Avoiding Excess Credit Card Interest Should Not Be A Taxable Event
This is one of the reasons, I am not a Tax Court judge. In my mind, if there is a credit card company involved, there should be a presumption that financing arrangements are being misrepresented.
Your Money Or Your Life – Which Can You Deduct ?
The case concerns the 2007 tax year. Apparently the Mills got away with over $2,000,000 in deductions for the first six years the scheme was in effect. The tax accounting issues raised by this are giving me a little bit of a headache. The $2,000,000 in allowed deductions reduced their basis in their LLC interests. Whether that will ever cost them anything depends on what else was inside the LLCs and how long they keep them running. How to sort that out would be a good question to ask on a partnership taxation exam.
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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.