Tag Archives: too clever by half

Apple avoids billions in taxes, and it all looks legal; those guys really are smart

Lawmakers are using words like “gimmicks” and “schemes” to describe how Apple Corporation has used a web of subsidiaries spanning the globe to avoid taxes. There are hearings this week at which Congressmen are expected to say they are shocked, shocked, to hear of tax loopholes being exploited.

As The New York Times reported, Congressional investigators have determined that “some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.”

One of Apple’s Irish affiliates reported profits of $30 billion between 2009 and 2012, but because it did not technically belong to any country, it paid no taxes to any government, The Washington Post reported. Another paid a tax rate of 0.05 percent in 2011 on $22 billion in earnings, according to the report.

It’s not expected that any of this will be determined to be illegal–just a highly proactive use of the existing tax rules. Interviewed by The Times, University of Southern California law professor Edward Kleinbard, a former staff director at the Congressional Joint Committee on Taxation, gets the Quote Of The Week Award. “There is a technical term economists like to use for behavior like this,” said Kleinbard. “Unbelievable chutzpah.”

Oops: No paperwork, no $18.5 million deduction

Does the IRS turn a laser-like eye on tax returns that claim large deductions for non-cash contributions to charity? You bet. Will the Service disallow deductions for contributions when people don’t have all their paperwork in order? You double-bet. The IRS and the U.S. Tax Court hammered this home in May 2012, when it disallowed…Continue Reading

Arranging a tax-deductible fire

Ever want to help support your local fire department? Several taxpayers over the years have done just that, by allowing the fire department to use their house for training purposes, including–yes–burning down the house. Why would someone do that? Well, for the tax benefit! No kidding. The idea is that you get to deduct the…Continue Reading

$2 million tax refund equals 66 months in prison

She could have been Turbotax‘s Poster Child For Getting Your Maximum Refund–“I used Turbotax and got a $2.1 million refund!” The only problem is that there wasn’t much truthful about the Oregon tax return filed by Krystle Marie Reyes of Salem once you got to the lines below her name and the address where you…Continue Reading

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Mitt Romney, through the funhouse mirror

Mitt Romney famously told a heckler on the campaign trail that corporations are people, too. A fellow named Geoff Sugerman was paying attention. Here’s his proposal: If corporations are people, why can’t people be corporations–with all the tax benefits of corporations Geoff has a website, peoplearecorporations.org., where he also promotes his political action committee, People…Continue Reading

Is a zygote a person? Ask your tax guy.

More than a half-dozen states are considering constitutional amendments, ballot measures or legislation that would declare a fertilized human egg (think back to your high school science classes and the word, “zygote”) to have the legal rights of a person. I’m not going to get into the logic of this. Oh, heck, sure I will—it’s…Continue Reading

It’s hard to hang a tax break on a thong

Repeat after me: Just Because You Wear It For Business Doesn’t Make It Deductible I want my small business clients to write off every expense they’re entitled to. Supplies, business travels, meals, conferences–we take everything that’s allowed. I get very skeptical, though, when they start telling me how much they had to spend on business-related…Continue Reading