Posted on 01/03/2006 10:18:43 AM PST by NormsRevenge
A company owned by Gov. Arnold Schwarzenegger has deferred paying state and federal income taxes on millions of dollars in revenue it generated since late 1997, thanks to a deal under which it bought a 747 jet from Singapore Airlines and leased it right back to the airline.
Despite claims by Schwarzenegger's top advisers during a 2003 campaign briefing that the actor's investments included "no tax shelters" and were "absolutely not tax-driven," a Bee examination of his company's 747 deal shows his company took advantage of what experts say is one of the most attractive tax sheltering devices available to the super wealthy.
While sale and lease-back deals are legal, some are now under scrutiny by the Internal Revenue Service.
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In documents it filed with Australian securities regulators, Babcock & Brown disclosed that IRS auditors are scrutinizing leasing deals developed by its advisory business between 1993 and 1999.
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Though he discussed several aspects of the jet transaction with The Bee in the fall, Paul Wachter, the governor's longtime investment manager who looks after his investments in a blind trust, declined to comment when asked whether IRS auditors have challenged tax deductions claimed by the governor's company.
Schwarzenegger spokesman Rob Stutzman said he was unable to say if the IRS has either audited or challenged any tax deductions associated with the jet purchase.
"I do not know and I cannot get answers to those questions," Stutzman said. "Mr. Wachter is not willing to discuss business matters inside the blind trust."
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Typically, buying a jet and leasing it to an airline is such a huge investment, it is the stuff of specialty leasing corporations and billion-dollar hedge funds.
(Excerpt) Read more at sacbee.com ...
This must have been buried pretty deep in order to this to only surface now as an issue.
"The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin." -- MARK TWAIN
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