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re: The Most Profitable Contractual Loophole in History
Posted on 5/12/16 at 10:03 am to GFunk
Posted on 5/12/16 at 10:03 am to GFunk
quote:
Cliffs: A French Life Insurance Company offered clients the ability to go back and change their investment decisions that their $ within their policy was invested within, without losing capital. So when the market shifted over the weekend, you could go back and take advantage of it-perfectly legally due to the contract which has been upheld over 60 times in French Courts-over and over and over again. Essentially piling up free money for life, and easily transferrable to the heirs of your estate.
holy crap, that makes no sense at all. why would a company do this? I could go "invest" in 1997 Amazon and sell today? um, I must be missing something.
1
Posted on 5/12/16 at 10:08 am to crazycubes
quote:
holy crap, that makes no sense at all. why would a company do this? I could go "invest" in 1997 Amazon and sell today? um, I must be missing something.
Not quite, but you can retroactively invest based on the previous day's happenings.
Posted on 5/12/16 at 10:11 am to TheCaterpillar
quote:
Not quite, but you can retroactively invest based on the previous day's happenings.
Oh wow.
Posted on 5/12/16 at 12:32 pm to BiggerBear
quote:
Apparently, OP and article writer don't know what "loophole" means.
Perhaps Poodlebrain can fill us in on the definition
Posted on 5/12/16 at 12:47 pm to Poodlebrain
The partnership is loaning partnership funds to partners to cover tax liability from income received from the partnership? What state? Better be careful.
Posted on 5/12/16 at 12:53 pm to Poodlebrain
quote:
I met Donald Schupak, the attorney for the Silnas. We were discussing the coordination of loan covenants with terms of a limited partnership agreement as they pertained to distributions of cash to partners to cover their anticipated tax liabilities attributable to their partnership interests.
Posted on 5/12/16 at 1:01 pm to anc
They talked about this on John Boy and Billy last week.
Posted on 5/12/16 at 1:07 pm to TheCaterpillar
i believe i read that it went the opposite way for Tommy Lee Jones in MIB. They offered him royalties and he took the payout. would have been paid like 100x what he got.
Posted on 5/12/16 at 3:52 pm to BBONDS25
The partnerships owned casinos built with borrowed money. The casinos were making money by the boatload. The loan agreements allowed the partnerships to distribute cash to the partners to cover their tax liabilities attributable to their shares of partnership income. The partnership agreements had provisions for making distributions to partners that had to be subordinated to the loan covenants. We had to determine a method for estimating the tax liabilities of the partners that was acceptable to the partners and the lenders. Schupak was one of the partners who participated in the discussions.
There were no loans to the partners. They were receiving distributions of less than 40% of their shares of the partnership income. The reality was that they were distributed less money than their actual tax liabilities since the distributions were based on the 35% corporate tax rate rather than the 39.6% individual rates since the loan covenants dictated use of corporate rates. The only partners who complained about the cash shortfall were the Louisiana limited partners who made no cash investments but got their interests for their "assistance" in getting the last of the 15 riverboat casino licenses.
There were no loans to the partners. They were receiving distributions of less than 40% of their shares of the partnership income. The reality was that they were distributed less money than their actual tax liabilities since the distributions were based on the 35% corporate tax rate rather than the 39.6% individual rates since the loan covenants dictated use of corporate rates. The only partners who complained about the cash shortfall were the Louisiana limited partners who made no cash investments but got their interests for their "assistance" in getting the last of the 15 riverboat casino licenses.
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