Big businesses getting big tax breaks - WSFA.com Montgomery Alabama news.

Big businesses getting big tax breaks

PHOENIX (CBS5) -

Everyone looks for ways to save money on their taxes. But when America's largest corporations do it, red flags go up.

"They have enough tax breaks as it is," said Susan Marlin of Phoenix.

"I feel like it's a little too much," said Nicole Mehnert of Phoenix. "We keep giving them tax breaks. At some point they have to take care of themselves ."

A recent New York Times article highlights the latest tax savings trend in corporate America, creating special trusts that are often exempt from paying federal income tax.

Companies are basically changing part of their business from a corporation and declaring it a real estate investment trust, or REIT, which allows them to write off their real estate holdings and avoid paying the corporate tax rate.

"They avoid double taxation," said Bob Semple, a certified public accountant. "The corporation deducts the dividends and distributions paid to the individual investors from its taxable income and only pays tax on residual income."

Real estate investment trusts have been around since the 1960s and have long been reserved for companies that only do business in real estate.

Recently, the IRS has broadened its definition of real estate.

For example, companies that own cell phone towers claim that the towers themselves are real estate.

And private prison companies like Corrections Corporation of America, which does a lot of business in Arizona, have convinced the IRS that the money they collect from governments for housing prisoners is rent.

CCA has been granted trust status, which should save the company roughly $70 million in 2013.

Steve Owen with CCA issued this statement:

"Real estate is an essential core of our business, with land and buildings comprising approximately 90 percent of our $3.6 billion in gross fixed assets. Our goal for converting to a REIT structure is to increase our value to shareholders and enable our company to provide high quality services even more competitively."

Critics insist this is nothing more than another corporate tax loophole that's giving big business another big break.

But tax experts tell CBS 5 News these companies are doing nothing illegal and nothing unethical.

A spokesperson at the nonpartisan Tax Policy Center in Washington D.C. said that the issue could spark new debate on the need for comprehensive tax reform.

Copyright 2013 CBS 5 (KPHO Broadcasting Corporation). All rights reserved.

  • Trending StoriesTrending StoriesMore>>

  • Video: Teacher appears to do drugs in classroom

    Video: Teacher appears to do drugs in classroom

    Thursday, November 23 2017 11:19 AM EST2017-11-23 16:19:48 GMT
    Thursday, November 23 2017 11:19 AM EST2017-11-23 16:19:48 GMT

    Samantha Cox, 24, who students say teaches English, is now being held on drug charges, including felony possession of a controlled substance.

    More >>

    Samantha Cox, 24, who students say teaches English, is now being held on drug charges, including felony possession of a controlled substance.

    More >>
  • Pastor found dead at parent's home

    Pastor found dead at parent's home

    Wednesday, November 22 2017 6:32 PM EST2017-11-22 23:32:15 GMT
    Quentin Barlow (Source: Family)Quentin Barlow (Source: Family)

    A local pastor was found dead in his family's home Wednesday morning.

    More >>

    A local pastor was found dead in his family's home Wednesday morning.

    More >>
  • FedEx worker killed at airport hub

    FedEx worker killed at airport hub

    Thursday, November 23 2017 10:10 AM EST2017-11-23 15:10:25 GMT
    (Source: WMC Action News 5)(Source: WMC Action News 5)

    FedEx has confirmed that a worker was killed at the airport this morning.

    More >>

    FedEx has confirmed that a worker was killed at the airport this morning.

    More >>
  • NewsMore>>

  • Macy's parade rolls on with balloons, bands, security

    Macy's parade rolls on with balloons, bands, security

    Thursday, November 23 2017 12:32 AM EST2017-11-23 05:32:23 GMT
    Thursday, November 23 2017 1:32 PM EST2017-11-23 18:32:57 GMT

    The parade will feature heavy security, including officers with assault weapons and portable radiation detectors, sharpshooters on rooftops and sand-filled city sanitation trucks poised as barriers to traffic.

    More >>

    The parade will feature heavy security, including officers with assault weapons and portable radiation detectors, sharpshooters on rooftops and sand-filled city sanitation trucks poised as barriers to traffic.

    More >>
  • Olympic gymnastics ex-doctor pleads guilty to sex charges

    Olympic gymnastics ex-doctor pleads guilty to sex charges

    Wednesday, November 22 2017 1:51 AM EST2017-11-22 06:51:40 GMT
    Thursday, November 23 2017 1:23 PM EST2017-11-23 18:23:42 GMT

    Olympic gymnasts Aly Raisman, McKayla Maroney and Gabby Douglas are among the women who have publicly said they were among the doctor's victims.

    More >>

    Olympic gymnasts Aly Raisman, McKayla Maroney and Gabby Douglas are among the women who have publicly said they were among the doctor's victims.

    More >>
  • In terror-wary NYC, security tight for Thanksgiving parade

    In terror-wary NYC, security tight for Thanksgiving parade

    Wednesday, November 22 2017 10:01 AM EST2017-11-22 15:01:53 GMT
    Thursday, November 23 2017 1:23 PM EST2017-11-23 18:23:19 GMT

    Security for the annual Macy's Thanksgiving Day Parade will feature trucks filled with sand, concrete barriers and scores of police officers.

    More >>

    Security for the annual Macy's Thanksgiving Day Parade will feature trucks filled with sand, concrete barriers and scores of police officers.

    More >>
Powered by Frankly