The rich get richer
Billionaire Paul Allen is a Microsoft cofounder, the owner of the NFL’s Seattle Seahawks and the owner of the NBA’s Portland Trailblazers.
And, thanks to the stimulus bill President Obama signed this week, he’s also about to be as much as a billion dollars richer.
Allen owns a majority stake in cable provider Charter Communications. Charter Communications this month said it would reduce its debt load by $8 billion and enter Chapter 11. Normally, partners at a firm like Charter Communications would have to pay taxes on the amount of debt forgiven in this process, which is, in a sense a one-time income windfall. Tax law calls it a “deemed distribution.” But under the new bill, companies like Charter Communications will be able to avoid paying taxes on forgiven debt until 2014. Even then, Paul will have until 2018 to pay it completely off. Paul owns about half of Charter, so his share of the Charter Commuincations’ $8 billion debt forgiveness is around $4 billion. At a tax rate of 25%, Allen could avoid paying as much as $1 billion in taxes until 2014, tax expert Robert Willens told the WSJ.
Not clear how a corporate tax benefit would be passed through to Paul’s personal tax payments? A reader informs us:
“It’s not a ‘corporate tax’ since it’s a partnership rather than a corporation. The partners pay tax on their share of a partnerships income, which is why partnerships are referred to as “pass-through” entities.”
For what it’s worth, one of Paul’s representatives told the WSJ the billionaire didn’t lobby for the windfall. It just fell into his lap, lucky dog.
Now would be a fine time for us unfortunate Microsoft sufferers to file a class-action lawsuit on behalf of the time we’ve wasted attempting to use Vista…