How U.S. Billionaires Avoid Reporting Gains to IRS
When billionaire Billy Joe “Red” McCombs, co-founder of Clear Channel Communications Inc., reported a $9.8 million loss on his tax return, he failed to include about $259 million from a lucrative stock transaction.
After an audit, the Internal Revenue Service ordered him to pay $44.7 million in back taxes. McCombs, who is worth an estimated $1.4 billion and is a former owner of the Minnesota Vikings, Denver Nuggets and San Antonio Spurs sports franchises, sued the IRS, settling the case in March for about half the disputed amount.
McCombs’s fight with the IRS illustrates an overlooked facet in the debate over tax rates paid by the nation’s wealthiest. Billionaires -- from McCombs to Philip Anschutz to Ronald S. Lauder -- who derive the bulk of their wealth from stock appreciation are using strategies that reap hundreds of millions of dollars from those valuable shares in ways the IRS often doesn’t classify as taxable income, securities filings and tax court records show.
In the McCombs case, the billionaire entered into transactions known as variable prepaid forward contracts. He received about $259 million for lending an investment bank his Clear Channel shares with a promise to deliver the stock for good a few years later. The arrangement enabled McCombs to defer paying capital gains tax because he hadn’t sold his shares, lawyers for the billionaire said. The IRS deemed the transaction a sale since the bank paid McCombs cash and got the use of his stock almost immediately.
It's the "Golden Rule" in action... "He who has the gold gets to make the rules..." You just hire more attorneys and CPA's, and you dodge the "fair share" of taxes. I still think a tax on TRANSACTIONS, (in addition to income) would have a major effect on these kinds of shenanigans...
Would it not be reasonable to set a limit on how many other citizens one has to support.
We can calc how much the average citizen consumes for govt services. (2011 expenese/population).
And then do something like limit any individual's taxes to no more than 100 or 1000 times that much. Surely paying for 1000 other citizens services would make it so someone was not shirking their responsibility to share their wealth? Or can you argue that paying for 1000 other people's govt services is cheap or unfair, while still noting that it is happening (the number 1000 being supported).
Sure if this guy had a loss, he would not have hit this limit, but once they tax him, does supporting 1000 other citizens seem generous, or stingy to you? I am curious if the loss was in a company that had significant employment expenses (meaning that loss was him paying people out of his pocket)?
How U.S. Billionaires Avoid Reporting Gains to IRS
It's the "Golden Rule" in action... "He who has the gold gets to make the rules..." You just hire more attorneys and CPA's, and you dodge the "fair share" of taxes. I still think a tax on TRANSACTIONS, (in addition to income) would have a major effect on these kinds of shenanigans...
Yea LJ- that's what we need- a tax on every transaction. You don't think this will be a dis-incentive to economic activity? It would have a major dampening affect as transactions are limited to the bare minimum by every corporation and every investor out there.
These corporations and billionaire's are just exploiting the rules that the government has set up for them- and when there's millions of dollars in the balance you can bet your ass that they will be hiring the best talent to minimize their exposure to the tax laws. You would have to be a total idiot not to!
You (and all the other Socialists) can hate on them as much as you want- but they are just following the laws. The government has it set up for them with all the loopholes in place. And when you have money like McCombs- and you don't agree with the IRS on an issue- you can hire lawyers and sue them for relief.
The IRS stood to lose here so they settled for 50%- this is the legal system at work here. Basically- the IRS "shook down McCombs" for 22.5 million.
The details do get lost in your ever present effort to drum up more class warfare sentiment.
How come you don't give the government more of YOUR money? HUH?
How come LJ?
I give the government more than YOU do, I'll wager... A LOT more... And I'm okay with that. Taxes is the price I pay for the government I'd like to have.
LadyJazzer wrote: I give the government more than YOU do, I'll wager... A LOT more... And I'm okay with that. Taxes is the price I pay for the government I'd like to have.
Would you like a little cheese with that whine?
I bet your wrong about paying the government more than I do- but that's not the point of discussion here.....
Come on LJ- answer the question- Why don't you give the government MORE of YOU'RE money?
You obiviously think you make lots of money- so you must have plenty of money to send into the Government LJ- there's people who are more needy than you even if you are not the 1%. Poor people won't care if you are not the 1%
You should send in more of your money to Obama so he can give it to people who need it more than you.
