F.B.I. Investigating Complaint Against California Lawmaker [View All]

[brooklynite]

LOS ANGELES, Feb. 3 — The Federal Bureau of Investigation is investigating whether Representative Gary G. Miller, Republican of California, improperly used an unusual tax provision to avoid paying capital gains taxes on profits from land sales to California cities, law enforcement and government officials said.

Last summer, Citizens for Responsibility and Ethics in Washington, a watchdog group, filed a complaint with the Internal Revenue Service saying that Mr. Miller had failed to pay capital gains tax on the 2002 sale of 165 acres in Monrovia, Calif.

The complaint said Mr. Miller invoked a rarely used provision that allows tax deferment if the land that is sold is facing an eminent domain threat and the protected proceeds are reinvested within two years.

Mr. Miller, who would have faced about a 30 percent tax on the property under a normal sale, used the roughly $10 million in profits from the Monrovia sale to buy property in Fontana, Calif., from Lewis Operating Corp., one of his major campaign contributors, and then resold some of that land to the City of Fontana in 2005 and later in 2006.