The $267,230 loan to Supreme Court Justice Clarence Thomas from a wealthy friend was forgiven after almost nine years, Senate Democrats have found, though he may not have paid anything on the principal. A report by Democratic members of the Senate Finance Committee says it's not clear how many payments on the interest Thomas made, either, before Anthony Welters pronounced the loan that enabled the justice to buy a 40-foot luxury motor coach satisfied in 2008, the New York Times reports. The handling of the loan could pose ethical and tax consequences for Thomas.
When he received the loan, Thomas said in a handwritten note on his Supreme Court letterhead that he agreed to pay interest of 7.5% a year and repay the money in five years, the report says. In 2004, the time to repay the loan was extended until 2014, per the AP. "This was, in short, a sweetheart deal" that made no sense as a business proposition, Michael Hamersley, a tax lawyer, told the Times. Even with those terms, Thomas didn't pay back a "significant portion" of the principal, and possibly not any of it, the report says.
The report notes that forgiven or canceled debt counts as income for tax purposes; Thomas has never included forgiven debt in his annual financial disclosures. "Justice Thomas should inform the committee exactly how much debt was forgiven and whether he properly reported the loan forgiveness on his tax returns and paid all taxes owed," Democratic Sen. Ron Wyden, chairman of the committee, said in a statement. Thomas did not immediately respond to requests for comment. (Thomas didn't report trips paid for by another wealthy benefactor, either.)
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