The Expanded Worldwide Planning Stories Video Series – Part 3 – Episode 2 – Tax Shield 2
Welcome. Oddly enough many of the tax benefits used in the sophisticated designs of Expanded Worldwide Planning, or EWP for short, are common to most life insurance policies. These tax benefits are:
- Tax-deferred growth of the cash value
- No capital gains tax
- No income tax
- The ability to access the cash value through tax-free loans, and
- A tax-free death benefit
In this video we meet Jack Newcastle, an attorney at the IRS. Jack is in the midst of auditing the very company that George Allbright is considering for his conservation easement. Jack’s nickname is ‘Jack the Shark.’ We learn how he earned this nickname, and why he has his current position at the IRS.
Jack Newcastle pursued his position as a lawyer at the IRS’s Global High Wealth Group with zeal. Many of his colleagues would call Jack a zealot. He was an unabashed crusader against abusive tax schemes.
What was not so common knowledge was that his grandfather’s law firm was destroyed for backing one of these abusive tax schemes. Because of this, the life of a rich, successful partner at a major law firm was denied to Jack. Jack sought revenge on those who had robbed him of his prestigious partner position. His nickname was ‘Jack the shark.’
Jack was walking down H Street, heading towards the Treasury Building. His mind felt dull, far from the clear, scientific thinking required to succeed on his current audit case. The Baroque grandeur of the city plan of Washington D.C. was lost to him.
Jack was lost in thought about the latest developments at the office. He was part of the Global High Wealth Group audit team that was undertaking an audit of Conservation for Nature, the company that had contacted George Allbright about the purchase of his land.
Things were not going well on this audit. The promoters of this syndicated conservation easement scheme were successfully bending the law to their advantage at every turn.
A conservation easement, in its original, legitimate form, is granted when a landowner permanently protects pristine land from development. In that scenario, the public enjoys the benefit of undeveloped land and the taxpayer gets a tax deduction.
By contrast, these promoters were finding appraisers willing to declare that land parcels purchased by the promoters have extraordinary development value, and thus were worth many times the purchase price. They then were selling stakes in the deal to wealthy investors who receive tax deductions that are often five or more times what they put in.
The Global High Wealth Group was introduced with the aim of stopping just this type of unscrupulous promotors. Unfortunately for the IRS, the Global High Wealth Group was not working as expected: with bureaucratic end-fighting and being woefully underfunded, the initial euphoria at its launching was short lived. They also had experienced no steady leadership with three different directors in the past five years.
At the beginning of the audit, the promoters seemed easy targets. But as they progressed with the audit, they realized that they were dealing with more savvy characters.
All this brought Jack to his office in a sour mood.
Jack’s cell phone rang. It was not a number he knew, but answered anyway, “Hello.”
“Jack is that you,” said a strangely familiar voice.
“This is George.”
“Man, it’s been a while.”
George telephoned Jack because he remembered that he had taken a position at the IRS, and he might know something about Conservation for Nature. After a few minutes of catching up, George asked him about Conservation for Nature, and was told about Jack’s ongoing audit.
They agreed to speak the following day, as Jack had reached the Treasury Building, and needed to go into his office.
George felt the pleasure of connecting with an old friend, but he knew the story of Jack’s grandfather, and how bitter Jack was at having to accept a position at the IRS. Jack gave only negative comments about Conservation for Nature. Could Jack be trusted? Would his advice be tainted by his personal history?
Our next video, reveals how Conservation for Nature achieves their inflated tax deductions. You will find out the very person who is most responsible for these inflated deductions, Jay Edwards. Jay is being pushed for larger and larger tax deductions at the cost of both his career and his health.
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The opinions expressed in this video are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual on any financial structure, investment, or insurance product.