Corzine-Katz and Taxes

Corzine forgave a loan to Katz. Outside of the obvious conflict of intrest issues there is the issue of income tax. When a person has a loan forgiven the person who is the beneficiary of the forgiven loan, in this case Katz, must report the amount as income. The IRS accounts for the amount as ordinary income. The party forgiving the loan needs to issue a 1099.

I figure that $470,000 plus a salary should put Katz into the 35% bracket. Between her federal and state obligations, assuming there were no mitigating circumstances, she should have paid roughly $173,000 in taxes on the $470,000.

Katz paid $361,850 to buy out her ex-husband leaving $108,000 over the amount. Corzines explanation of the $108,000 was "I think there were some repairs," link

I'd be willing to bet that the extra money was meant to cover the taxable portion of the transaction. What I'm wondering, though, is if Katz reported the income!