Petrino payment raises gift tax question UPDATE | Arkansas Blog

Wednesday, April 11, 2012

Petrino payment raises gift tax question UPDATE

Posted By on Wed, Apr 11, 2012 at 6:03 AM

NOTED: The Petrino affair has been given the Taiwanese cartoon re-creation treatment. Now, to return to our programming ....

A reader asks about the federal gift tax, required whenever someone gives a cash gift of more than $13,000 and doesn't receive something of equal value in return. IRS rules here.

It was reported that fired Razorback football coach Bobby Petrino gave his girlfriend Jessica Dorrell $20,000 in addition to hiring her for $55,735 as a football staff member. Is a gift tax filing required by Petrino? Good question.

UPDATE: A source close to the situation gives me some background to consider. First, doubts are expressed whether Petrino or Dorrell, right or wrong, ever gave a thought to the federal tax code. I can believe that.

Petrino, in a vague reference in his prepared statement last night to differences with Jeff Long's version of events, might have been referring to the fact that Jeff Long mentioned the cash gift, but wouldn't provide more details about it. I'm led to understand it was a Christmas gift, made before an intimate relationship ended, and thus arguably couldn't be linked to subsequent employment. It was not, as Long has said, public money.

I can't swear to this information. But circumstances — Long's strong assertion that, while he was sure Petrino gave Dorrell the cash gift, he was also sure it didn't violate any NCAA rules limiting unreported payments to staff — provide some evidence that it might be somewhere near the truth.

The $20,000, in short, may or may not be relevant to Long's decision to fire Petrino. But it certainly blew the fan base up. It dominates the sports talk I've been listening to on the radio this morning. It appears to have unified the base behind Long, irrelevant or not. His hiring of Dorrell given a past relationship, of course, remains completely relevant. The big pending question for the coach, should he ever take questions, is why the cycle ride, if the relationship was indeed over?

FULL DISCLOSURE: Let me get out of the way here my column written for press deadline before Jeff Long's news conference that I expected Petrino to be retained. I at least identified the sore points that proved Petrino's undoing. And I was in the dark then about that $20,000 love offering. But still. I was wrong.

PS — The accolades are pouring in for Jeff Long and the University of Arkansas. One good example in the Commercial Appeal.

And the national press isn't through kicking Bobby Petrino around, as here on ESPN. I don't think you can entirely discount his personal unpopularity in the decision process.

PPS — Petrino, though not arguing with Long at the moment, nonetheless hinted in his statement at ways he could contest his firing without severance. He'd have to begin by arguing that his relationship was over and immaterial in the hiring of Dorrell (and then try to explain the post-hiring motorcycle ride he tried to keep secret). The $20,000 doesn't immediately appear to be a legal issue for him, though it certainly demonstrates the depth of his relationship, at least last December. Here's the procedure by which Petrino could start an appeal. It could be expected to fail at the university and then proceed to court, should he choose.

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