CNN: Did Romney enable Marriott International's abusive tax shelter?

[highplainsdem]

http://www.cnn.com/2012/08/08/opinion/canellos-kleinbard-romney-taxes/index.html

Romney has had a close, long-standing, personal and business connection with Marriott International and its founders. He served as a member of the Marriott board of directors for many years. From 1993 to 1998, Romney was the head of the audit committee of the Marriott board.

During that period, Marriott engaged in a series of complex and high-profile maneuvers, including "Son of Boss," a notoriously abusive prepackaged tax shelter that investment banks and accounting firms marketed to corporations such as Marriott. In this respect, Marriott was in the vanguard of a then-emerging corporate tax shelter bubble that substantially undermined the entire corporate tax system.

Son of Boss and its related shelters represented perhaps the largest tax avoidance scheme in history, costing the U.S. many billions in lost corporate tax revenues. In response, the government initiated legal challenges that resulted in complete disallowance of the losses claimed by Marriott and other corporations.

-snip-

In his key role as chairman of the Marriott board's audit committee, Romney approved the firm's reporting of fictional tax losses exceeding $70 million generated by its Son of Boss transaction. His endorsement of this stratagem provides insight into Romney's professional ethics and attitude toward tax compliance obligations.

-snip-

The authors of this opinion piece (Peter C. Canellos, former chair of the New York State Bar Association Tax Section, and Edward D. Kleinbard, former chief of staff of Congress's Joint Committee on Taxation) point out that this was "an entirely artificial transaction, bearing no relationship to its business. Its sole purpose was to create a gigantic tax loss out of thin air without any economic risk, cost or loss -- other than the fee Marriott paid the promoter."

The IRS listed this as "an abusive transaction, requiring specific disclosure and subject to heavy penalties" and the government brought successful criminal prosecutions against a number of individuals involved.

The authors point out that Romney has to have been aware of what was going on. His campaign has tried to claim that he was simply relying on Marriott's own tax department and advisers, but the authors point out that normally someone in Romney's position would have sought advice from independent tax counsel, who would have warned against this. And Romney himself "had an insider's perspective on the motivation and lack of substance in the transaction, as well as the financial sophistication to understand the tax avoidance involved."

[livetohike]

1. Drip by drip....let all the business experience Romney likes to tout come to light

and once more people wake up, this will be a landslide election.

[highplainsdem]

2. The Marriott brothers are major Romney donors -- NPR link:

http://www.npr.org/2012/04/05/150058865/for-romney-family-ties-to-marriott-heirs-pay-off

[ProSense]

3. Interesting, thanks. n/t

[BumRushDaShow]

4. This guy makes Michael Milken

look like a saint. Geez.

[The Magistrate]

5. No Real Doubt About It, Sir: He Did

Doubtless he engaged in similar shenanigans on his own hook, as well.

"Romney loves America like a tick loves a dog."

[siligut]

6. From the article, Romney (Bain) specialized in tax avoidance

In his key position as head of the board's audit committee, Romney was required under the securities laws and his fiduciary duties to review the transaction. In fact, it has been publicly reported that Romney was the Marriott Board member most acquainted with the transaction and to whom the other board members turned for advice. This makes sense because aggressive tax-driven financial engineering was a large part of what Romney (and Bain) did for a living. For these reasons, it is fair to hold him accountable for Marriott's spurious tax reporting.

And even though benefits using BOSS had been blocked , Son of BOSS was created and used by law and accounting firms in its place.

http://online.wsj.com/article/SB10001424052702303990604577366312132335038.html

Son of BOSS was a term Treasury officials coined to describe a variety of tax shelters that sought to wipe out taxes on capital gains from the sale of a business or other appreciated asset, for example, by artificially inflating the cost of an asset to make the profit from its sale appear smaller.

All resembled an earlier shelter marketed as "BOSS," short for "bond and option sales strategy." The Son of BOSS transaction was marketed in various forms by advisers at some accounting and law firms beginning in the late 1990s. Several thousand taxpayers likely used the shelter before the Treasury and Congress took steps to block its tax benefits, beginning in 2000.

I definitely see a pattern emerging here. There is a very good reason Mitt won't show us his old tax forms.

[BlueStreak]

11. How do you think he got $100,000,000 into his magic IRA in the Caymans?

It is all about lying about the value of assets. That is the basis of both scams.

[nc4bo]

7. Can't get much more crony than Romney and his deep ties to Marriott.

So much in common, even their families.

Lots of favors for family and very close friends, eh?

Where does that leave the rest of us I wonder?

[highplainsdem]

8. kick

[indepat]

9. Enough to make one wonder if the Son of Boss scheme is emblematic of der Mitt's

approach to tax practices.

[ProSense]

10. Kick! n/t