IRS to close loophole: depreciating the same asset repeatedly
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The IRS says some pass-through entities have been depreciating the same assets repeatedly by "selling" them from one pass-through entity to another that are all owned by the same tax payers, and that new rules will be proposed to crack down on this. This crackdown on "basis shifting" is expected to recoup $50 Billions of tax revenue in ten years.
An existing rule requires that transactions have “economic substance” rather than merely reducing tax bills. A top IRS official mentioned the economic substance rule as the root of the agency’s belief that most of these closely related partnership transactions are illegal.
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The IRS is in a constant game of Whack-a-Mole.....
