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CORRADINI’S IRS FORMS DETAIL ITEMS REPORTED, NOT REPORTED

SHARE CORRADINI’S IRS FORMS DETAIL ITEMS REPORTED, NOT REPORTED

Salt Lake Mayor Deedee Corradini did not report to the IRS a $43,000 European vacation paid for by Sallah, the Panamanian company she and her husband used to shelter their income from taxes.

Corradini, her husband, Yan Ross, and Corradini's children, took the three-week trip in July 1990. In a note to John Dunlop, she described the vacation as a "once in a lifetime" trip and said it had cost considerably more than the couple budgeted. She asked him to send her money immediately.Eight days later, Sallah sent Corradini $40,000 for "travel expenses," according to Sallah's records. Two months later, Sallah sent Corradini another $4,632 for "additional bank charges to date."

Sallah paid $43,440 for the Corradini and Ross family trip, according to court records.

But the couple did not report any travel or entertainment paid for by a third party on their 1990 tax return.

Corradini didn't report the income because much of the trip was business for Sallah, said Ken Connaughton, campaign spokesman for Corradini. The rest was a loan from Sallah that she intended to repay.

"She's said that up front from the beginning," he said.

That money was repaid when Corradini and Ross settled with Bonneville Pacific trustee Roger Segal for nearly $800,000.

The Deseret News hired tax attorney Rick Evans and certified public accountant Robert Burdette to examine the couple's returns for 1990, 1991 and 1992, along with the 1991 return of the couple's corporation, Rossidini.

Corradini and Ross reported to the IRS in 1990, 1991 and 1992 that they did not have any interest in or authority over a financial account in a foreign country. But Corradini owned 20 percent of Sallah during those years, and she and Ross had financial accounts with the company, according to court records. Sallah's bank accounts, in turn, were located in Switzerland.

If a taxpayer acknowledges an interest in a foreign account, they must file an additional tax form detailing the ownership and approximate account balance, said Evans.

"It's a substantial disclosure," said Burdette. If a taxpayer makes that disclosure "it may increase your risk of an audit," he said.

Corradini and Ross reported they didn't have such financial interest, on the advice of their accountant, Dallas Bradford, Con-naugh-ton said.

"She and her accountant both believe that that question on the tax return refers only to bank accounts. She didn't believe she had any bank accounts that fit that description, so she checked `no.' "

The tax returns were made public Monday evening after U.S. District Judge David Sam refused to stay a bankruptcy judge's order declaring the documents part of the court record.

Sam ruled that the couple had not provided any evidence regarding the "irreparable harm" they said would occur if the documents are released. Attorney Kim Wilson pleaded for at least a 72-hour stay while Corradini appealed Sam's ruling to the 10th Circuit Court of Appeals. Sam declined.

The 1990, 1991 and 1992 tax returns were released at 7:30 p.m. by Vernon Hopkinson, general counsel for Bonneville Pacific trustee Roger Segal.

The returns reveal that the couple has substantial debt and, largely because of interest payments, they pay very little in taxes. Their effective federal tax rate ranged from 7.4 percent to 11.6 percent for the three years.

The returns are the first of 7,100 pages of financial records to be made public over the next several days pursuant to U.S. Bankruptcy Judge John. H. Allen's order.

Corradini will not make a third attempt at an emergency stay to block the release of the documents. In fact, she may not appeal Allen's ruling at all, Connaughton said.

"She considers this an important principle. If you run for public office, every aspect of your family life should not be made public. But the decision on whether to appeal and spend more money to establish that principle hasn't been made."

Corradini doesn't think the release of the returns on the day of the primary election will make any difference, Connaughton said. "There is nothing in those documents that's harmful."

Evans and Burdette made it clear they were not auditing the returns. Nor could they determine if the information on the returns is truthful without seeing Corradini's and Ross' financial records.

But the two men explained many aspects of the returns, pointing out some discrepancies between the return and what court records disclosed about the couple's finances.

Ross and Corradini were paying nearly 50 percent of their income in interest payments on their debts, particularly mortgages, according to the returns.

The couple's adjusted gross income was $215,000 for 1990; $188,000 for 1991; and $200,000 for 1992. They paid more than $100,000 in 1990 in debt interest. Their lowest interest payment was $90,000.

The bulk of the interest payments - more than $50,000 a year - was not previously discussed by Corradini. Corradini said Sallah International held the mortgage on her home when she discussed her finances at a 1992 press conference. That note was approximately $230,000, according to court records.

Corradini and Ross paid Sallah $14,900 in interest in 1991 and 1992 on that mortgage.

But the returns identify additional mortgage interest payments of $66,089 in 1990; $52,199 in 1991 and $52,466 in 1992. Those interest payments suggest one or more additional mortgages estimated at approximately $500,000, Burdette figured.

In addition to approximately $67,000 in annual interest payments on residential mortgages, the couple also paid between $16,000 and $36,000 in interest during each of the three years on investments they have borrowed against. The couple's gains from their investments are offset by interest payments on what they borrowed. This means their net income from their investments is virtually zero for each of the three years, Evans and Burdette said.

Based on the mortgage and investment interest payments listed on the tax returns, Burdette estimated the couple's debt at $1.1 million.

The returns also show that Corradini received consulting fees from an unidentified source that were approximately the same amount as the interest payments she made to Sallah. For example, in 1990 she received $13,650 in consulting fees from an unidentified source. In 1991, she paid $14,900 in interest to Sallah.

In 1991, she received from an unidentified source a consulting fee of $14,400 and a director's fee of $600 for a total of $15,000. In 1992, she paid $14,900 in interest payments to Sallah.

She did not receive a consulting fee in 1992. Connaughton said he didn't know what the consulting fee was for or who she received it from.

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ADDITIONAL INFORMATION

Corradini income tax

DISCLOSURE 1990-1992

1992 1991 1990

Adjusted gross income $200,413 $187,506 $214,896

Federal income tax $23,436 $15,575 $15,800

EFFECTIVE FEDERAL TAX RATE 11.7% 8.3% 7.4%

Self employment tax (FICA) $5,329 $4,981 $3,924

State income tax N/A $4,845 $5,243