Unraveling Tax Dodge Schemes Hit Public Transit


	Unraveling Tax Dodge Schemes Hit Public Transit

Andrew Gillies

10-24-2008 9:21 AM

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Andrew Gillies says:

Washington Post story details another ugly impact of credit crisis; public transit agencies face huge payments as deals struck to avoid taxes go into technical default following AIG's collapse. Washington's Metro system could be on the hook for $400 million. Other cities named: Los Angeles, San Francisco, Atlanta and Chicago.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/c62e4805-694a-446c-918e-1a5d5a83a518/846637A9-9519-41CE-B556-06893A14289E/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro" href="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro" style="font-size: 11px;">www.washingtonpost.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro"><H1>Credit Crisis May Force Metro to Pay Millions</H1></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro"><DIV id="byline">By <A title="Send an e-mail to Lena H. Sun and Binyamin Appelbaum" href="http://projects.washingtonpost.com/staff/email/lena+h.+sun+and+binyamin+appelbaum/">Lena H. Sun and Binyamin Appelbaum</A></DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro"><P>
Metro and 30 other transit agencies across the country may have to pay billions of dollars to large banks as years-old financing deals unravel, potentially hurting service for millions of bus and train riders, transit officials said yesterday.
</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro"><P>
The deals in question are vestiges of an elaborate tax-avoidance plan that the IRS has since ended. It involves government agencies, such as Metro, helping private companies to avoid federal taxes.
</P></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102303820.html?nav=rss_metro">Profit-making businesses are allowed to shelter income from taxes based on the declining value -- or depreciation -- of such equipment as rail cars. But transit agencies don't pay federal taxes, so they sold their rail cars and other equipment to banks, allowing the banks to shelter income while "their" rail cars depreciated. Then the transit agencies leased the cars back from the banks at a discount that effectively split the value of the tax break with the bank.</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/846637A9-9519-41CE-B556-06893A14289E/blog/" title="blog or email this clip"><img src="http://content7.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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