Walmart Saves Taxes by Paying Rent To Itself

From the you can't make this up department...

In a shrewd move Walmart has set up REITs to own their real estate. According the WSJ, "here's how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company."

The Great State of NC caught on to this and ordered Walmart to pay $33M in back taxes. Walmart paid up but is sueing for a refund.

Maybe if they used the dough to play the state "education lottery" or agreed to contibute to the Google bribery campaign, NC would let it slide.

You can't make this stuff up. Read the entire story at: http://www.realestatejournal.com/reits/20070205-drucker.html