Ark Encounter Local Tax Scandal Not Very Scandalous
On the other hand, I would not rate their attempt to be a little hardball with the city as scandalous. The structure they are using is actually pretty straight forward. One of the members of my brain trust indicated that he was poking at it wondering whether there might be inurement, as the Huff Post headline implies, but there really is not. Everything stayed in the same not for profit (for federal purposes) chain. That the LLC at the bottom is considered for profit for local tax purposes is really not that unusual.
New IRS Scandal – Syndication Of Conservation Easement Deductions
You can lie about a charitable deduction for appreciated property because that unrealized appreciation you are deducting is a debit that does not require a credit. And, of course, the entity on the other side of the transaction recognizing income is, by definition, exempt. Many of the turn of the millennium tax shelters worked by creating basis out of thin air with an unbalanced entry involving option contracts, that was based on a strained interpretation of partnership regulations. The unbalanced entry of a deduction for appreciated property is approved by the Code.
In the case of marketable securities, there is a reality test that limits the phantom deduction. Even the sky is not limit to the deduction for other forms of appreciated property as the imagination of appraisers boldly goes where no one has gone before.
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Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.