plus orange equals question mark” process. Some more information might be gleaned, but this is not nearly as transparent a look at the Republican candidate’s affairs as it would have been if Deal had done what Barnes had done and disclosed all the relevant information from his tax returns.

Releasing the information on the Thursday night before the Labor Day weekend may have put a softer light on it, from a news cycle point of view, but in the long run that, too, is only likely to stoke curiosity about what wasn’t disclosed. Deal has a page-turning press conference Tuesday to talk about his education plans, but it isn’t likely that last week’s attempt to put the tax issue to bed will turn out to be more than a tease.

   
   

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