Mitt Romney Implicated in Son-Of-Boss Tax Scam

MITT ROMNEY IMPLICATED IN SON-OF-BOSS TAX SCAM

Romney’s close personal and business relationship with the Marriott family goes back a long ways. Willard Mitt Romney was named after his father’s good friend, Marriott hotel magnate J. Willard Marriott. Romney has served on Marriott International Inc.’s Board of Directors for 11 of the past 16 years since 1993 and six times he served as chairman of its audit committee, placing him in charge of reviewing the company’s financial reporting. As a director, he oversaw the company’s tax planning. According to a report by Bloomberg News, while serving as a director and chairman of the audit committee, Marriott engaged in what has become the most notorious tax shelter to date, the infamous “Son-of-Boss” tax ploy that generated $71 million in bogus tax deductions for the company.

The Son-of-Boss ploy was presented by an investment banker to the tax department at Marriott in January, 1994. It involved generating a $71 million tax loss through a series of phony transactions involving the sale of $81 million in mortgage notes through partnerships created solely for the purpose of executing the tax shelter. IRS disallowed the loss and Marriott sued in the U.S. Court of Claims, which ruled in IRS’s favor., Marriott v U.S., 83 Fed Cl. 291 (2008). The company then appealed and the court of appeal sided with IRS, rejecting Marriott’s claim that the transaction was legitimate, Marriott v U.S., 586 F3d 962 (2009).

Given Romney’s background as chairman of Bain Capital, governor of Massachusetts and business experience with leverage buy-outs and hedge funds, it is not credible that he believed the tax shelter was legitimate. Under Romney’s watch, IRS disallowed the deductions and Marriott fought the case in court. The U.S. Department of Justice denounced the shelter as “fictitious,” “artificial,” “spectral,” an “illusion” and a “scheme.”

Note: Years later, the international accounting firm, KPMG, pled guilty to tax crimes in association with the Son of Boss tax shelter and entered a deferred prosecution agreement with the government. Also, there have been criminal indictments of others who aggressively promoted the scheme, although to date, none of the clients who participated in the tax shelter, including Marriott, has been implicated in criminal activity.

http://www.son-of-boss.com/SOB_Docs/Romney.pdf

Footnote: When Marriott recently lost their appeal, it ended up costing them. "n 2007, Marriott agreed to pay about $220 million in income taxes, excise taxes and interest to the Treasury and various states."

Poor, poor job-creators... Perhaps instead of trying to find so many creative ways to screw the IRS, they should try paying their fair share...

Here's how it worked:

Here is the basic pattern contained in the Son-of-Boss type tax shelters. These transactions reduce or eliminate capital gains by creating artificial capital losses. Although the pattern is simple, it is obfuscated with mounds of paperwork, intricate financial instruments and virtually incomprehensible tax code provisions.

--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.

The foregoing example illustrates the core principles of how tax shelters work. The transaction is legal and fits within the literal rules of the tax code. Millions of taxpayers offset capital gains with capital losses. But does the transaction work? Of course, the answer is clearly no; otherwise, no one would ever pay a dime in capital gains taxes. This is an example of an "artificial basis step-up transaction," the cornerstone of many tax shelter schemes. The promoter, through an sham transaction designed solely for the purpose of manipulating the tax code, creates a purported tax loss where there was no corresponding economic loss.

http://www.son-of-boss.com/

http://www.son-of-boss.com/SOB_Docs/Son ... _html.html

http://www.newser.com/story/140301/romn ... taxes.html

http://www.bloomberg.com/news/2012-02-2 ... y-irs.html

See, this is the difference between "Rightie spin", bullsh*t, and pulling stuff out of your backside, and sourced truth... You should try it some time.

...And this is the slimebag you'd rather see in the White House?... I think not...

And what was Romney indicted for? What criminal or civil charges were brought up against Romney. What lawsuits were filed against Romney? You don't have anything.

Democracy4Sale wrote: ...And this is the slimebag you'd rather see in the White House?...

Yep. Still better than what we've got now.

All the left has is the politics of personal destruction Twin. That's the campaign strategy that they are hoping will result in Obama getting reelected. They can't point to their own candidate's accomplishments, their own candidate is facing much more scrutiny this time than he did the last go 'round and a fair chunk of the coalition they built in '08 isn't going to be getting behind their candidate in 2012. All they have left is their Alinsky model of using whatever means are at hand to change the focus of the electorate in the hope that by doing so their ends will be served.

Same tactics the right is using.. 94% of the Romney ads are negative. Apparently the Romney campaign doesn't think he can run on his record as governor and business man OR his plans for the future...

archer wrote: Same tactics the right is using.. 94% of the Romney ads are negative. ...

Where did stat stat come from? rofllol

Well so you made the comment that romney was implicated. So produce where it states that. I read nothing that says that. Maybe I missed something, possible, but I saw nothing that says anything about Romney being implicated.

archer wrote: Same tactics the right is using.. 94% of the Romney ads are negative. Apparently the Romney campaign doesn't think he can run on his record as governor and business man OR his plans for the future...

So all the obama negative ads, does that mean he doesn't think he can win on his lack of doing anything as president. Though he does like to take credit for what others do.