Earlier this month, there was news that the IRS was suing Berkshire Hathaway over unpaid taxes at its NetJets business.
The issue has actually been brewing for awhile longer, but obviously the irony was delicious, given Buffett's semi-populist crusade in favor of higher taxes on the rich.
So what's the dispute all about?
In his latest column, Andrew Ross Sorkin explains the deal:
The issue has actually been brewing for awhile longer, but obviously the irony was delicious, given Buffett's semi-populist crusade in favor of higher taxes on the rich.
So what's the dispute all about?
In his latest column, Andrew Ross Sorkin explains the deal:
At the heart of the tax battle is whether NetJets and a sister division should have collected a special transportation tax — often called a “ticket tax” — from the fractional owners of its fleet. (Fractional owners own a stake in a private jet, entitling them to a certain number of flight hours a year, in a way that’s similar to someone owning a time-share vacation property.)
You and I — the rest of us who fly commercial — pay a federal excise tax when we fly (7.5 percent of the ticket price plus $3.80 for each leg of travel.) People who own an entire plane outright have not been subject to the same tax since, ostensibly, there is no ticket to buy. Mr. Buffett, for example, who owns a jet he once jokingly named the Indefensible — he has since renamed it the Indispensible — does not pay a ticket tax when he flies his plane.
So it turns out that fractional ownership isn't seen as ownership by the IRS.
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