What was described isn't tax avoidance, it's tax evasion. The form of the substance may appear kosher, but the nature of the transaction is evasion, since it ultimately has the effect of a salary and not a management fee.
Tax is one of those areas of law where the "spirit of the law" actually has meaning. For example, in nearly all of the convictions for the loss-harvesting tax shelters, the form of the underlying structures was legally sound under tax law--but the nature of the transactions was not and resembled tax evasion schemes. SCOTUS upheld these convictions. The same is generally true of various other similar tax shelter convictions in England and France.
Comments
What was described isn't tax avoidance, it's tax evasion. The form of the substance may appear kosher, but the nature of the transaction is evasion, since it ultimately has the effect of a salary and not a management fee.
Tax is one of those areas of law where the "spirit of the law" actually has meaning. For example, in nearly all of the convictions for the loss-harvesting tax shelters, the form of the underlying structures was legally sound under tax law--but the nature of the transactions was not and resembled tax evasion schemes. SCOTUS upheld these convictions. The same is generally true of various other similar tax shelter convictions in England and France.