Gents, I have been watching over the past several years, with mounting perplexity, the complete debacle that has become the CX basings policy. Having a bit of an 'inside' line to things, I thought it is important to point out that all along KPMG has been at the heart of the policy disaster that has now effectively destroyed the basings concept. From the very start, KPMG has been offering CX 'advice' on how to structure the basings. In particular, it has offered appallingly bad advice on the tax structuring it suggested to CX. The end result is that we now have 1500 pilots or more living in a 'twilight zone' when it comes to taxes and reporting. Nearly all of the advice given is inept, and has effectively destroyed the foundation for basings, not only for those presently on one, but for the other 2000+ pilots who one day hoped to take advantage themselves. I submit the following treatise to underpin why KPMG is so morally bankrupt as an organisation. I would also like to know how CX can continue to obtain advice from them when they have so completely displayed their incompetence for so many years prior? What is the AOA going to do about this? What an utter shambles.
My advice if you go work at KPMG is don’t sell corporate tax shelters or engage in structuring special purpose vehicles to hide billions of banking losses. If you do, KPMG may turn on you to save itself and destroy yours and your family’s lives. KPMG is very good at this and retains firms like Skadden Arps to make false statements on KPMG’s behalf so bad that you will end up in prison to suffer daily beatings and worse. Take a look at a smattering of the corporate tax shelters KPMG was selling its best clients like BRK while at the same time negotiating a deal with the DOJ to help it indict KPMG partners and managers who worked on individual transactions. Bob Bennett was more than happy to cut such a deal with the DOJ on behalf of KPMG (KPMG made false statements to the DOJ about its very own Partners and Managers) apparently in exchange for allowing KPMG to continue its massive corporate tax shelter business and government audits generating hundreds of millions in fees for KPMG. Goodness gracious, Bob Bennett of Skadden Arps was willing to make statements to the DOJ about KPMG Partners and Managers so the DOJ could indict the Partners and Managers working on individual transactions (but not any of the massive corporate tax shelters KPMG was purveying) not withstanding an email from KPMG’s Chief Counsel Joseph Loonan to Bennett informing Bennett that the information and statements he was making to the DOJ were absolutely false. Oh well, at least Buffet and BRK made out, BRK has over $1 Billion accrued on its balance sheet for tax shelters, penalties and interest, yet Warren thinks we all should pay more, what a fraudster he is, just ask AIG. SMATTERING OF KPMG CORPORATE TAX SHELTERS (FRAUD) a. “Tier 1 Capital”, which allows banks to obtain deductions when raising capital using offshore tax haven Financial Asset Securitization Investment Trusts (“FASIT”);b. “TITUS”, which allows banks to create fraudulent income through the decrease of book tax rate; c. “German KG Financing Structure”, which allows corporations to avoid taxes in the U.S. and Germany; d. “Verdi I”, which is the use of offshore tax haven FASITS to avoid taxes; e. “Default Captive Insurance”, which creates phantom tax deductions for banks on their credit card receivables through the use of offshore tax haven subsidiaries”; f. “21% LIFECO Solution”, which is the use of reinsurance contracts by banks to create phantom tax deductions; g. “Price”, which is the use of offshore tax haven insurance companies by executives to avoid taxes on corporate compensation; h. “RIPSS2”, which is the use of foreign party and debt securitization to avoid taxes; i. “CARTELS”, which is an international 304 non-economic loss generating transaction;j. “Repatriation of Foreign Parents Profits”, which avoids U.S. taxes on distributions through triangular B Reorgs; k. “Securities Lending Transaction”, which allows banks to avoid U.S. taxes by creating phantom FSI; l. “Partnership Buy in Strategy”, which allows U.S. corporations to avoid taxes on transfers of property to foreign tax havens; m. “LUX CO”, which utilizes a branch in the U.S. of a Luxembourg tax haven company to avoid taxes in the U.S.; n. “Interest Allocation Coop”, which allows corporations to avoid taxes in 2 the U.S. and other countries; o. “Spared Sparing”, which provides for the avoidance of withholding taxes; p. “Original Issue Discount Strategy”, which allows for taking the same interest deduction twice; q. “956/1032 Zero Basis Solution”, which avoids U.S. taxes on the repatriation of untaxed foreign profits; r. “Chase Knights”, which is the use of a Luxembourg tax haven to avoid us Taxes; s. “Chase Squires”, which is the use of a Luxembourg finance subsidiary to avoid us taxes;t. “RBS”, which is the use of repossessions by banks to avoid taxes; u. “Caesar”, which allows banks to fraudulently raise regulatory capital and investors to avoid taxation by intentionally structuring transaction to lack earnings and profits;v. “Global Currency Management Program”, which allows banks to invest in sophisticated foreign currency positions which generate substantial non-economic tax losses;w. “SOCS”, which is an artificial loss generator for banks;x. “Contingent Liability Trusts”, which create artificial phantom losses for corporations; y. “Foreign Tax Haven Captive Insurance Companies”, which create artificial phantom losses for corporations; z. “Tempest”, which creates artificial phantom losses for banks; aa. “Contingent Liability Corporations”, which create artificial phantom losses for corporations; bb. “REIT Strategy”, which eliminates income for banks; cc. “Compensation Partnerships”, which shifts income from corporation to employees to avoid taxes;dd. “Guaranteed Payments”, which is the use of guaranteed payments to avoid taxes;ee. “BIG”, which allows corporations to sell assets and avoid taxes;ff. “Hamlet”, which is the fraudulent use of banking rules to avoid taxes Resulting from interest expense allocable to tax exempt securities; gg. “Loss Planning”, which involves using IRC § 704d to avoid taxes; hh. “Debt Buy Back with Quasi Related Party”, which allows for the avoidance of taxes by a corporation on the buy back of discounted debt;ii. “AARTS”, which is the use of inter-company tax rules to avoid taxes on the transfer of assets; jj. “Nine Lives”, which is the use of options to avoid gain provisions of 355;kk. “RAPS”, which is the use of accounting periods and REITS to avoid taxes;ll. “CAPPS”, which allows taxpayers to avoid tax by converting ordinary income into capital under 306;mm. “B-Flip”, which is the use of foreign companies to generate non-economic tax losses;nn. “351 Leaseback”, which is a strategy to avoid taxes on contribution to corporations;oo. “SZCBS”, which uses synthetic debt to avoid taxes; pp. “Stock Option Swap”, which is a securities transaction using options to not only avoid taxes, but to avoid Securities and Exchange Commission Rules related to insider trading; qq. “Project Zodiac”, which allows for capital raising and creation of phantom losses to avoid taxes all at the same time; rr. “Oilco”, which allows oil companies to raise capital and avoid taxes through the manipulation of basis rules on depleted properties;ss. “Debt Repurchase Program”, which allows corporations to avoid taxes on 2 buy back of discounted debt;tt. “PARTS”, which allows for the issuance of debt and avoidance of taxes;uu. “FAS 140”, which allows banks to avoid taxes through the manipulation of accounting rules; vv. “Common Trust Fund Strategy”, which avoids taxes through the manipulation of common trust fund tax rules;ww. “MACES”, which allows individuals to avoid taxes on ordinary income property; xx. “CODA”, which avoids the recognition of income on debt buy backs; yy. “FADS”, which creates artificial tax deductions through the use of swaps;zz. “Express”, which is the use of foreign parties to avoid taxes through the securitization of receivables; aaa. “Stars”, which is the use of a U.K. company to avoid taxes in the U.K. and U.S.; bbb. “Short Lease”, which avoids depreciation rules; ccc. “Slots”, which creates tax deductions with leases that are otherwise unavailable; ddd.