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and in today's ... The rich get richer
Old 07-13-2007, 03:54 PM   #1
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and in today's ... The rich get richer

Tax Loopholes Sweeten a Deal for Blackstone - New York Times
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The Blackstone Group, the big buyout firm, has devised a way for its partners to effectively avoid paying taxes on $3.7 billion, the bulk of what it raised last month from selling shares to the public.

Although they will initially pay $553 million in taxes, the partners will get that back, and about $200 million more, from the government over the long term.

...

In simplest terms, the Blackstone partners paid a 15 percent capital gains rate on the shares they sold last month in the initial stock offering to outside investors (those shares represented a stake in the Blackstone management company, not its funds).
Blackstone then arranged to get deductions for itself for the $3.7 billion worth of good will at a 35 percent rate. This is a twist on the “buy low, sell high” stock market adage; in this case it would be “tax low, deduct high.”
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Old 07-13-2007, 04:30 PM   #2
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It's a great loophole. I used it on my second billion. I didn't know about it for my first billion.
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Old 07-13-2007, 08:51 PM   #3
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It's almost irrelevant whether they paid 15% or 35% in tax. The fact they made billions from the IPO is ridiculous. I am sure that they really think they deserve it.
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Old 07-13-2007, 10:10 PM   #4
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They still have to pay AMT tax.
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Old 07-13-2007, 10:27 PM   #5
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It's almost irrelevant whether they paid 15% or 35% in tax. The fact they made billions from the IPO is ridiculous. I am sure that they really think they deserve it.
As you and I believe that we deserve what we make. Face it, if we ever really got what we deserved, we would ALL be burning in Hell.
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Old 07-14-2007, 09:50 AM   #6
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None of this would be an issue if we could keep Congress from making such complex tax laws.

The tax code now exceeds 60,000 pages (in 2004). Complexity begets complexity. You can't have that many complexities w/o also creating loopholes (intentional or unintentional) along the way.

I remember reading recently that a rich family could take better advantage of some of the education tax credits/deductions than could a lower-middle income family. Totally unintentional, I forget the details, but I think the rich family could have the kid file separately (they didn't get the deduction anyhow, they were already maxed I think) and then the kid got a benefit, while the lower-middle got less/no benefit due to other restrictions.

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Old 07-15-2007, 04:51 PM   #7
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They still have to pay AMT tax.
Capital gains are also taxed at 15% under the AMT.
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Old 07-15-2007, 06:22 PM   #8
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Good for them. They are smart to structure the transaction the way they did. Bravo. Paying taxes sucks.
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Old 07-15-2007, 06:56 PM   #9
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We all look for ways to reduce the amount of taxes we pay. There is no moral or legal reason to pay more than we can legally avoid. I transferred assets to my 2 older children so they could sell the stocks at their 0 tax rate to fund their college. I took full advantage of any tuition tax credit available.

If it's legal it's legal. Our tax code is a disaster and I doubt our politicians will ever really clean it up. The bottom line is that the "rich" always benefit from any tax cut and seldom pay as much as expected for any tax increase. It doesn't matter which political party calls the shots.

The other key point is that the "rich" pay almost all of the taxes anyway.
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Old 07-15-2007, 07:51 PM   #10
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Capital gains are also taxed at 15% under the AMT.
Yes, but big capital gains can remove all you deductions under AMT.
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Old 07-15-2007, 08:33 PM   #11
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It's almost irrelevant whether they paid 15% or 35% in tax. The fact they made billions from the IPO is ridiculous. I am sure that they really think they deserve it.

Perhaps you would be so kind as to tell us what we all deserve to make?
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Old 07-16-2007, 05:33 PM   #12
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Yes, but big capital gains can remove all you deductions under AMT.
That's what will hit my in-laws this year. We sold their house but the AMT will eliminate their nursing home deduction that normally made them tax free.
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Old 07-16-2007, 06:55 PM   #13
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It's a great loophole.
What is a Loophole?
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Old 07-16-2007, 07:33 PM   #14
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In the last 6 months, the stock market has rewarded me with more than $30K. That is more money that 75% of the folks where i use to work make in a year. It all depends from where you are coming. I'll bet Gates thinks $200M is chump change.
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