NYT: Romney's OFFSHORE INVESTMENTS Really Did Help His IRA and Bain To AVOID TAXES

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Michael Luo@michaelluo

I asked tax lawyer re: #romney #offshore story, who loses, if anyone? He sed, b/c of these kinds of tactics, marginal rates have 2 b higher.

The New York Times’ Michael Luo and Mike McIntire report that Mitt Romney’s use of offshore accounts in the Cayman Islands have enabled both his individual retirement account and Bain Capital to avoid taxes.

Some of the offshore entities enabled Bain-owned companies to sidestep certain taxes, increasing returns for Mr. Romney and other investors. Others helped Bain attract foreign investors and nonprofit institutions by insulating them from taxes, again augmenting Mr. Romney’s bottom line, since he shared in management fees based on the size of each Bain fund.

Romney has said that he got “not one dollar of reduction in taxes” out of his Cayman Islands investments. “The Romneys’ investments in funds established in the Cayman Islands are taxed in the very same way they would be if the Romneys held their shares of the fund investments directly in the U.S. rather than through a Cayman fund,” his campaign said in a January statement.

read: http://www.washingtonpost.com/blogs/election-2012/wp/2012/10/02/what-romney-got-from-offshore-investments/?wprss=rss_election-2012


from the NYT: http://www.nytimes.com/2012/10/02/us/politics/bains-offshore-strategies-grew-romneys-wealth.html?pagewanted=2&_r=0&pagewanted=print


Bain and other private equity firms use a variety of mechanisms to help investors avoid those taxes, including setting up offshore “blocker” corporations, a practice that has been criticized in some circles and has prompted legislative efforts to curb it. These offshore corporations become a conduit for money for these institutional investors, as well as foreign investors looking to avoid United States taxes.

Individual retirement accounts, as tax-exempt entities, are subject to the “unrelated business income” tax. But people familiar with Mr. Romney’s investments said his I.R.A., which is managed by an independent trustee and is estimated to be worth between $21 million and $102 million, used offshore blockers to avoid the tax. Mr. Romney’s I.R.A., for instance, has millions invested in several Sankaty funds with onshore and offshore investment vehicles. His I.R.A. would have invested through the offshore funds, they said.

In addition, the largest investment — worth up to $25 million — in Mr. Romney’s I.R.A. is in a fund called BCIP Trust Associates III, a Cayman Islands partnership through which Bain employees invested in the firm’s deals. Documents from a German regulatory authority, detailing the Bain funds’ share of a media holding company in that country, refer to holdings by BCIP Trust’s blockers, indicating it used such entities.

The complexities of tax structuring are apparent in many Bain and Sankaty funds. The 2011 tax return for the blind trust belonging to Mr. Romney’s wife, Ann, released last month, showed holdings, for example, in investment vehicles that control two related funds — Sankaty Credit Opportunities IV, L.P., organized in Delaware, and Sankaty Credit Opportunities (Offshore) IV, L.P., set up in the Caymans.

The confidential offering memorandum for Sankaty Credit Opportunities IV, part of a trove of documents dating to 2004 obtained by The New York Times, is explicit in the purpose of its Caymans counterpart. It states that it is designed to “accommodate qualified non-U.S. investors and U.S. tax-exempt investors,” and explains that the Delaware fund is “expected to incur income that is considered ‘unrelated business taxable income.’

read more: http://www.nytimes.com/2012/10/02/us/politics/bains-offshore-strategies-grew-romneys-wealth.html?pagewanted=1&_r=0&pagewanted=print

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1. hard read for non-economists like me

but ,well worth it.

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2. The Democrats

The Democrats ‏@TheDemocrats

Mitt Romney says keeping his money offshore didn't shield him from taxes he'd have owed. The @nytimes finds otherwise. http://j.mp/U6Wxzr

[Scurrilous]

3. Thanks.