Hillary Clinton used trading profits to cut taxes

April 13, 1994|By New York Times News Service

WASHINGTON -- The White House said yesterday that the Clintons used some of the profits from Hillary Rodham Clinton's lucrative commodity trades to make large interest payments on a real estate venture in the late 1970s as a way to reduce their income taxes.

Confirming parts of an account provided earlier in the day by James B. McDougal, the Clintons' business partner in the real estate venture, the Whitewater Development Co., the White House said the Clintons had pre-paid interest on the venture to lower their tax bill.

Using the money from trading profits to make interest payments is not illegal, and in fact, interest deductions are a common way for investors to reduce their tax liabilities.

Earlier in the day, Mr. McDougal said he had suggested the strategy to Mrs. Clinton when she sought advice on how to lower her tax bill from the commodity trades, which earned her nearly $100,000 in 1978-1979.

Mr. McDougal said Mrs. Clinton accelerated interest payments on loans of more than $200,000 taken out by the Clintons and Mr. McDougal and his wife to buy 230 acres in the Ozarks. By making the payment in 1979, Mrs. Clinton was able to claim a deduction that helped offset her profitable commodities trades that year, he said.

This latest account of the Clintons' finances virtually ensures that Robert B. Fiske Jr., the special prosecutor looking into Whitewater, will have to review the commodity transactions.

Mr. Fiske has been examining the circumstances surrounding Whitewater and whether the development company or Mr. Clinton's 1984 campaign for governor of Arkansas received improper payments from Madison Guaranty Savings and Loan. The Arkansas savings association, owned and operated by Mr. McDougal, was seized by federal regulators in 1989.

Mr. McDougal's account was provided to reporters at a news jTC conference yesterday in Little Rock, Ark., at which he offered for sale copies of 2,000 pages of Whitewater documents. Mr. McDougal said the records showed the Clintons had done nothing illegal in Whitewater.

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