First, time for some tax accounting! Yes, this is how the Son of BOSS tax shelter works for cheating on one’s taxes:
- Tax shelter promoter sets up two companies, Company A and Company B and funds each company with $50. Company A buys a briefcase for the $50.
- Client comes to promoter and says, “I have a $1.0 million capital gain.”
- Promoter says, “No problem, I can eliminate that gain for you by generating a $1.0 million loss to offset your gain.” Promoter devises the following plan:
- Client purchases the $50 briefcase from Company A by paying Company A $1,000,050!
- Client pays $50 in cash. In addition (here’s the tax shelter part), Client “pays” another $1.0 million by signing a promissory note (a promise to pay) payable to Company A for $1.0 million in 30 years . For tax purposes, Client purchased the briefcase for the cash payment and the promissory note, so the tax cost for Client’s briefcase is $1,000,050.
- Client then sells the briefcase to Company B for $50. Thus, economically, Client is made whole; Client paid $50 for the briefcase and sold the briefcase for $50. However, Client’s tax basis in the briefcase was $1,000,050 and by selling the briefcase for $50, Client incurred a $1.0 million loss! That loss will then be used to offset Client’s $1.0 million capital gain, effectively zeroing out his tax liability.
- Assume that Company B then sold the briefcase back to Company A for $50. Promoter is ready for his next client now that Company A has the briefcase and Company B has $50, and the pattern can be repeated.
Guess who tried to carry this off? Why Mitt Romney in the 1990s, that’s who. Mr Romney was brought in to head Marriott’s audit committee:
In his key role as chairman of the Marriott board’s audit committee, Romney approved the firm’s reporting of fictional tax losses exceeding $70 million generated by its Son of Boss transaction.
So let’s look again at a man who likes to use technicalities and reread this carefully constructed sentence:
I have paid taxes every year, and a lot of taxes, so Harry is wrong.
What taxes were they exactly? He didn’t say federal taxes did he?
This guy is nothing more than a sleazebag with an honest face.
Discuss
58 Comments . Leave a comment below.http://www.bloomberg.com/news/2012-02-22/romney-as-auditing-chairman-saw-marriott-son-of-boss-tax-shelter-defy-irs.html
Mitt Romney would disclose his tax returns if he thought he could without jeopardizing his election. Harry Reid has exploited Mr. Romney’s Achilles heel — the only way to effectively rebut Mr. Reid’s assertions is to release the returns, and so ratcheting up the attacks on Mr. Reid (as the GOP has done) only strengthens the calls for Mr. Romney to release the returns. Yet by not rebutting Mr. Reid’s attacks, their substance stands.
Pieces such as this point the way towards the most likely explanation — Mitt Romney carefully structured his financial affairs to earn and keep a boatload of money, and used tactics that were both absolutely legal and absolutely abhorrent to most voters.
We’ve only seen the beginning of this, it’s still early August.
This device was illegal, and, at the time, the head of the Audit Committee brought in for his expertise, Mr. W. M. Romney, knew that.
That makes Reid a hatchet man. I suppose he might as well be useful for something. It is certainly an underhanded tactic, though effective for exactly the reason you assert.
I doubt that the actual planning method used was illegal; legal methods of tax avoidance work just fine. But the legality of the method would not alter the public perception of it.
Yup, I think Harry Reid is the hatchet man. Even if Mr. Romney releases his returns and they show that he did, in fact, pay taxes, Mr. Reid can shrug and say “I reported what my source said; my source must have been mistaken”. The damage is, nevertheless, done.
“Underhanded”? Perhaps. I think we agree that most voters reject this kind of behavior in a presidential candidate. More importantly, in my view most voters will conclude that the very fact that this skullduggery is legal is as bad or worse than the acts themselves.
Mitt Romney’s tax returns are likely to reinforce the already devastating critique of the GOP policies that the left has been hammering all along: that current tax policy is heavily biased to benefit the already-wealthy, and the GOP will if elected make them even more so.
Agreed, generally. I base my “underhanded” characterization on the fact that the truth of Reid’s statement is irrelevant, and would be overshadowed by whatever is in the returns anyway.
Definitely fighting dirty. But I tolerate it more than I do other dirty fighting maneuvers because it is so obviously a low blow, and obviously delivered with the gleeful knowledge that the only things Romney can do about is are (i) whine; or (ii) release the returns.
Obviously knowing the ins and outs of complicated tax loopholes or schemes gives him a HUGE advantage over Obama, who has no training in this matter.
After reading the link, is there anything Romney doesn’t know? Seems like an expert in everything, man has drive.
n/t
You can start with foreign policy where almost everything he has said is either boiler plate that a good high school student knows — or wrong.
You can go deeper and say he does not know how to be a statesman. I realize that being diplomatic can be related to personality or genuine respect for others and that that works better, it likely is true that people without those characteristics – like Romney – could learn rules to follow that would at least give the appearance of statesmanship.
But I suspect that the key to being President is how one works with others. I doubt any man or woman could be expert on every issue that will face a President. The question is how well he does heading a group to look at alternatives and then act.
Because of this, an agreement with the basic values of the nominee, character, and their ability to sell the agreed upon solutions may matter more than detailed knowledge – especially in how to – at minimum – go to the edge of legality for greedy personal gain.
Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A.
At least you admit to your commitment towards advancing the darkest aspects of human nature. The bizarre contortion that attempts to turn greed into a force for good exemplifies right-wing craziness.
The rest of us can only hope that such perversions remain a minority view.
Admit it
Admit it. Greed is a cardinal sin in Christianity, more specifically a mortal sin in Catholicism, and is listed in as of the Ten Commandments in the Old Testament (coveting thy neighbor’s goods).
is anti-Christian because your money doesn’t belong to you, it belongs to your neighbor.
this familiar line from the Gospel of Matthew:
a portion of your earnings belongs to society as a payment for belonging to this country. Shocker, how unpatriotic
What is the max % should be confiscated by
Fed/state and local taxes?
and even in the 1990s, you were not supposed to think him a hero in Wall Street. I do think it would be a fantastic idea for Romney’s campaign to use your quote. I don’t think it would work as you expect.
Romney shows no great greed for knowledge, an upward surge for mankind, love, or anything other than profits.
Treating the USA as a malfunctioning corporation is not a sensible thing to do – and in Romney’s case – though he spoke of self deportation for those illegally here – he can’t fire everyone from the USA or suck off all the assets and then declare the USA bankrupt.
I am sure you would against employers checking the legal status of employees.
In the real world, it ain’t leave no business behind (except alternative energy companies). Cant just borrow from the Bank of China and rack up a $5 Trillion dollar tab.
who work for them are legal.
As too deficit reduction neither the Romney plan or the Ryan budget actually result in lower deficits — even though they claim – magically – that they will.
He bends the curve of the debt. Obama spend us into oblivion, even with the wars ending.
The only VP I would go all in with Romney is if he picks the human bulldozer. That would be Chris Christie.
however, his plan does not do so.
As to Christie, I think you should look at his record – not his words.
Here is a comparison I wrote on DU awhile ago –
The more current numbers are 9.4 in NJ (the fifth worst in the country) and 6.0 in MA.
In addition, Christie has a LOT of baggage and was so unlikable that in his only previous elected office, in the most Republican County (Morris) he did not win reelection because the other Republican freeholders found someone else and ran as a ticket because they disliked Christie so much.
It is strange that you use his morbid obesity to nickname him “the human bulldozer”.
Unlike Deval who had a rainy day fund to tap into, Christie did not. Also, from a demographics point, NJ is 59% white, MA is 76% white. We all know Hispanics are being hammered in this economy disproportionately and have higher unemployment. So dont blame Christie, blame Obama.
It is true that MA has fewer Hispanics 9.6 vs 17.7 percent, but California is 37.6% In addition, in the past NJ’s rate has been similar to MA’s and changes have usually been in the same direction – as it was in the first two years cited.
But, even if you do not compare two states – what you see is that while the country has improved very slowly, NJ got worse.
was primarily created by the last three Republican administrations, which indulged in unprecedented massive deficit spending, including starting wars on the credit card and borrowing in order to lower taxes for billionaires.
Every time I hear a Republican whine about Obama’s deficit spending, II need to remind people of that simple face.
if somebody knows their son/daughter is drinking and driving, should they not saying anything to them if the parent has engaged in drinking/driving themselves in the past? Personally, I think drinking/driving is unsafe and I will tell my kids NOT to do it whether I have done it in the past or not. The same is true with the National debt, it’s going to bite us in the ass and we need to get it under control now regardless of how it got there. The current rate ofd growth is potentially catastrophic and may be unrecoverable.
Until Republicans finally accept that the deficit is not going to be fixed without raising revenue they are only going to make the situation worse. The debt and deficit are indeed important issues, but I don’t believe for a second that Republican politicians are really trying to solve the problem.
The GOP cannot be trusted to fix the problem because for four long years they have followed through on their explicit promise to focus on the single priority of defeating Barack Obama.
All of their actions support this explicitly stated goal — why on Earth would ANYBODY expect them to do anything different?
Of course, you are just trolling.
…and who better than the fox to repair the henhouse?!
It sounds like something they would be capitalizing on even if it is from 1994. Do they have reputable sources (not that it matters for Obama).
Obama entered Harvard Law in ’88 and graduated with a law degree in ’91.
Justify your constant squealing about his transcripts – since, y’know, even if they’re from 1991.
Huh?
For some reason, who knows why, methuenprogressive may have confused you with another BMG other-winged participant.
Honest face? I disagree.
n/m
Claiming it was an “accounting” error that listed his $4M mansion as his primary residence during the seven year period he needed to be a Massachusetts resident to qualify to run for Governor. Mitt “Fraud” Romney (R-Utah) seems to be still registered to vote in Belmont – yet seems is never there, splitting his time between Utah, California, and New Hampshire mansions. If the GOP wants to end voter fraud, they should start with Mittens.
Thus demonstrating the real motivation for the GOP’s interest in voter ID regulations.
send out taxpayer funded voter registration forms to all gun owners? Why just those on welfare?
…per the National Voter Registration Act of 1993, colloquially known as “Motor Voter” because Registries of Motor Vehicles are other authorized repositories of registration forms. The Department of Transitional Assistance was required to mail the forms to welfare recipients because they weren’t available for off-the-street pickup in DTA offices.
Not that it matters in all the media and campaign clutter, but this is a tempest in a teapot, for the following reasons:
The defendant in the Massachusetts iteration of the case was a Democratic Administration.
Voter registration in isolation has little to do with turnout, and there is little effective Get-Out-The-Vote targeted at welfare recipients. Progressive efforts to the contrary are almost never successful for reasons too lengthy to go into here.
Despite fantasies port and starboard, a surprising number of motor-voter registrees actually vote Republican in final elections.
In a related matter, the City of Boston mails registration forms to adults not on the voter list, but enumerated on the (Constitutionally-mandated) City Census. I know of no legislative or municipal incumbent that is losing sleep over the matter.
But I wonder if the Troll knew GW Bush signed the ‘Help America Vote Act of 2002′ – which puts forth most of the things the Troll now whines about?
We all know how Barack purchased a home for a song and a dance from a convicted felon.
“we all know”?
You got a mouse in your pocket?
And he didn’t buy it from Tony Rezko, either.
You lie so often, about so much, you’re beginning to believe your own lies.
No wonder you’re a Republican.
Obama is on record regretting the transaction, at like 50% of market value
You lie so often, about so much, you’re beginning to believe your own lies.
No wonder you’re a Republican.
In 2005 Obama purchased a new home in the Kenwood District of Chicago for $1.65 million (which was $300,000 below the asking price but represented the highest offer on the property) on the same day that Rezko’s wife, Rita Rezko, purchased the adjoining empty lot from the same sellers for the full asking price.[34] Obama acknowledged bringing his interest in the property to Rezko’s attention,[35] but denied any coordination of offers. According to Obama, while the properties had originally been a single property, the previous owners decided to sell the land as two separate lots, but made it a condition of the sales that they be closed on the same date. Obama also stated that the properties had been on the market for months, that his offer was the best of two bids, and that Ms. Rezko’s bid was matched by another offer, also of $625,000, so that she could not have purchased the property for less.[36]
After it had been reported in 2006 that Rezko was under federal investigation for influence-peddling, Obama purchased a 10 foot (3.0 m) wide strip of Ms. Rezko’s property for $104,500, $60,000 above the assessed value.[7][34] According to Chicago Sun-Times columnist, Mark Brown, “Rezko definitely did Obama a favor by selling him the 10-foot strip of land, making his own parcel less attractive for development.”[37] Obama acknowledges that the exchange may have created the appearance of impropriety, and stated “I consider this a mistake on my part and I regret it.”[36]
“We all know” < A lie.
"Barack purchased a home for a song and a dance from a convicted felon." < Both lies.
"He absolutely did buy it from Felon Rezko" < Absolutely a lie.
"at like 50% of market value" < Another lie.
You lie so often, about so much, you’re beginning to believe your own lies.
No wonder you’re a Republican.
And I produced the facts of the case. At least corrected my error, but it was a shady deal, no?
If you expect to be considered to be anything other than a troll, and a laughably inept one at that, then you cannot expect to continually make stuff up and then claim you were just mistaken when you are caught red-handed.
If you lie down with pigs, all you ever get is dirty.
Let’s please not give these stupid lies more credibility by arguing about them.
From the same article.
Most tax shelters are simply tax deferrals, the IRS rarely is fooled for long and when a true “loophole” exists they close it down quickly in the courts.
The IRS gets it’s money in the end. Aside from the complexity of some tax shelter schemes, the rules are pretty simple and profits generate tax liabilities. Deferring taxes is usually done to offset short periods of extremely high profits, to average the liabilities over a longer period of time. 10 million this year and zero for the next 9 years, average the 10 mil over the 10 years and pay a more reasonable rate. All profits are taxed eventually.
why Romney signed off on Marriott’s adoption of the scheme, does it?
are in their own minds, we are not supposed to delve into that here I thought.
But since you asked, he was probably playing the aggressive taxpayer, trying to maximize profits, and waiting to see if the IRS would disallow the “scheme”. Taxpayers and corporate boards cover the range from overtly aggressive, to extremely cautious. The aggressive types most often lose when it becomes litigated, but help to define the boundaries for the rest of us.
Personally, I’m more the sheep type, I have no desire to invite the IRS into my world and never push the limits, I sleep at night….but I don’t fault others for being aggressive when it comes to paying taxes and fighting with the IRS.
http://www.boston.com/politicalintelligence/2012/08/09/president-obama-campaign-repeats-call-for-more-mitt-romney-tax-returns-citing-tax-shelter-used-marriott-when-romney-was-board/oXkbpYDEbE1kdJvyGgGzSJ/story.html
The Globe piece cites a related piece published last February by Bloomberg:
It seems we are seeing yet another Mitt Romney emerge — flim-flam man
Scott Brown is putting his foot in his mouth over a court order…wtf.
were actually quite popular back in the late 90s and early 2000s. They were aggressively marketed by several major law firms and big 4 accounting firms as a way to offset large capital gains. Several major banks were involved in writing the foreign currency options that were used to create the large basis in the partnership that eventually flowed through to the partner and was used to offset the capital gain. Jenkins & Gilchrist, one of the largest law firms in the world, went under because a few lawyers from their Chicago office marketed so many son of BOSS transactions.
Many of the individuals who entered into these transactions had little understanding of either how the transaction worked or the risks involved. It probably should have occurred to them that the deal was too good to be true. But I can’t get too personally angry when someone receives an opinion letter from one of the largest law firms in the country, has his tax returns filled out by one of the big 4 accounting firms, and has one of the largest banks in the country create the options. Especially since the IRS cracked down big time and the people who entered the transactions paid more than they would have owed if they had just paid the tax on the gain in the first place.
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