I thought the banks had gone as far as possible to take money from the taxpayers and the government through their TARP funds and the manner in which they paid it back, enabling them to pay bonuses to their executives without government interference. They did not make the money by doing what banks are supposed to do, which is lend money. Instead, they invested it in the stock market, driving it up, and then selling and reaping the profits.
Of course, that results in capital gains that is taxable income with no offsetting deductions other than capital losses. God forbid the banksters should pay tax to the government (and the taxpayers) who bailed them out. They had to come up with a way to create more capital losses.
Of course, for these brilliant people, this was an easy task. Here is what they did, and I have the proof, which I am forwarding to the Internal Revenue Service this week. This was a JP Morgan Chase Bank transaction.
1. When they foreclose on a property, they report the "transfer value" to the county recorder. I am not sure how this affects the property taxes in other states, but in California the property taxes are assessed based upon the transfer value, as are the transfer taxes. The property for which I have the proof was reported to the county as having a transfer value of $143,000.
2. Chase then issued to the previous owner a 1099-A, as required by Federal law, to report the amount of the obligation and the fair market value of the property. In this case the outstanding principle was $283,000.00. In spite of the fact that they had shown a transfer value of $143,000 to the county, Chase reported that the Fair Market Value of the property was $345,000, more than $200,000 higher!
3. Chase then put the property on the market for $147,000, even though they had already turned down a short sale offer of $150,000 cash. They ultimately sold the property for $130,000.
What this means is that they now showed a capital loss of the difference between what they reported as the Fair Market Value ($345,000) and the final selling price ($130,000). Using those numbers, their capital loss was $215,000 which they could now offset against the capital gains from their stock dealings, saving them $32,250 in Federal taxes, and who knows how much in state taxes.
Doesn't seem like all that much for a big corporation such as Chase, but multiply that by 100,000 foreclosures and you come up with something like $3 billion dollars in fraudulent tax evasion.
In the mean time, our government leaders ignore these facts and have allowed the big banks and the rest of the financial markets to run our country because they have all of the wealth. They continue to drive down the prices of homes through the foreclosure process, while the government sits on the side lines making meaningless gestures regarding helping homeowners, while allowing the banksters free reign in destroying the fabric of America.
For more, read my book ... The American Dream Becomes the Global Nightmare