Romney, Marriott And Son Of Boss ---- For Dummies
Now that the question of Mitt’s knowledge of Son of Boss deals has been raised by CNN, I thought it might be a public service to explain Son of Boss deals. A lot of commentators seem to think that they are too hard to understand, but I don’t think so. I’ve told my friends at Dogs Against Romney that they might not want to bother filling in the beagles and the mastiffs , but I think the border collies and the poodles are ready for it.
Basis
I have previously explained Son of Boss using the ill fated tax shelter of EMC founder, Richard Egan, who got into the game in its waning days. His advisor, Stephanie Denby, commented on the beauty of the deals:
Secondly, some of the transactions focus on generating basis as opposed to capital loss. Basis is more discrete [sic] and less likely I believe to cross the IRS radar screen.
We are taxed on income, not gross receipts. That means that when you sell something you get to deduct your basis. In its simplest manifestation basis is the amount of money that you paid for something. You buy something for five dollars and sell it for six, your income is a dollar. Of course it can be more complicated if you acquire assets in other ways, such as by gift or inheritance or in a like-kind exchange. The important point though is that when you sell something the higher your basis the less your gain or the greater your loss.
http://www.forbes.com/sites/peterjreilly/2012/08/08/son-of-boss-for-sons-of-you-know-if-marriott-did-it-did-romney/