This on top of tax free dividends...or is it tax free dividends on top of this?
Overstating of Assets Is Seen to Cost U.S. Billions in Taxes
By DAVID CAY JOHNSTON
Investors, entrepreneurs and landlords annually avoid paying at least $29 billion in taxes by overstating the price of stocks, businesses and real estate, two professors say in an article being published today in Tax Notes, an influential tax policy journal.
Claiming to have paid more than the actual price for a stock, business, apartment building or piece of art results in a smaller profit being reported when the asset is sold, and a lower tax on that profit.
"An unpublicized problem of crisis proportions is plaguing" the tax system, one that will cost the government at least $250 billion in the coming decade, the professors wrote.
The potential for abusive reporting in this area, particularly for stocks, "is virtually unlimited," according to the authors, who outline five ways that the law encourages cheating. They added that opportunities to cheat also abound in investment real estate, "where tax-free, like-kind exchanges are increasingly common."
Congress could easily reduce this cheating to a minor problem through changes in tax laws that, the professors wrote, would apply the same rules to those harvesting capital gains that now apply to workers, home owners and parents.
