The NYT has a long investigative piece explaining the procedures deployed by the Estee Lauder heirs to "shelter" their income from tax, such as donating millions of dollars' worth of art to their own charitable trusts, then taking a gigantic tax write-off.
Estée Lauder Companies went public in 1995, and Ronald Lauder and his mother cashed in hundreds of millions of dollars in stock but managed to sidestep paying tens of millions in federal capital gains taxes by using a hedging technique known as shorting against the box.
Together, Mr. Lauder and his mother borrowed 13.8 million shares of company stock from relatives and sold them to the public during the offering at $26 a share. Selling borrowed shares in this way is referred to as a short position. Since the Lauders retained their own shares, the maneuver allowed them to have a neutral position in the stock, not subject to price swings. Under I.R.S. rules at the time, they avoided paying as much as $95 million in capital gains taxes that might otherwise have been due had they sold their own shares...
“There’s real truth to the idea that the tax code for the 1 percent is different from the tax code for the 99 percent,” said Victor Fleischer, a law professor at the University of Colorado. “Any taxpayer lucky enough to have appreciated property is usually put to a choice: cash out and pay some tax, or hold the property and risk the vagaries of the market. Only the truly rich can use derivatives to get the best of both worlds — lots of cash and very little risk.”
A Family’s Billions, Artfully Sheltered
(via Beth Pratt)
Vox parsed out the Bureau of Justice Statistics’ numbers on incarceration in prisons (excluding jails) and produced this ghastly visualization tracking the transformaiton of America into the country with the highest rate of incarceration in the history of the world.
The McClatchy Company, a chain of more than 30 U.S. newspapers, is expected to close its foreign bureaus by the end of the year. The media giant’s chief executive denies the rumors, but it kind of sounds like the closures are likely anyway.
Online retail giant Amazon just launched a marketplace for handcrafted goods: Handmade at Amazon. It’s “an arts-and-crafts bazaar online that squarely takes aim at a niche but growing market dominated by the Brooklyn-based Etsy,” as the New York Times puts it. Handmade at Amazon went live early Thursday more than 80,000 items from roughly 5,000 […]
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