Certain IRS rules may lighten bill for taxpayers

An Associated Press analysis has found that Illinois Gov. Rod Blagojevich, his family and guests have taken hundreds of flights that don't appear to have clear business purposes. The value of the flights could top $225,000, based on the cost of chartering private planes, and the amount could be added to the governor's income as a taxable, non-cash fringe benefit.

The governor's past two tax returns don't indicate that he has paid taxes on the flights, which might end up being $60,000. A Blagojevich spokeswoman says the trips were for legitimate business.

More coverage Stories Flying above IRS' radar? Study intentionally conservative Passengers: Who's on board? Certain IRS rules may lighten bill for taxpayers These tax laws may determine if governor's flights are taxable

There are Internal Revenue Service rules that could lighten any tax bill he may face:

bull; A "special valuation" discount for personal travel by executives. If it were applied to flights covered in the AP review, the governor would have had to pay taxes on an estimated $15,000 or less for the flights rather than a potential $60,000.

bull; A "50 percent" rule that allows executives to "hitchhike" on aircraft for personal use if the plane already is half-full of passengers declaring business.

The state aircraft were half full in about 45 percent of the Blagojevich flights the AP found may have been personal. But they were half full of the governor's employees. The rule wasn't designed to let a "control employee" such as Blagojevich fill the plane with subordinates to get around tax laws, experts said.