March 28, 2011 -- Professor Steven Bank commented on two lawsuits filed against the co-founder of Broadcom Corp. over alleged tax shelters. His comments appear in a Los Angeles Daily Journal article.
Steven A. Bank, vice dean and professor at UCLA School of Law, who reviewed the complaint in the tax case, said the IRS clearly hopes to show through marketing materials and other evidence that the transactions to purchase the loans lacked "economic substance," and that there was little to no actual risk of sustaining the losses that would justify a tax deduction.
Speaking generally, Bank said tax shelters are sometimes used by individuals who generate huge capital gains to try to generate huge capital losses to offset those gains and the resulting tax liability.
"The whole idea behind a tax shelter is that it is designed to take foreign losses and transfer them to a U.S. partnership," Bank said, "which can use those losses to claim deductions on its taxes."
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