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Billionaire in Debt

Billionaire in Debt

Everyone heard the story about the winner of Survivor getting into some trouble with the IRS because he didn't pay his taxes on his winnings from the show. So how is it that billionaire Philip Anschutz can rack up $144 million dollars in back taxes?

Current reports show that the IRS is fighting the billionaire over capital gains taxes and the crackdown is part of a broad attempt to regulate transactions used to defer capital gain taxes. Here's the way it works. Mr. Anschutz agrees to turn over his shares in XYZ company to an investment bank on a specific date in the future. Meanwhile, he loans the bank the same amount of stock and they give him cash, generally equal to about 80% of the fair market value. This little roundabout means Anschutz can avoid capital gains taxes because he hasn't technically sold the stocks. Meanwhile, Richard Hatch, the aforementioned prizewinner, is serving a 51-month jail sentence for tax evasion (he claims CBS said they'd pay the taxes.)

Seems there's just no way around paying taxes, people. Uncle Sam will catch up to you someday. Tell us—better to be in debt to the government, or just pay the taxes and be done with it? Are these guys in the right, or totally wrong? [Forbes]

Posted: 6/10/08