Recently we learned that the Biden syndicate created a network of 20 or more limited liability corporations (LLCs) for the purpose of obscuring the transfer of money “earned” by the sale of Joe Biden’s influence as Vice President of the United States. Although our “Justice Department” hasn’t figured it out yet, the rest of the country is starting to realize that massive criminality has taken place. At the very least, several felonious violations of the Foreign Agents Registration Act (FARA) have probably been committed by Hunter — and by his father. Let’s not forget that it was Joe, not Hunter, who had influence to sell.
We have also learned that Hunter did not pay taxes on all of his income. I don’t exactly blame him for that because there is no line on the tax return for “influence peddling.”
In summary, we have already seen two likely crimes: FARA violations and income tax evasion. However, there may be a third crime that has been overlooked: estate tax evasion.
If a person dies with a very large estate, a federal tax of 40 percent is taken from the estate, after the estate value is reduced by an exemption amount. Is the President evading estate tax? Let’s do a quick analysis.
If you are 80 years old (Joe’s age), and have a chance to make $40 million dollars from various foreign officials, do you want to put the money into your own bank account? If you do, there will be a large estate tax to pay upon your death. No, it would be much better to direct the payments to your heirs. That way, the massive estate tax is avoided — if the subterfuge is not detected.
Here is how this could affect Joe Biden. Since the Supreme Court’s 1935 Gregory v. Helvering case, the IRS has held that taxpayers should be taxed on the substance of transactions, even if that substance is inconsistent with the legal form of the transactions. This doctrine is known as “substance over form.” A derivative of it is the “step transaction doctrine.”
Using the step transaction doctrine, the IRS could ignore the 20 LLCs, and even ignore Hunter’s role as the person who supposedly earned the foreign income. Instead, it might presume that the foreign money was actually earned by Joe, who used Hunter and the LLCs as a means for collecting and distributing the funds. If the IRS did that, this might be the result:
The $40 million would be put back into Joe’s estate, and it would be added to his current net worth (around $8 million according to Forbes). From the total ($48 million) the IRS would subtract Joe’s estate tax exemption of $13 million. In addition, Joe would probably leave at least $13 million in assets to Jill, so that her estate could also utilize an estate tax exemption (upon her death). Joe would get a spousal exclusion for the $13 million left to Jill. In this scenario, the federal estate tax would be about $9 million:
Now, in case there are tax preparers reading this, I realize that the actual calculation would be a good deal more complex. (This is something I used to do as a CPA.) For example, Joe could leave more assets to Jill to delay the payment of estate tax until her death. In addition, it is likely that the IRS would treat the LLC distributions as gifts from Joe Biden that would reduce the size of his estate. However, the impact of that might be fairly small because gifts that reduce the value of the estate would partly or completely reduce the estate tax exemption. Other changes are likely, but the above calculation provides a rough idea of the potential size of the tax avoidance.
It is not unusual for the IRS to apply the step transaction doctrine, in normal times. But these are not normal times. If they were, Hunter might be in jail right now — and Joe might be living in a Delaware nursing home.