This was a popular topic last summer. One poster in particular was quite sure that Hastert's victim was actually an extortionist and should be in jail with him.

That's what Hastert told the feds when they confronted him. So the FBI and Federal prosecutors listened to several calls Hastert made to the victim. Their conclusion, no blackmail, no extortion. No threats to reveal his secret. The victim was sympathetic to Hastert's request that it would take time to collect more money. In fact the victim, he was 14 at the time of the abuse, wanted to involve attorneys to make sure every I was dotted and T crossed correctly. Hastert didn't want to do that.

The victim is suing Hastert for the rest of his settlement.

Important lesson, asking for compensation for damages you have incurred, because of illicit behavior, is not extortion. Threatening  to expose illicit behavior that damaged you can be.

Hastert will lose his teachers pension, but gets to keep his state of Illinois and Federal one.  

No links, a million stories out there.

The case would have been so much harder to prove, and he wouldn't have the lying to police rap either.

Plus, there is no point in structuring cash withdrawals.  It's you money.  Take it all out at once in pennies if you want

Pay special attention to the 11th paragraph down.

If LE comes to question you, just ask for a lawyer and do not give out any information except for your name and address.

If you look at nearly any article in the newspaper about a crime, over half the time the defendant's own statement constitute a major portion of the evidence used against that person.

-- Modified on 4/29/2016 9:29:14 AM

It's always fun when someone throws my name out there.  LIke Beetlejuice, I try to appear on demand, lol.  If one goes back & reads the original thread (link below), I was skeptical that Hastert's extortionist (and he is an extortionist) would see prison time. But as you noted, the extortionist was smart enough to avoid making explicit threats while under surveillance.  

 But I believe our dispute was tax liability for the millions of dollars in extortion payments (or as you'd put it, 'settlement money', lol)  From IRS.gov:    

 "...amounts received for emotional distress in satisfaction of such a claim are not excludable from gross income under section 104(a)(2), except to the extent they are damages paid for medical care…only compensation for out-of-pocket amounts for medical costs incurred to treat any emotional distress claims would be excludable from income if not previously deducted (IRC §§ 111 and 213). All punitive damages received pursuant to these types of claims are taxable."  

 So there you go.  Whether the IRS actually prosecutes this individual is uncertain.  But I hope so.  As I've always stated, both Hastert & his extortionist deserve prison time.  But people don't always get what they deserve.  --

In which case there would be no tax due from the receiver, though Hastert could be on the hook for the gift tax

IMO: the millions of dollars that  flowed from Hastert to the victim over the years may be reasonably described in one of two ways :

1) Extortion money Hastert paid in exchange for the victim's silence (my view)

2)  A financial settlement from Hastert to the victim in exchange for non-disclosure.  

 Either way, Hastert was buying silence to protect his career & reputation.  

Now let's consider the IRS definition of 'Gift', which is the only definition that matters here:  
"Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return."

 The idea that this was a gift, freely given by Hastert with no thought of consideration, distorts the concept of 'gift' to where it no longer has meaning.  Think of how high Hastert climbed, and how great his fall would be if this information ever came to light. From House Speaker to Pedophile.  For Hastert, there was plenty of "consideration" here while money was changing hands.  

 To argue that this money was a 'gift' would raise the eyebrows of any IRS auditor or judge.  --

Punitive damages.

The IRS regs for actual damages are very different. I am unaware of any trial that awarded punitive damages to the victim.

You left out number 3. A settlement for damages that were done to the victim by Hastert.

Edit to add: The victim is suing Hastert for the remainder of his settlement. I doubt he would be doing that if he was on anything but solid legal ground.

-- Modified on 5/4/2016 10:07:47 AM

-- Modified on 5/4/2016 10:54:19 AM

 
 It's interesting that you don't know what 'punitive' means.  The IRS passage I quoted addressed:  
 
1. emotional distress (compensatory damage that's  taxable)
2.  medical costs (compensatory damage that's non-taxable)
3.  punitive damages (taxable).    No, they're not.  You're unable to cite anything to support your arguments.  In this thread & the original thread, I've cited & linked to the NY Times, LA Times, Politico, and IRS.gov.  You haven't produced one shred of evidence to support any of your assertions.  But I've linked to the relevant IRS doc below.  I'm sure you'll find something in there to argue.  As my logic professor used to say, "Even a blind chicken eventually finds a grain of corn."    You're just restating #2 with the word 'damages'.  Everyone on the board (with the exception of you) understands that a victim has been 'damaged' in some way.   Dear God.    You actually edited your post just to add the naive statement above.  Just because someone files a lawsuit, that has no bearing on the legal merits of their case.  --

Lets see what the IRS has to say...

 
Settlements — Taxability
If you receive proceeds from settlement of a lawsuit, you may have questions about whether you must include the proceeds in your income. This publication provides information about whether you must include the proceeds of certain kinds of settlements in your income. Whether you must include the settlement proceeds in your income depends on all the facts and circumstances in your case.
A settlement payment may consist of multiple elements that have been allocated by the parties. For example, an agreement may include allocations to back pay, emotional distress, and attorneys’ fees. Generally, the IRS will not disturb an allocation if it is consistent with the substance of the settled claims.

Personal physical injuries or physical sickness

• If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable. Do not include the settlement proceeds in your income.

Physical injuries suffered by being sexually abused by an authority figure.  

BUT

• If you receive a settlement for personal physical injuries or physical sickness, you must include in income that portion of the settlement that is for medical expenses you deducted in any prior year(s) to the extent the deduction(s) provided a tax benefit. If part of the proceeds is for medical expenses you paid in more than one year, you must allocate on a pro rata basis the part of the proceeds for medical expenses to each of the years you paid medical expenses. See Recoveries in Publication 525 for details on how to calculate the amount to report. The tax benefit amount should be reported as “Other Income” on line 21 of Form 1040.
Emotional distress or mental anguish

• The proceeds you receive for emotional distress or mental anguish originating from a personal physical injury or physical sickness are treated the same as proceeds received for Personal physical injuries or physical sickness above.

Emotional distress that a 14 year old would suffer after being abused by an adult authority figure is the basis of my position. Compensatory damages paid to the victim for the negative impact his actions had on his life. As mentioned above non-taxable unless you have taken a deduction.

 
BUT
• If the proceeds you receive for emotional distress or mental anguish do not originate from a personal physical injury or physical sickness, you must include them in your income. However, the amount you must include is reduced by: (1) amounts paid for medical expenses attributable to emotional distress or mental anguish not previously deducted and (2) previously deducted medical expenses for such distress and anguish that did not provide a tax benefit. Attach to your return a statement showing
the entire settlement amount less related medical costs not previously deducted and medical costs deducted for which there was no tax benefit. The net taxable amount should be reported as “Other Income” on line 21 of Form 1040.
Publication 4345 (Rev. 4-2015) Catalog Number 38586D Department of the Treasury Internal Revenue Service www.irs.gov

Speaking of punitive:

Punitive Damages: Punitive damages are taxable and should be reported as “Other Income” on line 21 of Form 1040, even if the punitive damages were received in a settlement for personal physical injuries or physical sickness.

I agree with you punitive damages are taxable. I'm unaware if any punitive damages being awarded in this case.

You can call me naive if you want. Hastert turned the full force and power of the US government, FBI and Justice on the victim. It didn't work for him. IMHO the victim is on solid ground, from a legal and tax liability perspective.

Cheers....

 

 
 

t's rather comical, what you did: you copy/pasted large sections of IRS code, then slipped in you own editorial comments without trying to distinguish between the two.  

 As I already pointed out, comp damage awards for physical injury is non-taxable; comp damage awards for emotional distress is taxable (except for medical treatment).  That's a potentially serious tax liability for Hastert's victim/extortionist.  

 So here's what you do:  you copy/paste the IRS code regarding comp damage awards for physical injury. Then you add this little nugget at the bottom of the passage:    
 What a ridiculous statement. As bad a Hastert's behavior was,  there was absolutely no physical injuries reported in this case.  You can't make stuff up and insert it into the tax code.  Not only is that dishonest, it's also idiotic.   --z

I should have done a better job of making it known that was my thought. You got me on that one, even though it wasn't my intent. My apology for that.

To be clear this is my opinion:

Still doesn't change my opinion. Hastert's physical actions, performing sex acts on him, hurt the victim. That leads to the emotional distress/mental anguish claim and IMHO no claim for taxes. We will see what happens.

Yet to be clear this is from the IRS:

"Emotional distress or mental anguish
• The proceeds you receive for emotional distress or mental anguish originating from a personal physical injury or physical sickness are treated the same as proceeds received for Personal physical injuries or physical sickness above.
BUT
• If the proceeds you receive for emotional distress or mental anguish do not originate from a personal physical injury or physical sickness, you must include them in your income. However, the amount you must include is reduced by: (1) amounts paid for medical expenses attributable to emotional distress or mental anguish not previously deducted and (2) previously deducted medical expenses for such distress and anguish that did not provide a tax benefit. Attach to your return a statement showing
the entire settlement amount less related medical costs not previously deducted and medical costs deducted for which there was no tax benefit. The net taxable amount should be reported as “Other Income” on line 21 of Form 1040."

You and I will never agree. I'm in the Chicago area and the case has a lot of coverage. If anything, either way, comes of this I will post it.