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'Accidental' Tax Break Saves Wealthiest Americans $100 Billion

Thursday, December 19, 2013


By Zachary R. Mider

Dec. 17 -- Sheldon Adelson makes no secret of his disdain for the estate tax.

“How many times do you have to pay taxes on money?” the casino magnate asks, leaning on a blue cane on the cobblestones of Wall Street on a crisp October morning.

A gravel-voiced man whose accent recalls his blue-collar Boston roots, Adelson, 80, has just rung the bell at the New York Stock Exchange. Shares of his Las Vegas Sands Corp. are at a five-year high, making him one of the world's richest men, worth more than $30 billion.

Federal law requires billionaires such as Adelson who want to leave fortunes to their children to pay estate or gift taxes of 40 percent on those assets. Adelson has blunted that bite by exploiting a “loophole” that Congress unintentionally created and that the Internal Revenue Service unsuccessfully challenged.

“You can certainly say we can't let this keep going if we're going to have a sound system.” 
Richard Covey, Carter Ledyard & Milburn LLP

By shuffling his company stock in and out of more than 30 trusts, he has given at least $7.9 billion to his heirs while legally avoiding about $2.8 billion in gift taxes since 2010, according to calculations based on data in Adelson's U.S. Securities and Exchange Commission filings.

Hundreds of executives have used the technique, SEC filings show. These tax shelters may have cost the federal government more than $100 billion since 2000, says Richard Covey, the lawyer who pioneered the maneuver. That's equivalent to about one-third of all estate and gift taxes the U.S. has collected since then.

With assistance from Beth Jinks and Margaret Collins in New York, Richard Rubin in Washington and Michael Novatkoski and Michael Weiss in Princeton, N.J.

To contact the reporter on this story: Zachary R. Mider in New York at

To contact the editor responsible for this story: Daniel Golden at

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