Index
Above-market loans, 108–109, 111
Abrams, Allan, 125
Abrams, Morris, 125
Abreu, Alice, 270
Abusive tax shelters, 1–2
and accounting firms, 4–5
and aggressive tax strategies, 178
anti-abuse doctrines, 29–35
demand for, 45, 73
and form of transaction, 34
and fraudulent tax reporting, 262–263
future of, 348
government response to, 325
growth of, 249–252
identifying, 31
and individual taxpayers, 261–262
and lawyer wrongdoing, 238–239
and legitimate shelters, 25–29
penalties, 285
registration and listing, 91–92, 95–96, 245–246, 260, 263, 265, 280, 285
Accounting firms, 53–57, 154, 216. See also Arthur Andersen; BDO Seidman; Deloitte & Touche; Ernst & Young; KPMG; PricewaterhouseCoopers
and abusive tax shelters, 4–5
and audit services, 55
compensation system, 157
competition among, 55, 331
and confidentiality protection, 21
consulting services, 55–56
and economic environment, 331–332
fee structure and revenues, 54, 56–57, 78
and fraud, 269
functions of, 53
and law firms, 54, 70–71
and lawyer recruitment, 71
mergers among, 56
organizational misconduct, 326, 329
reorganization of, 346
standardized tax products, 56–57, 71
tax services, 53–54, 56
training and promotion, 54–55
ACM Partnership v. Commissioner, 72, 85, 89, 247–248
African Americans, 14
AIG, 151–152
Akselrad, Ira, 142, 232–233
Alex. Brown & Sons, 161
Altheimer & Gray, 161, 182, 192–193, 234–235
American Bar Association, 61
American Institute of Certified Public Accountants, 55–56
American Jobs Creation Act of 2004, 285
American Lawyer, The, 66–67
Americans for Tax Reform, 16
America Online, 51
Ammerman, Doug, 90, 94, 109, 111, 113, 117, 119–120
Amnesty program, IRS, 265–267, 269, 279
Anti-abuse doctrines, 29–35, 38–40
Antitax movement, 13–16
Archer, Bill, 12, 253, 257, 261
Armey, Dick, 16
Arnold & Porter, 3, 230, 232, 292
Arrow Fastener, 125
Arterton, Janet Bond, 237–238
Arthur Andersen, 53–54, 56, 133, 146, 276, 301
collapse of, 77, 309–310
and Deutsche Bank, 151
and Enron scandal, 269, 302
IRS summons, 273–274
shelter promotion, 150–152
SOS shelters, 97–98
Artificial loss, 80, 195–196, 201–202
Assurance game, 341–342
Atkin, Andrew, 126
Attorney-client privilege, 266, 317–318, 339
Audit profile, 206–207
Audit rates, 19, 36, 244, 252, 267
Audit services, 55
Bachrach, Marion, 313–314
Bailine, Richard, 128
Bankers Trust, 276
Banking, 344
Bankman, Joseph, 72, 249, 251–252
Bar corporatism, 344
Basis Enhanced Security Transaction (BEST), 159–162
Basis of asset, 26
and artificial loss, 195–198
in partnership, 98–101, 139, 159–160
Baucus, Max, 231
BDO Seidman, 3, 97, 155–174, 194
and anonymous letter to IRS, 171–172
Basis Enhanced Security Transaction, 159–162
and client audits, 173–174
compensation incentives, 168–169
criminal indictments, 289, 322
and grantor trusts, 163, 261
and investment potential, 163
and IRS, 172–174, 273–275, 278–279, 337–338
and Jenkens & Gilchrist, 160–162, 164–166, 174
and list maintenance requirement, 166–167
plea agreements, 289
recharacterization of fees, 160, 164–165
settlement agreement, 291
and Skadden memo, 168–170, 290
Tax Solutions Group, 157–159, 162–163, 166, 167–171
value-added transactions, 156
Wolf Pack, 3, 156, 158
Bee, Charles, 156–157, 159–162, 167–168, 170, 172–173, 279, 289–290
Beer, Andrew, 146
Bennett, Robert, 306
Bickham, Randy, 90, 92, 96, 107, 111–115, 120, 122, 123, 220–223
Big Eight accounting firms, 53–54, 56, 77
Blanchard, Jerred, 140–141
Bobrow, Richard, 133
Bolton, Charles, 137, 144, 147–148, 287
Bolton Asset Management, 153
Bolton Capital Trading, 137
Bond and Option Sales Strategy (BOSS) shelters, 1, 98–99, 140, 153–154, 257–259. See also Son of BOSS shelters
Bond-Linked Issue Premium Structure (BLIPS), 2, 103, 107–126, 222–224
and above-market loans, 108–109, 111
and client representations, 116–118, 121–122
and economic substance, 110–113, 333–334
and IRS, 130
KPMG, 103, 107–126, 222–224, 332–333
marketing of, 123–126
and partnership rules, 107–108, 115–116
Booz Allen, 22
BOSS shelters. See Bond and Option Sales Strategy (BOSS) shelters
Bowen, William H., 178
Branan, Carolyn, 84
Brand, Phil, 95
Brasher, James, 305, 312
Breeden, Richard C., 311
Bricker, William, 151
Bricolage, 146–147, 151, 235
Broadcast.com, 51
Brockway, David, 120–122, 126, 334
Brodsky, Jeff, 144–145
Brown & Wood, 3, 103, 218–229, 280
BLIPS, 223–224
and Diversified Group Inc., 228
and KPMG, 83, 219–229, 281–282
opinion letters, 218, 223–224, 226–228
OPIS, 221–222
and Presidio, 224
revenues, 219
Senate testimony, 281–282
shelter activity, 218–219
Brubaker, R. Craig, 289–290, 322
Burke, Michael, 309
Bush, George H. W., 12, 15
Bush, George W., 214, 269–270
administration, 269
Business Development Managers, 87
Business purpose doctrine, 85, 247–248
Cafeteria plans, 26
California, 14
Call options, 195–197
Call-option spread strategy, 151–152
Camferdam, Henry, 202–205, 274–275
Campbell, John, 236, 292
Canellos, Peter, 63–64
Cantrill, Thomas, 318, 320
Cap Gemini, 232
Capital gains, 41, 135–136
Caplin, Mortimer, 283
Caplin & Drysdale, 283
Capone, Al, 171
Carney, Robert, 141
Cayman Islands, 80–81
CDS Add-On, 143–148, 230, 288
Chapoton, John, 253
Charitable giving, 26
Chenery Associates, 224–225, 280
Chopack, John, 305, 312
Chronicle Publishing Company, 154
Cinquegrani, Peter, 146, 151, 235, 292
Circular 230 (Treasury Department), 263, 283, 345, 347
Clark, Jim, 51
Clifton, Brent, 136, 139, 144, 230
Clinton, Bill, 16, 21, 252–253, 260, 269
administration, 252–253, 260
Coastal Trading LLC, 259
Cohen, Larry, 172
Colaprete, John, 11, 12
Coleman, Norman, 231, 281, 303, 305
Colgate-Palmolive, 85, 247–248, 251
Competition, 46–48
accounting firms, 55, 331
law firms, 58, 65–66, 73, 184–185
Compliance, 327, 339–343
as assurance game, 341–342
and tax morale, 340–341
Congress
American Jobs Creation Act of 2004, 285
Economic Recovery Tax Act of 1981, 15
and IRS funding, 18, 22
and IRS hearings, 11–12, 19–22, 243
IRS Restructuring and Reform Act, 21, 243, 252, 286
Sarbanes-Oxley Act, 294, 302
shelter legislation, 261, 271
and tax evasion penalties, 285
and tax incentives, 26–27, 29, 40
tax law amendments, 34–35, 79, 293
Taxpayer Relief Act of 1997, 86, 91–92, 245, 260
Tax Reform Act of 1986, 15, 42
tax shelter hearings, 2, 253–254, 257, 277
Conjura, Carol, 129
Conlon, Dennis, 148, 150
Contingency fees, 54, 56–57
Contingent deferred swap (CDS), 135–139, 152–153, 230–231
CDS Add-On, 143–148, 230, 288
Ernst & Young, 135–138, 143
and IRS, 138
and partnerships, 135–136
and PricewaterhouseCoopers, 107
Contingent liability, 99–101, 108, 196–198
Contingent Liability Acceleration Strategy (CLAS), 129–130, 311–312
Contract with America, 16
Cook, Michael, 190–191, 198, 208, 210, 213, 335–336
Coopers & Lybrand, 77, 87–89, 152
Coplan, Robert, 134, 138, 140–150, 199, 287
Cornerstone Partners, 144–145
Corporate tax shelters, 252, 262. See also Tax shelters
Corporations, 45–49
audit rates, 19, 252, 268
and competition, 46–48
financial conception of, 48
and law firms, 57, 66–67
legal departments, 66
power of, 46
ranking, 47–48
tax departments, 45, 48–49, 252
and tax law amendments, 294–295
Cosmetic trading, 206
Criminal indictments, 217, 285–293, 295
BDO Seidman, 289, 322
consequences, 325–326, 328–329
Ernst & Young, 284–287, 328
Jenkens & Gilchrist, 290, 322–323
KPMG, 286, 312–316, 328
private lawyers, 291–293
Currency Options Bring Reward Alternatives (COBRA), 2–3, 186, 210
and class action suit, 275
Ernst & Young, 139–143, 148–150, 288
Jenkens & Gilchrist, 139, 142, 195, 198–202, 275
lottery feature, 200–201
Custom Adjustable Rate Debt Structure (CARDS), 224–225, 235
Darley, John, 334, 337
Daugerdas, Paul, 3, 98, 103, 139, 151, 159–162, 164–165, 177–178, 181–199, 206–216, 217, 275, 289–291, 319–320, 322–323, 328, 335–336, 338–339
Deary, David, 319
Deductions, tax, 26
Deerhurst Management, 137, 144, 146
Deferred taxation, 41
DeGiorgio, Domenick, 313
DeLap, Richard (Larry), 85, 86, 90–97, 110–113, 115–116, 119–121, 123, 128–129, 333, 336
Deloitte & Touche, 57, 126–127, 133–134, 250
Denney, Thomas, 275
DePetris, Ron, 313–314
Deregulation, 47
Deutsche Bank, 2, 89, 139, 160, 276
and Arthur Andersen, 151
backdating, 207
and Jenkens & Gilchrist, 198–201, 203–204
and KPMG, 95, 103, 116–117, 120–124, 222, 333
non-prosecution agreement, 289–290
Dickens, Grady, 198, 230
Dicker, Adrian, 156–157, 159–161, 166–167, 289–290
DiPiazza, Samuel, 259
Diversified Group Inc. (DGI), 97, 211–214, 228, 233–234
Divola, Julie, 234
Doerr, John, 50
Doggett, Lloyd, 254, 257–258, 271, 273
Dog tech stocks, 206
Doran, Michael, 36
Dougherty, Thomas, 148–149
Duer, Walter, 126
Duncan, Douglas, 126
Dupont, 67, 78–81
Durbin, William, 185–186, 190, 214–215, 318
EarthWeb, 51
Ebbers, Bernie, 97
Economic Recovery Tax Act of 1981, 15
Economic substance doctrine, 30, 38, 198, 237, 247–248
BLIPS, 110–113, 333–334
and KPMG approval process, 316
and tax law, 293–294, 332
as technical issue, 333–334
Edsall, Mary, 14
Edsall, Tom, 14
Egan, Richard, 233
Eischeid, Jeffrey, 97, 103, 107, 109, 113–115, 123, 131, 223, 304–305, 313
Ellsworth Partners, 173
Enron Corporation, 133, 269–270, 276
“Enron’s Other Strategy,” 270
Environmental law, 36
Ernst & Young (E&Y), 2–3, 57, 71, 97, 107, 133–150
and audit profile, 207
CDS Add-On, 143–148, 230, 288
contingent deferred swap (CDS), 135–138, 143
criminal investigation and indictments, 284–287, 328
Currency Options Bring Reward Alternatives (COBRA), 139–143, 148–150, 288
document purge, 149–150
and fee payment, 147
and IRS, 147–150, 273, 278, 285
and Jenkens & Gilchrist, 198–200, 203
and Locke, Liddell & Sapp, 230–231, 234–235
non-prosecution agreement, 288–289
partners’ shelter transaction, 232–233
Personal Financial Consulting unit, 133, 134
Personal Investment Corporation (PICO) strategy, 146–147, 151, 235
and Proskauer Rose, 232–233
Quality and Integrity Program, 346
reorganization, 346–347
review process, 333
and Sprint, 275–276
Strategic Business Solutions group, 140
Strategic Individual Solutions Group, 141, 288
and Support Net, 202–205
and swap termination, 137–138, 148
VIPER group, 134–139, 141, 288
Evanson, Dennis, 291
Everson, Mark, 277–278, 283–284
Exchange rates, 201
Executive compensation, 50
Executive Risk Indemnity, Inc., 319
Family Investment Statutory Trust, 225
Farr, Wilkie, 306
Federal deficit, 15–16
Federal Savings & Loan Insurance Corporation (FSLIC), 178–179
Federal Trade Commission, 56
Fees, value-based, 78, 184, 186, 206–207
Field, Denis, 3, 155–161, 165–168, 170–171, 172, 174, 279, 289–291, 322–323, 328
Financial Accounting Standards Board Interpretation No. 48 (FIN 48), 294–295
Financial conception of control, 48
Firm liability, 345, 347
Firm-specific capital, 57–58
First Union Bank, 84, 152–153
Flexible gain deferral strategy, 134
Fligstein, Neil, 48
Foreign Leveraged Investment Program (FLIP), 81–88, 90–92, 152–153, 221
401(k)Accel, 312
Fox, Edward, 151–152
Frank, Michael, 141
Friedman, Michael, 274
Friedman, Ron, 141
Frontline, 306
Fuller, Lon, 339
Galbreath, Stephen, 127
Garlock, David, 140
Garner, Robert, 133–134
Gates, Bill, 174
Gemstar, 308
Gilchrist, Henry, 215, 322
Gingrich, Newt, 15, 16
Global Crossing, 97
Goldberg, Fred, 20, 167–168, 170, 248
Gordon, Jay, 235–236, 292
Graetz, Michael, 27
Grantor trusts, 105, 163, 165, 261–262
Grassley, Charles, 269–270
Greenberg Traurig, 235–236
Greenstein, Jeffrey, 82, 236, 292
Gregory vs. Helvering, 30, 39, 247
Greisman, Robert, 157, 159–162, 164, 172–173, 194, 289–290, 322
Gross income, 25
Guerin, Donna, 161, 182–183, 190–192, 207, 209–211, 214, 289–291, 319–320, 322–323, 328
Haber, James, 97, 211–212
Hacker, Jacob, 15
Hamersley, Michael, 299–304, 306
Harris, David, 267
Hayse, Roger, 209–210
Hedge Option Monetization of Economic Remainder (HOMER) shelter, 195
Helios, 233–234
Helmer v. Commissioner, 99–101, 108, 197–198
Henning, Joel, 68
Hermann, Robert, 270
Hill, Lawrence, 167, 172, 266
Hoenig, Wayne, 202–203
Hogan, Thomas F., 307–308
Holland, H. Brian, 63
Holmes, Sven Erik, 308–309
Home ownership, 26
Hortenstine, Dale, 144
How to Beat the I.R.S. at Its Own Game, 18
Huber, Robert, 126
Humphreys, Thomas, 225, 227–229
“Hustling of X-Rated Shelters, The,” 2, 249
HVB, 124–125
Hybrid, 291
Hybrid regulation, 344–347
Hypercompetition, 47–48
ICA shelters, 235
Ice Miller, 62
Income
and compensation, 50
concentration of, 49–50
gross, 25
taxable, 25–26, 71
Income tax. See also Tax law
and accounting firms, 53–54
credit, 19
repeal of, 16
and taxable income, 25–26
withholding, 18
Incomplete redemptions, 80
Information document requests (IDRs), 173
Initial public offerings, 51
Interaction costs, 34
Internal Revenue Service (IRS), 4, 17–24
accounting systems, 12–13
amnesty program, 265–267, 269, 279
and Arthur Andersen, 273–274
audit rates, 19, 36, 244, 267
and BDO Seidman, 172–174, 273–275, 278–279, 337–338
and BLIPS, 130
and BOSS shelters, 140, 154, 258
brain drain at, 18–19
and CDS, 138
and CLAS, 130
and COBRA, 201–202
collection procedures, 13, 17–19, 23–24
Congressional hearings, 11–12, 19–22, 243
and contingent liability shelters, 145
Criminal Investigation Division (CID), 20, 255–256, 283
data analysis, 17–18
enforcement activity, 24, 268, 277–278
and Ernst & Young, 147–150, 273, 278, 285
funding, 18, 22, 271
and grantor trust netting, 105, 165, 261–262
and high-wealth individuals, 18–19, 24
hostility to, 12, 16
and income tax credit, 19
IRS Restructuring and Reform Act, 21, 243, 252, 286
and Jenkens & Gilchrist, 317–318
and KPMG, 273–274, 297–298
litigation, 245, 256, 259–260, 264, 277–279
and Merrill Lynch, 264
mission statement, 21–22
Office of Professional Responsibility, 282–283
Office of Tax Shelter Analysis, 260–261, 264–265
partnership and corporate returns, 18–19, 268
and PricewaterhouseCoopers, 259, 273
and regulation of professionals and firms, 345–346
restructuring, 22–24
and SC2 strategy, 128–129
settlement agreements, 277–279, 283–286
and shelter investigation, 41, 229, 244–245
shelter registration and listing, 91–92, 95–96, 245–246, 260, 263, 265, 280, 285
and Short Options Strategy, 165
and Son of BOSS shelters, 130, 261–262, 337–338
summonses, 273–277, 279–282
taxpayer service, 22–23
and tax practitioners, 246–247, 283
“Ten Deadly Sins,” 23
unmatched returns, 268
International Air Leasing, 225
International Services group, 93–94
Internet companies, 50–51
Investment
and loss reporting, 42
passive loss rules, 42
and tax avoidance, 41
IRS Restructuring and Reform Act, 21, 243, 286
Jackson Tufte Cole & Black, 98
Jacoboni, Joseph, 298–299, 306
Jenkens, Holman, 178
Jenkens & Gilchrist, 3, 5, 177–216, 295, 317–324
and Altheimer & Gray, 192–193
and attorney-client privilege, 317–318
and audit profile, 206–207
backdating, 207
and BDO Seidman, 160–162, 164–166, 174
class action settlement, 319–320
client representations, 205–206
COBRA, 139, 142, 195, 198–202, 275
compensation, 189, 211–212
criminal indictments, 290, 322–323
Daugerdas agreement, 190–193
and Deutsche Bank, 199–201, 203–204
dissolution of, 320–321
and Diversified Group Inc., 212–214
employee exodus, 318–320
and Ernst & Young, 198–200, 203
Hedge Option Monetization of Economic Remainder shelter, 195
intellectual property practice, 180–181
IRS summonses, 317–318
Jenkens & Gilchrist (cont.)
lateral hiring, 185–186, 189
legal troubles, 178–179
non-prosecution agreement and settlement, 321–322
opinion letters, 199, 205–206, 208–209
profits and revenues, 178, 181–182, 209–211
restructuring and growth, 179–182
review process, 335–336, 338
Short Options Strategy, 194
Swaps shelter, 194–195
tax shelter adoption, 187–192
trial testimony, 290
value-based fees, 184, 186, 206–207
Jobs Act of 2004, 285
John Doe summons, 280
Johnson, Calvin, 78, 82
Jones, Tommy Lee, 179
Justice Department, 295
and Arthur Andersen, 310
and KPMG, 297–298, 307–308, 310
Kaplan, Lewis, 314–315
Kasich, John, 12
Kelley, Michael, 140–142, 145
Kelliher, William, 127–129
Kelly, Terry, 156
Kerekes, Michael, 156, 158, 160, 162–163, 166, 167, 172, 289, 337–338
Kies, Kenneth, 253–254, 257–258, 260, 264
Killefer, Campbell, 298–299
King & Spalding, 71, 237–238
“Kiss That Tax Shelter Goodbye?,” 259
Kleiner Perkins, 51
Klotsche, John, 278, 284
Knetsch, Karl, 27–30, 31
Knetsch vs. Commissioner, 27–32, 35
Korb, Donald, 284
Kozlowski, Dennis, 276
KPMG, 2, 57, 77–131, 133, 152, 295, 297–317
anonymous memo, 312
approval process, 316–317, 332–333, 336
audit partners, 301
Bond-Linked Issue Premium Structure (BLIPS), 103, 107–126, 222–224, 332–333
and Brown & Wood, 83, 219–229, 281–282
Capital Transaction Strategies (CaTS), 90, 92–93
class action suit, 286
and client representations, 116–118, 121–122
Contingent Liability Acceleration Strategy (CLAS), 129–130, 311–312
criminal indictments and prosecutions, 286, 312–316, 328
deferred prosecution agreement, 310–311
Department of Professional Practice for Tax, 85
and Deutsche Bank, 95, 103, 116–117, 120–124, 222, 333
and disclosure of clients, 274
and finders’ fees, 84
fines, 311
Foreign Leveraged Investment Program (FLIP), 81–88, 90–91
401(k)Accel, 312
“Generating Capital Losses,” 83
and grantor trust netting, 105, 261–262
Innovative Strategies group, 107, 126, 130, 305
IRS summons, 273–274, 297–298
Justice Department investigation, 297–298, 307–308, 310
lawyer recruitment, 86–87
legal fees, 306, 313–315
litigation by clients, 286, 298–300
marketing and sales, 87, 123–126, 128–129
Offshore Portfolio Investment Strategy (OPIS), 93–97, 102–103, 105
opinion letters, 85, 91, 223–224, 307–308
Partnership Option Portfolio Securities, 131
Personal Financial Planning (PFP) group, 90, 103, 107, 311
and Presidio, 88–90, 111, 124
and privilege claim, 307–308
and registration requirements, 95–96
reorganization, 305
SC2 strategy, 126–127, 285, 306, 311
SEC civil suit, 308
Senate hearings, 303–305
Short Options Strategy (SOS), 97–98, 101–102, 130
Skunk Works, 78–79
Stratecon, 126, 301, 305, 311
Tax Advantaged Transaction group, 88, 90
tax evasion strategies, 78–82, 88–89
Tax Innovation Center, 86
tax services and products, 77–78, 85–87
value-based fees, 78
Washington National Tax (WNT) office, 78–79, 104, 106
Krane, Matthew, 236, 292–293
Krieger, Andrew, 137, 144
Kuller, Mark, 237–238
Kurtz, Jerome, 41
Laney, David, 177, 179–180, 183, 185–186, 189–190, 209–210, 213–216
Langdon, Larry, 265–266
Lanning, John, 71, 78, 85, 87, 88, 90, 109, 112, 117, 131, 313, 336
Larson, John, 79, 80, 82, 85, 88, 90, 92, 95, 103, 107, 111, 115, 123, 124, 221, 224, 313, 315–316
Law firms, 57–73. See also Arnold & Porter; Brown & Wood; Jenkens & Gilchrist; Locke, Liddell & Sapp; Proskauer Rose; Sidley Austin Brown & Wood
and abusive tax shelters, 3–6
and accounting firms, 54, 70–71
advising/advocacy, 61–63, 65
attitudes to shelter transactions, 191–192
compensation and promotion, 67, 69
and competition, 58, 65–66, 73, 184–185
and corporate clients, 57, 66–67
and criminal prosecution, 217
culture and organization, 59–60, 67, 69–70
and economic environment, 331–332
elite tax bar practice, 60–65, 70–72
and Ernst & Young, 230–234
and firm liability, 345, 347
firm-specific capital, 57–58
and high-income clients, 6–7
and IRS amnesty program, 266
lawyer oversight, 217
legal services life cycle, 184–185
opinion letters, 64, 234–235, 237–238
organizational misconduct, 326, 329
organization culture, 324
professional norms, 7, 58, 61, 343
profits per partner, 66–67, 181
and regulation, 59
reorganization, 347
responsibilities of, 62–63
services pyramid, 67–68
and tax avoidance, 63–65, 70–71
and textualism, 72
“Lawsuits over Tax Shelters Suggest a Hard Sell by KPMG,” 300
Lawyers
as independent counsel, 339
and professional norms, 343
Lay, Kenneth, 97
LeBoeuf, Lamb, Greene & MacRae, 3, 234–235
Lederman, Leandra, 30
Lee, Bryan, 208, 210
Leisner, Christopher, 172
Leonard, Joel, 144–145, 150
Levin, Carl, 280–282, 302–305
Levitt, Arthur, 55, 309
Lewinsohn-Zamir, Daphna, 341
Liddell, Sapp, Zivley, Hill & LaBoon, 182
Lippman, David. See Smith, David
Lipton, William, 141
Listed transactions, 165
Loans
above-market, 108–109, 111
interest deductions, 28
legitimacy of, 121
non-recourse, 108, 114
Locke, Liddell & Sapp, 3, 144, 179, 209
and Ernst & Young, 139, 230–232, 234–235
opinion letters, 136–137
Locke Lord Bissell & Liddell, 230
Locke Purnell Rain Harrell, 182
Lockheed Corporation Skunk Works, 78
Long, Jennifer, 20
Long options, 100–101
Long-Term Capital hedge fund, 236–238, 286
Lottery feature, 200–201
Lovejoy, Ralph, 84, 87
Luchs, Lorin, 156
Makov, Amir, 111, 114–116, 315
Mandel, Ken, 151
Manth, Larry, 126
Martin, Isaac William, 13
Matthews, Mark, 256, 278
Mayer, Erwin, 183, 190–192, 207, 210–211, 214, 289, 319–320, 322–323
MCA, Inc., 78–79
McDonough, Bill, 309
McElhaney, John, 231
McKee Nelson Ernst & Young, 71
Medical deductions, 26
Meese, Edwin, 277
Merrill Lynch, 247–248, 264
Merton, Robert, 237
Miers, Harriet, 231–232
Miller, Canfield, Paddock & Stone, 236
Miller, Merle, 62, 63
Mintz, Seymour, 61
Mitchell, Pat, 186, 320
Moore, Larry, 173–174
Moore, Nancy, 173–174
Morse, Susan, 294
Murchison, Clint, Jr., 178
Murias, Fernando, 250, 257
Murphy family, 142
Namorato, Cono, 282–283
Net income, 25–26
Netscape, 51
“New Market in Corporate Tax Shelters, The,” 251
Nissenbaum, Martin, 134, 140, 232–233, 287–288
Non-recourse loans, 108, 114
Norquist, Grover, 16
Novack, Janet, 133, 249–250
O’Daniel, Patrick, 198–199, 209
Office of Tax Shelter Analysis (OTSA), 260–261, 264–265
Office of Thrift Supervision, 344
Offshore Portfolio Investment Strategy (OPIS), 93–97, 102–103, 105, 221–222
O’Kelly, Eugene D., 305, 309
Opinion letters, 37–38, 64, 184, 234–235
Brown & Wood, 218, 223–224, 226–228
and compliance, 340
Jenkens & Gilchrist, 199, 205–206, 208–209
King & Spalding, 237–238
KPMG, 85, 91, 223–224, 307–308
Locke, Liddell & Sapp, 136–137
Proskauer Rose, 234
and strict liability standards, 294
Treasury requirements, 263
Option Partnership Strategy (OPS), 212
Options, 100–101, 194–197, 201
Organizational misconduct, 329–339
causes of, 330–331
and diffusion of responsibility, 334–335
and economic environment, 331–332
and geographic isolation, 336–337
institutionalization of, 332–337
and reorganization, 346–347
and sunk cost problem, 337
Organizational Sentencing Guidelines, 345–346
Pacific Capital Group, 97
Packard, Pamela, 170–171
Parker, Robert, 319
Parker Chapin, 209
Parse, David, 161–162, 289–290, 322–323
Partnership Option Portfolio Securities (POPS), 131
Partnerships
audit rates, 19
basis in, 98–101, 139, 159–160
and BLIPS, 107–108, 115–116
and BOSS shelters, 98–99
and CDS, 135–136
and liability, 99–101, 196–197
and options, 100–101, 196–197, 201
returns, 18–19, 268
rules, 33
as tax shelters, 40–41
trading, 136
unmatched returns, 268
Passive investments, 42
Paul, Randolph, 62
Pavelich, Dan, 155–156
Pearlman, Ron, 253
Peat Marwick, 77
Penalty scheme, 293–294
Perez, Daniel, 84, 298–299
Perez, Reuben, 84, 298–299
Personal Investment Corporation (PICO) strategy, 146–147, 151, 235
Pesiri, Emil, 98, 103
Pfaff, Robert, 80, 83, 85, 88–92, 103, 107, 109, 112, 124, 224, 313, 315–316
Pierson, Paul, 15
Pillsbury, Madison & Sutro, 230, 234–235
Poch, Oskar Rene, 236, 292
Portfolio Optimized Investment Transaction (POINT), 236
Powell, Gary, 89
Powers, William, Jr., 269
Practicing Law Institute lectures, 83
Presidio, 88–90, 103, 111, 124, 224
Priceline.com, 51
Price Waterhouse, 53, 77, 102
PricewaterhouseCoopers (PwC), 1–2, 57, 87–88, 98, 136, 140
BOSS shelters, 98, 258–259
CDS, 107
contingent fees, 254
internal review process, 153–154
and IRS settlement, 133, 259, 273
shelter involvement, 152–154, 250, 337
and Treasury envelope, 257–258
Wall Street Journal article, 145
Prisoner’s dilemma, 341
Private Capital Management Group (PCMG), 135, 137, 139, 148, 153
Privilege, practitioner-client, 266, 274, 277–279, 297, 317–318, 339
Problem of Corporate Tax Shelters, The, 252
Professional services, 52. See also Accounting firms; Law firms
fee structure, 54, 56
financial incentives, 52–53
and profit maximization, 52
Profits per partner (PPP), 66–67, 181, 209
Property taxes, 13–14
Proposition 13 (California), 14
Proskauer Rose, 3, 142, 230, 232–234
Quadra Investment, 82–83, 87, 89–90, 103, 107, 153
Quellos, 153, 236, 292
Ramirez, Edmundo, 298–299
Reagan, Ronald, 12, 14, 15
Real estate investment, 41
“Realization” event, 33
Refco Bank, 153
Registration, shelter, 91–92, 245–246, 260, 263, 265
Ernst & Young, 278
JOBS Act, 285
KPMG, 95–96
Regulation
hybrid, 344–347
self-regulation, 343
Republican Party
hostility to taxes, 12, 15–16
Taxpayer Pledge, 16
Resnick, Joel, 79
Retail tax shelters, 262
Retirement contributions, 26–29
Ritchie, Gregg, 89–97, 104–105, 107, 220–222
Rivkin, David, 314
Roedel, Richard, 156–157, 159
Rokoff, Gerald, 120, 124
Rosenthal, Richard, 127, 129, 131, 308
Rosenthal, Steven, 106, 107, 109–111, 113–117, 119–123, 126, 153, 334
Ross, John, 124
Rossotti, Charles, 21–23, 243, 255–256, 267–269, 277
Rostain, Tanina, 71
Roth, William, 11, 20, 255, 261
Ruble, R. J., 83, 92, 97, 101, 103, 107, 122, 140, 151, 154, 199, 218–229, 233, 280–282, 286, 307, 313, 315–316
Ryan & Sudan, 164
Saban, Haim, 236, 292–293
Sam Houston Life Insurance, 35
Sams, Jim, 109
San Francisco Chronicle, 154
Sarbanes-Oxley Act, 294, 302
Saunders, Laura, 133, 249–250
Saylor, F. Dennis, 233–234
SC2 strategy, 126–129, 285–286, 306, 311
Scheef & Stone, 230
Scheinfeld, Larry, 87
Schneyer, Ted, 344
Scholes, Myron, 237
Schwartz, Michael, 79, 80, 82, 83, 87, 88, 137, 152–153, 259
S corporations, 126–128, 146–147, 160, 206–207
“Scrap the Code” tour, 16
Seagram, 78–81
Seidman, L. William, 155, 171, 174, 194
Self-regulation, 343
Sellin, Henry, 62
Senate
IRS hearings, 11–12, 19–22
tax shelter hearings, 255, 270, 280–281, 303–305
September 11, 2001, 138
Seyfarth Shaw, 3, 234–235
Shaheen, Michael, 263
Shanbrom, Paul, 161, 165, 172, 290
Shapiro, Dan, 143, 148
Shapiro, Richard, 134–135, 137, 140–141, 143, 146, 287–288
Shearman & Sterling, 116, 124, 237
Sheppard, Lee, 262, 270
Short options, 100–101
Short Options Strategy (SOS), 97–98, 101–102, 130, 165, 194
Sidley & Austin, 218, 229, 233, 280
Sidley Austin Brown & Wood, 3, 229, 279–282
class action suit, 286
disclosure of clients, 280, 282, 318
Senate testimony, 281–282
settlement agreement, 286
Simon, Bob, 91–94, 221
Six, Belle, 134–136, 139, 143, 146, 148, 287
Skadden, Arps, Slate, Meagher & Flom, 167–170
Skunk Works, 78–79
Smith, David (also known as David Lippman), 79, 80, 82, 87, 88, 107, 122, 135–137, 139, 143, 148, 153, 230, 234, 287
Smith, Richard, 79, 95, 109–111, 116, 117, 119, 120, 123, 131, 221, 304, 305, 309, 313
Smith, Thomas, 220, 225, 227–229, 280–282
Solway, Rick, 221
Son of BOSS shelters, 98, 100, 139, 154. See also Bond and Option Sales Strategy (BOSS) shelters
and IRS notices, 130, 151, 261–262, 337–338
and options sale, 194
and settlement with IRS, 283–284
Springer, Mark, 127
Sprint, 275–276
Stein, Jeffrey, 78, 88, 93–95, 112, 119, 120, 123, 125–127, 131, 297, 305, 308, 313, 336
Stein, Sidney, 287
Step transaction doctrine, 82, 96
Summers, Lawrence, 260
Sunk cost problem, 337
Support Net, 202
Swaps shelter, 194–195
Taft, Claudia, 309
Tauzin, Bill, 16
Taxable income, 25–26, 71
Tax accounting, 54. See also Accounting firms
Tax advising, 6, 61–63, 65, 338–343
Tax advocacy, 61–62, 65
Tax bar, 252, 266, 327, 344–345
Tax cuts
and electoral politics, 14–15
and federal deficit, 15–16
Tax elimination, 207
Tax evasion strategies, 1, 24
artificial loss, 80, 195–196
and deferred taxation, 135–136
Enron, 269–270
Foreign Leveraged Investment Program (FLIP), 81–88, 90–92
KPMG, 78–82, 88–89
Seagram-Dupont deal, 78–81, 91
Tax law, 32–34
basis of asset, 98–101
business purpose doctrine, 85
complexity of, 331–332
economic substance doctrine, 293–294, 332
and fairness, 38–40
interaction costs, 34
and opinion letters, 37–38
and options, 194
and partnerships, 99–101
passive loss rules, 42
and social engineering, 40
step transaction doctrine, 82, 96
and tax morale, 341
and taxpayer honesty, 36
textualism, 72
Tax morale, 340–341
Taxpayer Pledge, 16
Taxpayer Relief Act of 1997, 86, 91–92, 245, 260
Tax professionals. See also Accounting firms; Law firms
cooperation with IRS, 246–247, 283
and criminal prosecution, 327–329
disclosure obligations, 285
and economic environment, 331–332
law degrees, 104
and opinion letters, 37–38
practitioner-client privilege, 266, 274, 277, 297
regulation of, 327, 343–349
as shelter designers and promoters, 348
and social bargain, 326–327
and tax compliance, 327, 339–343
and taxpayer liability, 37
and Treasury regulations, 263
Tax Reform Act of 1986, 15, 42
Tax shelters. See also Abusive tax shelters
as commodities, 184–185
corporate, 252, 262
history of, 40–43, 45
investments as, 41–42
mass marketing of, 205
partnerships as, 40–41
and trade secrets, 185
and value billing, 184
Tax straddle, 64–65
Tax system
antitax movement, 13–16
complexity of, 31, 34
deductions, 26
Economic Recovery Tax Act of 1981, 15
and fraudulent reporting, 262–263
and high-wealth individuals, 6, 18, 24
hostility to, 12
legitimate costs, 30–31
and property assessment, 13–14
and self-assessment, 35–38
and taxpayer behavior, 26
Taylor, Graham, 230, 234–235, 291–292
Textualism, 72
TheGlobe.com, 51
Theofel, George, 103
Third-party verification, 27
Thomas, James, 151–152
Thomas, L. G., 46
Thompson, Larry, 306
Thornton, Grant, 279
Thrower, Randolph, 62
Tilevitz, Orrin, 101
Tradehill Investments, 232
Trading partnerships, 136
Treasurex, 213
Treasury Department, 1, 59, 252–255
Circular 230, 263, 283, 345, 347
and enforcement, 331
shelter regulations, 260, 262, 267, 276
Treasury bills, 64, 159, 162, 194
Tucker, Stefan, 253–255
Turkus, Albert, 168
Turner, Ted, 98
Union Bank of Switzerland (UBS), 83, 89, 137
Univer, Scott, 167, 172
Value-based fees, 78, 184, 186, 206–207
Vaughan, Diane, 330–331
Vaughn, Brian, 134–141, 143–144, 287
Vertically integrated companies, 47
Watson, Mark, 103–107, 109–113, 115–117, 119–123, 127, 153, 303, 313, 316, 333–334, 335–336
Webster, William, 255–256
Webvan, 51
Weddle, Justin, 314
Weisbach, David, 32–34
Whistleblowers, 293
White, James R., 268
Wiesner, Philip, 110, 113, 116–123, 126, 313
Wilk, Charles, 236, 292
Williams, B. John, 277, 317
Wilmer Cutler, 106
Winnick, Gary, 97
WorldCom, 275
Wright, Damon, 298–299
Xerox Corp, 308
Yin, George, 42
Zysik, Jeffrey, 95, 111