Tax Law Amended

Posted By: Dr. Frugal in Taxes on 01/03/2008 at 06:38:15

George Bush finally did something good by amending the shield to tax-exempt groups.

The law was originally intended to curb questionable tax arrangements in which corporations bought public land or assets and then leased them back to cities and states. Such deals generate big tax breaks for companies but not for the governments, which typically make such deals to meet budget shortfalls or finance infrastructure projects.

Such deals — known as lease-in, lease-out, or Lilo, and sale-in, lease-out, or Silo — came into widespread use in the late 1990s. The Internal Revenue Service formally banned Lilo by 2002 and Silo by 2005.

While the Treasury Department and the I.R.S. had not taken action against partnerships with tax-exempt investors, a moratorium on applying the law to nonabusive partnerships would have expired at the end of last year.

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