Jamie and Frank McCourt made $108 million from 2004 through 2009 but paid no federal or state income taxes. The secret lives of the rich and infamous came to light when the couple filed for divorce in Los Angeles County Superior Court. According to Michael Hiltzik of the LA Times:
The court papers indicate that the McCourts deliberately structured their business at least partially to allow them to live tax-free ...According to court papers files by Jamie McCourt, Frank manipulated business accounts to make himself look $670 million poorer than he is. Cheating the IRS may be legal, but ...
According to Jamie, the McCourts employed two mechanisms to live tax-free. One was to claim enormous tax losses from their business, which was mostly commercial real estate before they bought the Dodgers. These could be carried forward, offsetting income year after year until they were finally netted out ...
Depreciation is a non-cash expense that can be applied against cash income, reducing your income taxes or creating a loss to show the tax man, even though you're making money. It's common in real estate, though it can also be applied to things like a sports team's player contracts ...
Another McCourt maneuver involves financing and refinancing their assets. The tax rules allow real estate owners to refinance properties with rising values and take out cash tax-free ...
The McCourts have also borrowed against future business income -- in 2007 they took out a $140-million loan against future Dodger ticket sales, of which $20 million went to fund their lifestyles, tax-free.
Perhaps our good friend and honorary cephalopod, AZRainman, should have the last word …Heaven has no rage like love to hatred turned
Nor hell a fury like a woman scorned.
