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Politics : Politics for Pros- moderated

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To: DMaA who wrote (30133)	2/17/2004 4:11:45 PM
From: redfish	Read Replies (1) of 793914

"I never understood that. Why would you deliberately lose a dollar in order to save 70 cents?" The loss in on paper only. Unlike the commodity straddles our Mike describes, many shelters were quite simple. You buy an interest in a partnership that owns a residential building. Thanks to accelerated depreciation, it throws off $1.00 of "paper" deductions for every .30 of income it produces. The tag end of this is that later in the life of the partnership, it produces "paper" income that far exceeds actual cash flow. That is called a "busted" tax shelter, and very hard to get out of. Other schemes took advantage of the investment tax credit, accrual accounting and non-recourse debt.

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