This website uses the infamous son of Boss tax shelter as a tool to explain how our tax code has been manipulated by some of the sharpest and most devious minds in the country. At its core, the son of Boss tax shelter involves the same concept employed by other tax shelters to reduce or eliminate capital gains: the creation of an artificial tax loss to offset a taxable gain. What sets the son of Boss tax shelter apart is the magnitude of tax dollars lost to the U.S. Treasury, as well as the tortured logic of its creators. Understanding how the son of Boss transaction distorts economic reality offers an insight into how all tax shelters work, as well as how the dysfunctional nature of our current tax code provides the opportunity to attain such illogical results.
The Inflated Basis Transaction (Diagram)
Son-of-Boss Transaction in a Nutshell (Diagram)