Income Tax Guide for State Legislators

2014 2015

Income Tax Guide for State Legislators

2400 Veterans Boulevard Suite 500 Kenner, LA 70062-4739 504.464.1040 800.288.5272 Fax 504.469.7930 lcpa.org

January 30, 2015

The Society of Louisiana Certified Public Accountants is pleased to

present this “2014-2015 Income Tax Guide for State Legislators”

prepared specifically for members of the Louisiana Legislature. This

income tax guide will be helpful to you in answering some frequently

raised questions concerning income tax laws as they relate to your unique

position as an elected official.

Rules governing taxation are continually changing and evolving because

they are affected not only by legislation, but also by the decisions

of courts and pronouncements by the Internal Revenue Service.

Consequently, the material contained in this income tax guide may be

considered current only as of the publication date.

For tax issues not addressed in this guide, for consultation on other tax or

accounting questions and for assistance in the preparation of your various

income tax returns we suggest that you contact your certified public

accountant.

THOMAS PHILLIPS JR., PhD, CPA, CGMA RONALD GITZ II, CPA, CGMA

President

Executive Director

JIM HARRIS

CARRIE W. GRINNELL, CPA

Legislative Liaison

Federal Taxation Committee

Chair

Published January 30, 2015. For additional copies contact:

LCPA • 2400 Veterans Memorial Blvd., Suite 500 • Kenner, LA 70062

TABLE OF CONTENTS

Preface:

. . . .

4

Introduction:

. . . .

5

Automobile & Travel Expenses

. . . .

6

Living Expenses:

. . . .

11

Living Expenses:

. . . .

13

State Legislator’s Election to Treat Residence as Tax Home

. . . .

14

Health Insurance:

. . . .

15

Office Expenses

. . . .

15

Advertising

. . . .

17

Entertainment & Business Meal Expenses

. . . .

18

Telephone & Other Expenses

. . . .

19

Personal Financial Disclosure

. . . .

21

Campaign Expenses & Contributions

. . . .

22

Contribution Limits and Campaign Reporting Deadlines

. . . .

27

Recordkeeping

. . . .

30

IRS Form 2106

. . . .

35

IRS Form 2106-EZ

. . . .

45

IRS Schedule A

. . . .

47

2106

2106-EZ

PREFACE

“The CPA Profession Today”

CPAs act as advisers to individuals, business, financial institutions, nonprofit organizations and government agencies on a wide range of financial matters. Today, many turn to CPAs for help with: tax preparation and planning; estate, trust and retirement planning; personal financial planning; budgeting; management advisory services; computing services; financial management and financial forecasting; and auditing, review and compilation of financial statements.

CPAs also serve in management at companies of all sizes. As corporate managers, they perform many of the same services that “outside” CPAs do. They also bring special expertise and insight to management issues, helping to reengineer company finance functions, structure transactions for the capital markets; manage employee benefit plans and prepare and analyze financial and operational information for management decision-making. Whether chief financial officer, controller or head of human resources, CPAs are trusted members of many successful companies’ senior management teams.

The highest professional standards and integrity in the practice of accountancy are maintained by holders of the certified public accountant certificate issued by the State of Louisiana or by other states.

To qualify for certification and a state license to practice public accounting, a CPA must:

• Have fulfilled stringent education requirements;

• Have passed the comprehensive Uniform CPA Examination covering accounting practice and theory, taxes, commercial law and auditing;

• Obtain a minimum of 120 hours of continuing professional education during each three-year period;

• Abide by the Code of Professional Conduct, one of the most exacting of any profession, which stresses independence, integrity, objectivity, technical competence and adherence to professional standards and emphasizes the CPA’s commitment to serving and

protecting the public interest.

The Society of Louisiana Certified Public Accountants, organized in 1911, is a non-profit association with more than 7,000 members and has nine active chapters throughout the state. It is considered the state’s premier organization of accountants.

The following are the members of the Louisiana Legislator’s Tax Guide Subcommittee of the Society’s Federal Taxation Committee:

• Frank J. Holzenthal, CPA • Roger M. Cunningham, CPA • Dennis W. Dillon, CPA • Jeffrey W. Koonce, CPA • Scott LaCaze, CPA • William A. Paddie, CPA • Henry A. Riser, Jr., CPA

INTROduCTION

As a Legislator. . .

As a legislator, you are considered to be an employee of the state of Louisiana for federal and state income tax purposes, and you will receive a W-2 form from the state. This W-2 will reflect your salary, session per diem, interim committee per diem and special travel per diem. You may also receive mileage and district office reimbursements that are not included in your W-2.

Certain expenses incurred by you while serving in your capacity as a legislator may be deductible for tax purposes. These expenses are referred to as employee business expenses and are reportable on Form 2106 or 2106-EZ of your individual income tax return (a copy of Forms 2106 and 2106-EZ are included in this

booklet). Employee business expenses include automobile and other travel, entertainment and certain other

expenses related to your employment as a legislator, such as dues, subscriptions and office expenses. Form 2106 expenses and other such expenses, in excess of reimbursement, are deductible only as miscellaneous itemized deductions on Schedule A, subject to a 2 percent of adjusted gross income floor and also subject to a phase-out for adjusted gross income in excess of certain thresholds (a copy of Schedule A is included in

this booklet).

Travel expenses include automobile expenses, transportation fares, meals, lodging and other related

expenses incurred while away from home. For the purpose of this deduction, your “tax home” is considered to be your principal place of employment or business headquarters which, of course, may be different from your place of residence. Whether the geographical area you represent is your principal place of business

(“tax home”), or a minor post of duty, is determined by a review of all of the facts and circumstances relative

to your particular situation.

Regardless of the facts and circumstances, you may elect to treat your residence in your legislative district as your “tax home.” The election is made by attaching a statement to your income tax return, and your deductions are determined, in part, by reference to federal and Louisiana per diem allowances. This election is not available if you live within 50 miles of the Capitol building. The election is more fully explained on Page 17 of this booklet.

Throughout this income tax guide you will note an emphasis on the importance of recordkeeping. The burden of proving the appropriateness and extent of deductibility is on you, the taxpayer. Therefore, it is imperative that sufficiently detailed records be kept by you. Failure to adequately support a deduction can result in its disallowance.

A question-and-answer format is used to provide specific answers to questions regarding income tax laws as they relate to your unique position as a member of the Legislature. The answers generally assume that Baton Rouge is not your “tax home.”

AuTOmOBILE &

TRAvEL ExPENSES

Q. How much may I deduct for the auto mileage I incur to and from Baton Rouge?

A. You may deduct either the standard mileage rate for all business miles, including mileage driven to and from Baton Rouge, or you may itemize your actual automobile expenses. The standard mileage rates for 2014 and 2015 are as follows:

2014 $.560 per mile 2015 $.575 per mile

If you itemize your expenses, you may deduct that portion of total expenses allocable to business mileage, including mileage for traveling to and from Baton Rouge. The business use percentage is computed by dividing total business miles by total miles, business and personal, driven during the year. Allowable itemized expenses include depreciation, gas and oil, repairs and

maintenance, insurance and other costs of operating and maintaining your automobile. Parking fees, tolls and property taxes may be deducted as separate additional items, but only to the extent otherwise allowable (see subsequent sections). Personal interest paid on car loans by an employee is not deductible unless it qualifies as home equity indebtedness.

Since the state of Louisiana reimburses you for mileage between your home and Baton Rouge, your deductible automobile expenses must be reduced by the total amount of reimbursement received by you during the year. Expenses in excess of reimbursement may be deducted on Schedule A subject to the 2 percent of adjusted gross income floor. In some cases, the deduction for these expenses may be further limited if adjusted gross income exceeds certain threshold amounts (Page 23).

Q. What other mileage expenses may I deduct?

A. Most members of the Legislature incur a great deal of mileage expenses while in their home districts. All travel to club meetings, speaking engagements and meetings you attend because of your position as a legislator is considered business mileage and should be included with the mileage traveled between your home and Baton Rouge. This mileage can become substantial, particularly if your district covers a large geographical area. A memorandum of this mileage should be recorded in a diary or an appropriate mileage log.

Q. What about mileage expenses incurred while going to meetings during a political campaign for

my re-election? Although I am running for re-election, I still feel it is incumbent upon me to attend these meetings to explain to my constituents the activities of the Legislature, and the disposition of legislative measures.

A. The Internal Revenue Code specifically states that none of your campaign expenses are tax deductible (see section on campaign expenses). Because of this, it is very important for you to

Q. If my campaign account reimburses me for legislative or campaign expenses can I still deduct the mileage on my return?

A. If your campaign account reimburses you at the above-referenced per mile rates, you may not deduct the mileage. If you do not give the campaign account specific mileage detail to justify the reimbursement then you must pick up the reimbursement amount as income and deduct the per mile amount on your individual income tax return as a miscellaneous itemized deduction.

Q. If I use another mode of transportation to get to Baton Rouge, such as the bus or airplane,

may I deduct these expenses in addition to my mileage expenses?

A. You cannot claim both the mileage you would have incurred had you driven your automobile to Baton Rouge and the cost of the bus fare or airplane ticket. If you use a bus, airplane or other means of transportation to Baton Rouge, these expenses should be detailed on Form 2106, along with any reimbursement you received for the travel. The expenses incurred in excess of reimbursement will be deductible subject to the limitations discussed on Page 23. If your reimbursement exceeds your expenses, the excess may be taxable income to you to the extent not offset by other non-reimbursed deductible employee business expenses.

Q. On occasion I ride with another legislator to Baton Rouge. Do I still claim a tax deduction for the mileage for that particular day, even though I did not drive my car?

A. No. When you ride with someone else and do not directly incur any travel expense yourself, you may not claim any mileage expense for that day’s travel. Of course, you may still deduct other expenses incurred, such as meals and lodging, subject to the requirements discussed in the next section, “Living Expenses – Meals and Lodging.”

Q. I received a traffic violation because I was rushing to get to Baton Rouge to be on time for a

session or a committee meeting. Is the fine a tax deductible expense? A. No. A traffic fine is a penalty and is therefore not a deductible expense.

Q. I travel to Baton Rouge for each legislative session. I stay at a motel, and I am required to drive to the state Capitol each day. May I deduct this mileage as a business expense?

A. Yes. You may deduct as a travel expense the mileage you incur going from your living quarters in Baton Rouge to either the state Capitol or any other location, as long as the purpose of the travel is directly related to your position as a member of the Louisiana Legislature. Additionally, the IRS has ruled that you may deduct daily transportation expenses incurred in going between your residence and a temporary work location outside the metropolitan area where you live and normally work. A temporary work location is defined as any location where employment at the location is realistically expected to last (and does in fact last) for one year or less.

Q. I have an office in my home district. May I deduct mileage expense from my home to this office?

A. No. The mileage from your residence to one or more regular places of business within the geographical area considered your “tax home” is deemed a non-deductible commuting expense. However, any business mileage traveled between your residence and any other temporary place of business would give rise to a deduction, as would mileage between the office and another temporary place of business. One deductible example would be the trip between a legislator’s law office and his legislative office.

Q. The IRS allows me to deduct a flat rate expense per mile or to itemize all of my automobile expenses and then to take a portion of those expenses based on a percentage of my business miles to the total miles traveled during the year. Which method results in the greatest deduction for me?

A. If you want to use the standard mileage rate, you must choose to use it in the first year the car is available for use. Then in later years you can choose to use either the standard mileage rate or actual expenses. You cannot use the standard mileage rate if you claimed an accelerated depreciation deduction in an earlier year. In order to determine which gives you the greatest deduction, it is necessary to itemize your automobile expenses and then compare that amount to your tax deduction under the standard mileage allowance. Generally the greater the total business mileage, the more beneficial the mileage deduction becomes. A mileage log should be kept regardless of the method selected.

Q. If I don’t use the standard mileage rate method for computing automobile expenses, specifically what expenses am I allowed to deduct?

A. Deductible expenses include depreciation, gasoline, oil, repairs, insurance, tires, license plates, registration fees and similar items. The cost of the car itself, including accessories or improvements, must be capitalized and deducted via depreciation.

Sales taxes incurred due to the purchase of the vehicle must be added to the cost of the car, and manufacturer rebates, if applicable, must be subtracted from the cost of the car for depreciation purposes. Specific dollar amount limits apply to annual depreciation deductions, except for SUVs, large

autos, larger passenger trucks, and other vehicles weighing more than 6,000 pounds. Any truck or van that is a qualified nonpersonal use vehicle is also exempt from depreciation limits. A qualified

nonpersonal use vehicle is modified in a way that makes it unlikely to be suitable for more than a deminimus amount of personal use. For vehicles subject to the depreciation limitations on passenger automobiles, the depreciation depends on the tax year in which a car is placed in service. The annual depreciation for autos placed in service in 2014 is limited to $3,160. The 2014 depreciation limit for trucks or vans (passenger autos built on a truck chassis, including minivans and sport-utility vehicles (SUVs) built on a truck chassis) is $3,460.

Q. Are there expenses I may deduct for the use of my automobile in addition to the standard mileage rate?

A. Yes. Parking fees and tolls and personal property taxes may be deducted. As discussed later, personal interest related to the purchase of a car is not deductible by an employee unless it qualifies as home equity indebtedness. These deductions are available only as itemized deductions and are subject to the adjusted gross income limitations discussed on Page 23.

Q. Since I am reimbursed by the state for actual mileage for personal, legislative and committee

travel, would it be best to just disregard the reimbursement entirely and assume that it is completely offset by mileage expenses and therefore not report anything?

A. If you are fully reimbursed for actual mileage driven at a rate not exceeding $.560 for mileage in 2014, or $.575 for mileage in 2015, it is not necessary to report automobile expense in your federal income tax return. This assumes that the state has an accountable plan (requires employee substantiation and

return of amounts received in excess of substantiation) and does not include the reimbursement as

taxable wages in your Form W-2. If you incur travel expenses for which you are partially reimbursed, you must report all of the reimbursements and related expenses in order to deduct the unreimbursed portion of the expense. You may also have driven other miles that were not reimbursed by the state at all. L.A.R.S. 24:31:1 provides Louisiana legislative members with a mileage allowance for trips to and from the State Capitol during legislative sessions, based on the standard mileage rate under IRC §162(a). The regulations under IRC §274 provide that gross income does not include automobile reimbursements to employees which are provided under a mileage reimbursement plan and are based on mileage rates that do not exceed the rate allowed by the IRS, provided that the expenses be substantiated. For these purposes, a mileage reimbursement plan is an accountable reimbursement plan that meets the requirements of an accountable plan under IRC §62(c) (See Rev. Proc. 96-63). IRC §1.62-2(c) states that an accountable plan must meet the following three requirements:

1. The reimbursement under the plan must be for expenses incurred by the employee in connection with his performance of services as an employee of the employer.

2. The expenses must be substantiated; and

3. Amounts reimbursed in excess of actual expenses must be returned to the employer.

For purposes of a mileage reimbursement plan, the amount of actual expenses incurred is equal to the lesser of (1) the amount paid under the plan, or (2) the standard mileage rate multiplied by the number of miles substantiated by the employee.

Q. If I itemize my automobile expenses one year, may I use the standard mileage rate the following year?

A. Yes, but within the following guidelines. The standard mileage election may be made yearly (not just

in the first year) if the car was depreciated using the straight-line method in the first year it was

placed in service.

Q. Must I maintain a complete log of all use of my auto in order to be able to deduct auto expense?

A. Adequate records or sufficient evidence are required to support auto expense deductions. Written evidence recorded close in time to the actual expense will be much stronger support than oral evidence or evidence recorded much later in time. (See “Recordkeeping” section.)

2014 income tax returns will ask the following questions, which should be answered (see Forms 2106

and 2106-EZ).

1. Date vehicle was placed in service. 2. Total mileage vehicle was used for 2014. 3. Total business miles for 2014.

4. Average daily round-trip commuting distance (miles) for 2014. 5. Miles vehicle was used for commuting for 2014.

6. Other personal mileage.

7. Do you or your spouse have another vehicle available for personal use? ❑ YES ❑ NO

8. Was your vehicle available for personal use during off-duty hours? ❑ YES ❑ NO

9. Do you have evidence to support your deduction? ❑ YES ❑ NO

If yes, is the evidence written? ❑ _YES ❑ _NO

Q. What is home equity indebtedness? How does this make personal interest on car loans deductible?

A. Home equity indebtedness is defined as all debt other than acquisition debt (debt incurred in

acquiring, constructing or substantially improving a qualified residence and secured by such residence) that is secured by a qualified residence to the extent it does not exceed the fair market

value of the residence reduced by any acquisition indebtedness. A qualified residence includes the principal residence of the taxpayer and one other residence (other than rental property) used by the taxpayer as a personal residence (for example, a vacation home). Acquisition indebtedness may not exceed $1 million, and home equity indebtedness may not exceed $100,000. Interest on home equity indebtedness is deductible even if the proceeds are used for personal expenditures (for

example, the purchase of an automobile). This may not be deductible for alternative minimum

LIvINg ExPENSES

MEALS AnD LODgIng

Q. What expenses may I deduct for meals and lodging while in Baton Rouge attending a

legislative session or committee meeting or performing general legislative duties?

A. During 1997, the Legislature voted to change the per diem rate from a flat amount to the reimbursement rate allowable for Baton Rouge for federal employees. This rate could change when the government (GSA) periodically reviews expenses of various locations. The federal per diem rate for Baton Rouge is based on the following schedule:

Per Diem Schedule

Per Diem Lodging Meals

10/1/14 – 9/30/15 $150 $94 $56

10/1/13 – 9/30/14 $153 $97 $56

Q. May I deduct the expense of meals I have purchased for constituents and other persons who

have come to Baton Rouge for a meeting involving legislative business?

A. Yes, the cost of meals paid by you is an allowable deduction, but only if directly related or associated with the active conduct of legislative business. Business must be discussed during the meal, or the meal must occur either before or after a substantial and bona fide business discussion. An exception to this would allow a deduction for your meal when you are traveling away from home and overnight on business even if you dine alone. In general, reimbursed meals will be 100 percent deductible but unreimbursed meals are only 50 percent deductible and subject to the adjusted gross income limitations discussed on Page 23. In support of the deduction you should secure a receipt for the amount paid by you with your notation showing the names of the persons present and the business discussed. Your personal meal may not be separately deductible if the per diem deduction allowance election is made by you. Also, you or your representative must be present at the meal in order to deduct the cost.

Q. Because we are in Baton Rouge for long periods of time, I find it necessary and desirable to

have my spouse and children come to Baton Rouge on occasion. May I deduct the cost of their travel to Baton Rouge and their expenses for motel and meals?

A. No, unless you can establish that your spouse’s presence served a bona fide business purpose. The spouse’s performance of some incidental service does not cause that spouse’s expenses to qualify as deductible business expenses. This same rule applies if your spouse accompanies you on a trip for a legislative conference.

Q. After some committee meetings that last late into the evening (until 11 or 12), I go out and grab

a sandwich or some refreshments. Is this a deductible business expense?

Q. While in Baton Rouge on certain special occasions, such as Independence Day, I will have a gathering for fellow legislators and other individuals connected with the Legislature. May I deduct the expense of this gathering as a business expense?

A. Entertainment expenses must meet the same “directly related” or “associated with” criteria as business meals to be deductible. Unreimbursed entertainment expenses are only 50 percent deductible subject to the adjusted gross income limitations discussed on Page 23. To establish a deduction for entertainment there must be a record of the cost, date of entertainment, place of entertainment, description of entertainment (if not apparent from the name of the place), the business purpose and the nature of the business benefit expected to be derived and the business relationship

(name, occupation, title) of the persons entertained. If there are a large number of people entertained

and they are readily identifiable as a class, you may record such class (e.g., senators) rather than all their names. Where the entertainment expense is incurred before or after a substantial business discussion, you must document the date and duration of the business discussion, the place, nature and business reason for the business discussion and the names of those who participated in the business discussion.

Q. Sometimes administrative assistants work long hours during the legislative session. If a fellow

legislator and I take them out to dinner or if we buy them candy, etc., would this be a deductible expense?

LIvINg ExPENSES

PER DIEM ALLOWAnCE

Q. May I elect to deduct a per diem amount for meals and lodging while in Baton Rouge attending

a legislative session, committee meeting, etc.?

A. Yes. For a legislator whose residence in his legislative district is more than 50 miles from the State Capitol building, an election may be made to treat this residence as his “tax home.” If the election is made, the legislator is deemed to have expended, for living expenses at the State Capitol, an amount equal to the greater of the daily per diem allowed federal employees for travel to Baton Rouge ($153 for travel on or after January 1, 2014 through September 30, 2014; $150 for travel on or after October 1, 2014 through September 30, 2015) or an amount allowable to state employees for travel to Baton Rouge (not in excess of 110% of the federal rate)

The state per diem rate for legislators now piggybacks the federal per diem reimbursement rate for each legislative day. A legislative day is defined, for purposes of the election, as any day on which the Legislature was in session including any day in which the Legislature wasn’t in session for a period of four consecutive days or less. A legislative day also includes a day the Legislature wasn’t in session, but the legislator’s physical presence was formally recorded at a meeting of a committee of the Legislature. A committee of the Legislature is any group that includes one or more legislators and

is charged with conducting the business of the Legislature. It also includes committees the Legislature authorized to conduct inquiries into matters of public concern.

If a state legislator makes the IRC §162(h) election to deduct a per diem amount for lodging and meals, the amount allowable as a deduction for travel expenses away from home must be allocated in accordance with the ratio of meals and lodging under the federal per diem reimbursement rules applicable to Baton Rouge at the end of year. For this purpose, the amount allowable for meals is the federal per diem for meals and incidentals ($56) reduced by $5 per day. This meal amount is then reduced by 50% to arrive at the deductible amount under §274(n). For example, the legislator would receive a deduction of $25.50 per day for meals [($56 – $5) x 50%]. In addition, he or she would receive a deduction of $97 ($153 – $56) per day per diem for lodging before October 1, 2014 and $94 ($150 – $56) for lodging after September 30, 2014.

Deductible living expenses include meals, lodging and related incidental expenses such as laundry and fees and tips for services (e.g., those given to waiters and baggage handlers). Not included are travel fares, telegrams, telephone expense or local transportation (e.g., taxicabs) for business. Amounts not treated as living expenses are deductible as travel expenses in addition to the elected per diem amount.

The per diem allowance paid by the state is reported on Form W-2 as part of your salary and is not treated as travel reimbursement.

STATE LEgISLATOR’S

ELECTIOn TO TREAT RESIDEnCE AS TAx HOME

If taxpayers travel away from their “home” in pursuit of a trade or business, travel expenses may be deductible. For tax purposes, travel expenses are ordinary and necessary expenses of traveling away from home for business. An individual’s “home” for tax purposes is his place of business, employment, station, post of duty, even though his family residence is located in a different place.

A state legislator would normally not be able to deduct expenses for travel away from home during the legislative session because the state capitol would be considered his principal place of business. However, an individual who is a state legislator at any time during the taxable year can make an election for tax purposes to treat his place of residence within his legislative district to be considered his home for tax purposes. He will thus be considered to be away from home on any day that the legislature is in session or on any day when the legislature is not in session but the legislator’s presence is formally recorded at a committee meeting. The election is available to a legislator if his residence is (1) within his legislative district and (2) is more than 50 miles away from the state Capitol building.

How to make the election:

The election to treat a legislator’s place of residence within his legislative district to be considered his tax home for tax purposes must be made by the due date (taking into account extensions) of the tax return for the tax year at issue. The election is made by attaching a statement to the return that:

(1) contains the taxpayer’s name, address and TIN;

(2) identifies the election;

(3) indicates that the election is being made under Internal Revenue Code Section 162(h); (4) specifies the period for which the election is being made; and

(5) contains any information required by the Internal Revenue Code or necessary to show that the taxpayer is entitled to make the election.

Authorities: Internal Revenue Code Section 162(h) and Treasury Regulation Section 301.9100-4T

STATE LEGISLATOR’S ELECTION TO TREAT RESIDENCE AS TAX HOME

120 Somewhere Street

Nowhere Near Baton Rouge, Louisiana 70433 Social Security No.: 123-45-6789

HEALTH

INSuRANCE

TAxATIOn OF HEALTH InSuRAnCE PREMIuMS PAID By THE STATE

Q. Are health insurance premiums paid by the state on my behalf taxable to me?

A. LA R.S. 42:851 provides that state employees are eligible for health insurance coverage. The state’s legal staff determined that elected officials may choose to participate in the State Employees Group Benefits Program or another health insurance program available to employees, under which the premiums are paid as provided by law.

Because the premiums would be paid directly to the insurer (and not to the official to remit to the

insurer), the premium payments would not be included in the gross income of the employee. Similarly, these amounts would not be subject to federal income or employment taxes (IRC §3121(a)(2)).

Q. Do health insurance plans offered by the State Employees group Benefits Program meet

the definition of "minimum essential coverage" under the Affordable Care Act in order to avoid paying a penalty for not having health insurance coverage?

A. Yes, for 2014 and 2015 these plans do meet the requirements of "minimum essential coverage".

OFFICE

ExPENSES

Q. The Legislature provides both a $500 monthly allowance and a $1,500 monthly supplemental

allowance for home district office expenses and a $500 (unvouchered) monthly expense allowance. How do these amounts affect my taxable income and my deductions for expenses incurred on my personal income tax return?

A. First, the home district office reimbursement is for rental of office space in a building located in the parish the member represents and other costs of maintaining a district office. Each legislator must file an itemized statement of expenses including supporting invoices or receipts for each month, prior to receiving reimbursement of actual expenses. It cannot be used for home office expenses in the legislator’s residence or in any other property owned wholly or in part by the legislator or a member of the legislator's family.

Rents, utilities, maintenance and other office expenses incurred exceeding the reimbursed amounts are deductible on Form 2106. These expenses are subject to the adjusted gross income limitations discussed on page 23.

Second, the unvouchered expense allowance of $500 per month is subject to withholding and income taxes and is included in income as Form W-2 wages. It is paid to each member for undesignated expenses incurred in connection with the holding or conduct of their office.

Q. May I deduct any cost of my home as a business expense?

A. Deductions for office-in-home expenses are subject to strict limitations. In general, unless you can show that deductions claimed for the cost of a home office (other than those deductions allowed to

everyone, such as home mortgage interest and real estate taxes) are allocable to a portion of your

home that is exclusively used on a regular basis as a principal place of business, the deductions will be disallowed (i.e., if you maintain a downtown office in your home district in which you conduct your

Exclusive use means the use of a specific part of the home solely for the purpose of carrying on a trade or business or for meeting with business clients. Regular basis means the home office is used on a continuing basis as a principal place of business or for meeting with business clients

(occasional or incidental use will not suffice).

Home office expenses may not be used to reduce taxable income from the activity to less than zero

(i.e., to create a loss). Any unused home office expenses are available for carryover to the succeeding

year, subject to the taxable income limitation discussed above. The allowable deduction is computed on Form 8829. As the home office deduction is a miscellaneous itemized deduction, it will also be subject to the adjusted gross income limitations discussed on Page 23.

Q. Assuming that the above-mentioned requirements are met, specifically what may I deduct as a

home office expense?

A. Deductible expenses include a pro-rata share of rent or depreciation, utilities, home mortgage interest, insurance, security system monitoring and real estate taxes. The cost of repairs that do not benefit the room used as a home office are not deductible, but the cost of repairs to that room are deductible in full. Expenses of lawn care and landscaping are not deductible. Personal household expenses are not deductible. The allocation of expenses is determined by dividing the area exclusively used for business by the total area of the home. Depreciation is computed on the lower of the adjusted cost basis of your home or its fair market value at the time you begin using the home office.

Starting with the 2013 tax year, a simplified option of computing the home office deduction has been created by the Internal Revenue Service. This simplified method reduces the paperwork and

recordkeeping required by taxpayers. This optional method allows a deduction capped at $1,500 per year, based on $5 per square foot for a home office, up to 300 square feet. Current restrictions on the use of the home office deduction still apply.

Your deductions for office-in-home expenses cannot exceed the gross income derived from business use for the taxable year reduced by expenses that are otherwise deductible (i.e., home mortgage interest,

real estate taxes on the home and business expenses unrelated to the home such as office supplies).

Q. Does deducting office-in-home expenses affect me when I sell the house?

A. Office-in-home can impact how gain on the sale is reported and taxed when the house is sold. The general rule is that up to $250,000 ($500,000 for joint returns) of the gain from the sale of a principal residence may be excluded from your income except for gain recognized to the extent of any depreciation taken after May 7, 1997. No allocation of the exclusion is required between a home office and the remainder of a principal residence as long as the home office is located within the principal residence. However, the gain that is eligible for the exclusion must first be reduced by any depreciation taken after May 6, 1997 and the depreciation must be recognized as unrecaptured section 1250 gain.

Q. If I have a legislative assistant in my home district to whom I pay a token amount each month

for work not related to the assistant's job duties from my private funds, am I required to go through the process of filing payroll tax returns and withholding payroll taxes?

AdvERTISINg

Q. Because I am a member of the Louisiana Legislature, I am often called upon to pay for ads in

trade journals, programs or magazines published by various organizations in my district. May I deduct the cost of these ads when paid with personal funds?

A. Holders of public office are generally allowed to deduct all ordinary and necessary expenses incurred in carrying on their duties in that office. If you pay for the ads personally and they are necessary to maintain relations with your constituency or to promote your name (which is necessary to you as an

elected official to make people aware of who you are), such expenditures may be deducted as a

business expense. They are, however, subject to the adjusted gross income limitations applicable to miscellaneous itemized deductions. During a re-election campaign period, exclude the costs of these ads from your tax deductible items (campaign expenses are not deductible). During the campaign, these expenses should be paid from campaign contributions, which are kept separate from your personal funds.

Q. As a member of the Louisiana Legislature, I am requested (and required, in effect, because of

my position) to attend many dinners within my district. May I deduct the cost of these dinners?

A. You may be able to deduct these costs if you pay for your dinner. Additionally, any incidental costs incurred to attend such dinners (travel expenses, parking fees, etc.) are also deductible. Remember, you must document not only the amount of the expenses incurred, but also the business relationship

(who, why, when, where). The burden of proof for the deduction is on you, the taxpayer. For dinners

that are deductible, only 50 percent of the cost may be deducted, and the deductible portion is subject to the adjusted gross income limitations discussed on Page 23. Remember also that if the dinner is one where the proceeds go to a political party or candidate, it is not deductible.

Q. I buy calendars, pens and similar items with my address and phone number on them. I pass

these items out to my constituency as a means of notifying the people that I am their legislator and that they may contact me should the need arise. May I deduct such items?

ENTERTAINmENT

AnD BuSInESS MEAL ExPEnSES

Q. I am required to meet with a constituent regarding a state problem. We meet for breakfast,

lunch or dinner, and I pay for his meal. May I deduct this as a tax expense?

A. The law provides that meal expenses (like other entertainment expenses) are not deductible unless (a) they are directly related to the active conduct of your trade or business (as a state legislator) or (b) they directly precede or follow a substantial business discussion associated with the active conduct of your trade or business. Thus, no deduction is allowed unless business is discussed during, directly before or directly after the meal (an exception: the cost of your own meal if you are

traveling on business). Moreover, you or your representative must be present at the meal. Meal

expenses may not be deducted to the extent the meal is lavish or extravagant.

Only 50 percent of any otherwise deductible expense for business meals or entertainment is allowable as a business deduction. So, if you spend $100 for a business meal that meets the other deduction requirements, the amount that may be claimed as a business deduction is $50 (which is

further subject to the adjusted gross income limitations discussed on Page 23).

In order to claim any deduction, a taxpayer must be able to prove that the expense was in fact incurred. A meal expense, which is deemed by the IRS as particularly susceptible to abuse, must generally be sustained as to (1) amount, (2) time and place, and (3) business purpose. Receipts must be retained for any expenditure of $75 or more.

You generally cannot deduct the cost of meal expenses for your spouse or for the spouse of a constituent. However, you can deduct these costs if you can show that you had a clear business purpose for providing the meals.

Q. Because of my position in the community, I occasionally will entertain other elected officials such as city councilmen and mayors. I may also entertain congressmen. This entertainment is primarily for the purpose of maintaining communications with these officials, exploring each other’s problems and determining common solutions. May I deduct this expense?

TELEPHONE

AnD OTHER ExPEnSES

Q. May I deduct the cost of my home telephone since I use the telephone for calling and receiving

calls from constituents and for conducting other state business?

A. The basic cost of local services for the first telephone line is considered personal and would not be a deductible expense, even if the line is used solely for business or legislative purposes. If you have a separate telephone installed exclusively for the purpose of your legislative business, then the entire cost of this telephone may be deducted as a business expense. If this second or other line is used partly for business, then the deduction is allowed to the extent of the business portion. Charges for optional services such as call waiting, call forwarding, speed or three-way calling or extra directory listings are allowable, assuming that business purpose is established. If you are a senator, to the extent your telephone expense is paid by the state, no deduction would be available.

The cost of unreimbursed long distance telephone calls that relate to state business is a deductible expense. The unreimbursed cost of an answering service is also a deductible expense when it is directly related to your position as a member of the Legislature. Further, the cost of a telephone answering machine is a deductible business expense under the same conditions.

Since the state reimburses you for office expenses on a vouchered basis, all of these expenses would be deductible only to the extent that they were not reimbursed by the state. Also, they are considered miscellaneous itemized deductions subject to the adjusted gross income limitations previously discussed.

Q. Can I deduct the cost of my cell phone or PDA?

A. The portion of the monthly cost that is specifically related to your position in the Legislature can be deducted as a miscellaneous itemized deduction, similar to the other miscellaneous deductions that have already been discussed in this section. For example, if the monthly cost of operating the cell phone is $60 and you used the phone 75% of the time for business, then your deduction will be $45 ($60 x 75%). You should have documentation to support the business percentage that is used. The business percentage might change from month to month, so keeping records will be important. To help you document your deduction, request the cell phone service provider include a detailed list of all the calls that were made using the phone each month.

Also, you can deduct the cost of buying the cell phone. Only the business use portion can be deducted. For example, if the cell phone cost $250 and your records indicate that you need it 80% for Legislative purposes, then your deduction would be $200 ($250 x 80%). To obtain the deduction for the cost of the cell phone, use Form 4562, which is the form used to report depreciation. You can elect to use the provisions of Section 179 and thereby deduct the entire portion in the year of purchase, or you can elect to depreciate the business portion of the phone’s cost over 5 years. The amount of depreciation expense is also considered a miscellaneous type deduction.

Q. What other expenses may I deduct on my personal tax return?

A. There are many other expenses you may incur as a result of your position as a member of the Legislature. Some of these expenses may include the following, which are tax deductible as miscellaneous itemized deductions if not reimbursed by the state:

2. Any other supplies, such as pens, paper clips, pencils, etc., that are necessary to maintain your office and serve your constituency.

3. Dues to organizations you normally would not belong to before becoming a member of the Legislature (to which you now belong as a matter of policy and to which your participation is

instrumental to your functions as a legislator) are deductible expenses. Examples would be dues

to civic organizations in your community. Dues to organizations you normally are a member of may be partially deductible to the extent you can show a direct business use and purpose. No deduction is permitted for club dues. This rule applies to many types of club dues, including

social, country, sports, luncheon, etc. Dues to civic clubs and chambers of commerce are deductible. Business related meals and entertainment expenses incurred at a club are deductible up to the 50 percent standard.

4. Newspapers and magazines – the cost of obtaining additional publications because of your position as a state legislator, such as special weekly papers in your district and special

publications relating to politics of state or related areas of government, are deductible expenses. 5. The cost of Christmas cards sent to district leaders and leaders in the community is a form of

advertising expense that is directly related to your business as a member of the Legislature. If you buy special Christmas cards that are mailed to people related to you in politics, this constitutes a tax deductible expense (cost of the cards, envelopes, postage and even family

photographs, if the photographs are included in the Christmas cards).

6. Cost of newsletters sent to constituents is a tax deductible expense unless paid from campaign funds.

7. The cost of furniture and fixtures purchased by the legislator and not reimbursed by the state may be deducted over time through a depreciation allowance.

8. Business gifts are deductible, up to $25 per recipient per year. Items clearly of an advertising nature that cost $4 or less are not included in the $25 business gift limitation.

Remember that all the above expenses are subject to the adjusted gross income limitations.

Q. Explain more fully the limitations on deductions for unreimbursed employee business expenses.

A. Unreimbursed employee business expenses are subject to two separate limitations.

First, miscellaneous itemized deductions (e.g., tax preparation fees, safe deposit box rentals,

unreimbursed employee business expenses) are deductible to the extent that these items, in the

aggregate, exceed 2 percent of adjusted gross income, and you are able to itemize.

Second, the overall deduction for all itemized deductions (except for the deductions for medical expense, investment interest, casualty losses and wagering losses to the extent of wagering gains) is further reduced by 3 percent of the excess of adjusted gross income in excess of $305,050 (married joint filers), $279,650 (heads of households), $254,200 (single filers), or $152,525 (married separate filers). These 2014 threshold amounts are adjusted annually for inflation. In no event will the reduction in these allowable itemized deductions exceed 80 percent. For 2015, the threshold amounts are projected to increase to $309,900, $284,050, $258,250, and $154,950, respectively.

You should note that this limitation applies to the deductions for home mortgage interest, state income taxes and charitable contributions, as well as employee business expenses.

PERSONAL FINANCIAL dISCLOSuRE

generally require the disclosure of certain specified information concerning income, employment, property, business associations, investments, liabilities, and transactions. Also required is disclosure of specified information, including value, regarding certain purchases or sales of immovable property, stocks, and other securities (subject to specific exceptions). Generally, except for amounts of income received from public sources and gaming interests, amounts are disclosed by category of value.

Q. How often do I have to file the report and what is the deadline for filing the report?

A. The financial disclosure report must be filed by May 15th each year the office is held and the year following the termination of the holding of the office. However, a legislator may file his or her financial disclosure statement within 30 days after filing his or her federal tax return for the year for which the report is filed, BUT ONLY IF he or she has timely filed for an extension for filing the federal income tax

return AND he or she notifies the Board of Ethics prior to the annual May 15 deadline of his or her intention to do so.

Q. Where can I find more information on financial disclosure reporting?

A. Financial disclosure forms and instructions and other information are made available by the Board of Ethics (http://www.ethics.la.gov).

CAmPAIgN

ExPENSES

ANd

CONTRIBuTIONS

Q. Are my campaign expenses deductible for tax purposes?

A. In 1962 Congress passed legislation that prohibits all deductions for expenditures in any political campaign by a candidate for public office.

A candidate’s campaign expenditures out of his own resources are not deductible as ordinary business expenses for income tax purposes. This is true even though a public office is defined as a trade or business. Additionally, these expenses may not be amortized as capital expenditures over the term of office.

Campaign expenses paid from a candidate’s private resources are considered non-deductible personal expenses regardless of the result of the election. Such expenses would include the cost of attending a political convention; contributions to the party that sponsored the candidacy; expenses of campaigning, travel and campaign advertising; expenses of successfully defending a contested election; filing fees; and the cost of legal fees paid in litigation over redistricting. However, once elected, an individual defending his right to elected office may deduct the expenses incurred in defending against a recall campaign.

Even though political office may be viewed as a stepping stone to some other business or profession, this is not enough to change the result. Thus, political campaign expenses are not deductible by a lawyer seeking election as a legislator in the hope that the exposure will build his professional practice. Even though a candidate feels that his professional reputation was damaged during a political campaign, he cannot deduct the cost of any defamation litigation for allegations published during the campaign.

Q. May I handle my campaign finances through my personal legislative office checking account?

A. No. The Louisiana Election Campaign Finance Disclosure Act requires that all candidates designate one or more state or national banks or state or federally chartered savings and loan associations or savings banks or state or federally charted credit unions as a campaign depository. In 1997 the Legislature passed Act No. 863 which allows campaign funds to be deposited in a money market mutual fund and designated as a campaign depository. Separate accounts should be maintained.

Q. Are campaign receipts and expenditures subject to Internal Revenue Service review?

A. Yes. However, the Internal Revenue Service has ruled that campaign contributions and political gifts used solely for the expenses of an election campaign or similar purpose are not taxable income to the candidate. Any contributions that are used for personal purposes must be included in the candidate’s taxable income. You should keep in mind that personal use of campaign funds is illegal under Louisiana law.

Q. Is it permissible to commingle political funds with personal funds?

Q. How are proceeds derived from fund-raising dinners or testimonial dinners accounted for? A. The accounting and reporting for dinner proceeds are the same as for campaign contributions.

Q. How should currency contributions be accounted for?

A. Currency contributions in excess of $100 are illegal. Receipts for currency contributions of $100 or less shall contain the name, address and social security number of the contributor and be signed by the contributor, and the candidate or campaign fund shall retain a copy and provide a copy to the contributor.

Q. Are contributions of property recorded in the same manner as cash?

A. Yes. The fair market value on the date of the contribution should be acknowledged as the amount of the contribution.

Q. Can my political campaign committee receive contributions from foreign nationals?

A. No. Act No. 1164 passed by the Legislature in 1997 prohibits contributions by any foreign government entity, foreign business entity not qualified to do business in Louisiana, or an individual not a resident of the United States and not a citizen of the United States.

Q. Are contributions to my campaign eligible for a political contributions credit or deductible as

itemized deductions on the individual contributor’s tax return?

A. No. There is no longer any provision for tax credit or deduction for campaign contributions.

Q. What type of expenditures may be paid from campaign contributions?

A. The general rule concerning the expenditure of campaign funds is that the funds must be expended for a use related to a political campaign or the holding of a public office.

Examples of expenditures properly payable from campaign contributions include: 1. Generally recognized campaign expenses.

2. Contributions to the national, state or local committee of the candidate’s party.

3. Reimbursements to the political candidate for out-of-pocket campaign expenses paid by him. However, all campaign expenditures should be made directly to the recipient on a check drawn on the account of the campaign.

An opinion issued by the Board of Ethics for Elected Officials acting as the Supervisory

Committee on Campaign Finance Disclosure provided additional guidance by permitting the following expenditures (Ethics Board Opinion No. 91-050):

1. Donations to bona fide charitable or governmental organizations such as churches, schools and civic organizations, as long as these types of expenditures are reasonable and customary.

2. The purchase or lease of telephone equipment provided the primary purpose is to facilitate the campaign or the holding of public office.

3. Payment of membership dues directly related to holding public office. Examples include the State Legislators’ National Conference, Common Cause, Public Affairs Research Council, etc.

4. Expenses of operating a district office. However, funds should not be used to compensate persons who would be considered public employees for the performance of duties and responsibilities of their public office or position.

6. Flowers for funerals or serious illnesses of constituents or graduation gifts to young people in the legislator’s district.

Expenditures for transporting electors to polling places for purposes of voting are strictly prohibited and subject to civil fines. However, a candidate may pay a bona fide bus, taxi, or transportation service, which holds a license or permit.

Q. What is the tax status of unexpended balances of political funds refunded to contributors?

A. Campaign funds may be refunded to all contributors on a pro-rata basis. For tax purposes, unexpended balances of political funds that are repaid to contributors are not considered to be either expended or diverted and, therefore, are not taxable income to the candidate or income to the original contributor.

Q. In what other ways may unexpended balances of political funds be disposed of without being

taxable to the candidate?

A. Unexpended balances of political funds may be contributed to or for the use of another political organization subject to the contribution limits; transferred to the general fund of the U.S. Treasury

or of any state or local government; or transferred to or for the use of an exempt public charity without being considered to be expended, diverted or taxable to the candidate. Alternatively, funds may be held in reasonable anticipation of being used for future campaign purposes without being considered a disposition.

Q. What reporting is required of a political committee, organization, association or fund formed

for the purpose of managing expenses of a candidate?

A. Such entity is considered an association taxable as a corporation and Form 1120-POL must be filed annually. The return is due on or before the fifteenth day of the third month after the end of the taxable year. The return must be filed with the Internal Revenue Service Center, Ogden, UT 84201. A political organization, other than a newsletter fund is not required to file Form 1120-POL if its taxable income before the specific deduction of $100 is $100 or less. (Newsletter funds cannot even claim the specific deduction of $100.) Political organizations that are not required to report certain information to the federal government or Louisiana generally must (1) file Form 8871 and send the IRS an electronic message within 24 hours of its formation, (2) report the organization’s contributions and expenditures to the IRS on Form 8872 (the frequency of these reports depends upon whether they are made during a federal election year) and (3) if the political organization has gross receipts of more than $25,000, it must annually file Form 990. Prior to the passage of P.L. 107-276 in October 2002, most state and local political organizations were also required to comply with these

requirements. The 2002 law, however, removed these reporting requirements for most state and local political organizations retroactively, specifically including candidates for state and local office in the state and local group.

If the campaign files Form 1120-POL, the campaign is also required to file a Louisiana corporate income tax return. If the campaign is incorporated, the campaign may have to pay a Louisiana franchise tax with the tax return.

Q. What items would be reported and subject to tax on the 1120-POL?

A. All receipts and expenditures not related to tax-exempt campaign activities must be reported on the 1120-POL. Generally, these types of receipts and expenditures relate to investment income such as dividends and capital gains or losses. As discussed in answers to previous questions, however, campaign receipts are not subject to tax. The Internal Revenue Code provides the campaign fund a $100 specific deduction against investment income, and the balance is taxed at the maximum federal corporate rate of 35 percent for state legislators. Estimated tax rules and alternative minimum tax do not apply to political organizations. For Louisiana income tax reporting, the state provides for no specific deduction and all investment income is subject to tax at the regular Louisiana corporate tax rates. If the campaign fund is considered to be incorporated, the Louisiana corporate franchise tax is also payable.

Q. What accounting records are required for political funds?

A. Detailed substantiating records should be kept by the political candidate or other custodian to enable the candidate to account accurately for the receipt and disbursement of political funds. Otherwise, receipts may be taxed on his individual return, whereas campaign expenses would be non-deductible. If political funds are commingled with the personal funds of the political candidate to render tracing or identification impractical, the political funds will be presumed to have been diverted to personal use at the time so commingled and as such would also be considered an illegal act under Louisiana law. Candidates should determine that their records are kept in a manner that will assure their compliance with the Louisiana Campaign Finance Disclosure Act, as previously enacted, and as amended by Act 994 of 1988 and Acts 294, 340 and 1208 of 2001 (La. R.S. 18:1505.2). Detailed contributions and expenditures by date are required to be submitted as part of the Candidate’s Report. Expenditures made by a public relations firm, advertising agency or agent for the campaign must be reported to the campaign, and the ultimate recipients of such expenditures must be submitted in the Report.

Q. What is the tax rule regarding presumption against unrestricted gifts?

A. The Internal Revenue Service will presume, in the absence of evidence to the contrary, that contributions to a political candidate are political funds that are not intended for the unrestricted personal use of such recipient. If, in fact, the funds were intended for the unrestricted personal use of the political candidate, he must be able to substantiate this claim.

Q. Are amounts paid by a contributor for advertising in a political publication tax deductible?

A. No. The Internal Revenue Code specifically bars any deduction for expenses of advertising in political programs or in any publication if any part of the proceeds directly or indirectly inures to the benefit of or for the use of a political party or candidate. If the political program or publication is not issued by the legislator but the ad supports the legislator, the cost of the ad should be considered an

“in-kind” contribution to the legislator, unless it qualifies as an independent expenditure.

Q. What are the maximum amounts that may be contributed to a legislator’s campaign per election?

Q. What expenditures are permissible in cash?

A. No expenditure in excess of $100 shall be made from a petty cash fund, and no expenditures for personal services shall be made from petty cash funds except for gratuities paid for the serving of food or drink.

Q. What are the reporting requirements for any loan made or received by a candidate?

A. The date and amount of each loan for campaign purposes made or received by the candidate to or from any person or political committee during the reporting period, together with the full name and address of the lender, of the recipient of the proceeds of the loan, and of any person who makes any type of security agreement binding himself or his property, directly or indirectly, for the repayment of all or any part of the loan must be reported. Generally, amounts reported originally as campaign contributions can not be later changed to loans.

Q. Besides foreign nationals, is there another group that cannot give political contributions to Louisiana candidates?

A. Persons substantially interested in the riverboat and land-based casino gaming industry are prohibited from contributing to candidates and committees supporting or opposing candidates. No one who only holds a license under the Video Draw Poker Devices Control Law is prohibited from making a

CONTRIBuTION

LImITS

ANd

CAmPAIgN REPORTINg dEAdLINES

Contribution Limits (R.S. 18:1505.2 H, K)

Contributions, in-kind contributions, loans, endorsements or guarantees on loans and transfers of funds are all counted towards the contribution limits. Cash contributions are limited to $100 and receipts must be given which include the name, address, social security number, and signature of the contributor.

Exception:

(1) A candidate’s personal funds are not subject to the limits. A candidate may not charge interest on personal loans to his campaign above the judicial interest rate (uncompounded) as of the date of the loan.

(2) Loans made in the ordinary course of business, on a basis which assures repayment, as the usual and customary interest rate from a state bank, a federally chartered depository institution, a depository institution with insured accounts, a licensed lender or an insurance company do not count towards the limits. However, a loan from such an institution shall be considered a “loan” by each endorser or guarantor in the proportion of their liability.

The contribution limits are detailed in the following chart:

1 _{The Primary and general elections are considered as two separate elections.}

2 _{A husband and wife may each make contributions to the same candidate up to the limit. However, separate checks should be used. If a single}

check is signed by one spouse, the other must provide an affidavit as to their intent to share in the contribution.

3 _{Includes legal entities owned wholly or partially by candidates, except Internal Revenue Code Subchapter S corporations and Limited Liability}

Companies wholly owned by the candidate. Parent corporations and their subsidiaries are subject to a single limit. A corporation is a parent if it owns over 50% of another corporation.

4 _{Candidates are also subject to an aggregate limit on the contributions they may accept from all PACS combined for both the primary and general}

elections. Those limits are: $80,000 – major office, $60,000 – district office and $20,000 – any other office.

5 _{A PAC with over 250 members who contributed over $50 to the PAC during the preceding calendar year and has been certified as meeting that} To a major office candidate or candidate committee per election2 To a district office candidate or candidate committee per election1 To any other office candidate or candidate committee per election1

To a PAC over any four year calendar period

Individual may give2 _{$ 5,000 $ 2,500 $ 1,000 $ 100,000}

Family Member of $ 5, 000 $ 2,500 $ 1,000 $ 100,000

Candidate may give

Democratic or Republican Party No limits No limits No limits No limits or Committees may give

Legal Entity may give2 _{$ 5,000 $ 2,500 $ 1,000 $ 100,000}

PAC may give4 _{$ 5,000 $ 2,500 $ 1,000 $ 5,000/}

$ 2,500/ $ 1,000

Big PAC5_{may give}4 _{$ 10,000 $ 5,000 $ 2,000 $ 10,000/}