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The most bizarre story I've seen this year
guest:
http://www.theinquirer.net/gb/inquirer/news/2007/12/31/comcast-founder-paid-dead
Here's the text :
IN a move sure to outrage shareholders, Comcast has decided to keep paying the salary of founder Ralph Roberts for five years after he dies.
Roberts, 87, is not dead yet, but the board seems to think he will keep on working until he drops if he is paid for five years after the Grime Reaper has shown up with his hour glass and scythe.
Unless Comcast know more about the afterlife than the rest of humanity, it is unlikely that Roberts will be able to spend the cash he earns when he is pushing up the daisies. Instead the money will be paid to his beneficiaries.
We don't see who this deal actually benefits. Roberts can't collect it and the beneficiaries don't do Comcast any good. Is there something powerful about keeping the name of Robert's on the payroll long after he has snuffed it? Is Comcast betting that he will somehow be able to influence company decisions from beyond the grave?
The cash involved is not small potatoes either. Roberts, whose son now heads the company, sits on the board of directors and is chairman of its executive and finance committee. He was paid more than $1.8 million last year.
The new agreement gives Roberts' beneficiaries his annual performance-based cash bonus although it is not clear how he will meet his performance targets after he has snuffed it.
kitz:
How weird. I'm sure there must have been other ways of setting up some form of benefit for his beneficiaries.
I'm just wondering if by doing this way they have perhaps found some sort of loophole in death duties and inheritance tax etc.
By paying out annually for 5 years after his death then they are going to be dealing with 6 different tax years - each with an allowance.
Will be interesting to see how the american IRS copes with that.
guest:
Heh the IRS makes HMRC look like nice people :D
kitz:
Maybe Im being cynical because I dont know how the IRS works compared to the UK Inland Revenue.... but I have a sneaky suspiscion that they may have found some way of at least reducing the UK equivalent of Inheritance Tax.. and also perhaps a way of reducing the annual tax bill of the beneficiaries.
Its many years since I was a FA and in that line of business, but in the UK each fiscal year has its own allowance and death duties work on a sliding scale over a 6/7 year period.
On top of that any IHT is settled at the time of probate. Estate Tax is also levied at the time of death. Therefore what happens to income after this date, because generally after death anything (such as pensions or lump sums) are normally written in to be paid to the NoK. How it would work if a scheme is specifically set up to pay someone a salary after their death I've no idea, because Ive never heard of anyone doing this before. Ive also no idea of how the IRS would deal with the Personal Tax allowance of someone who is deceased outside the current fiscal year.
I should imagine it may also make a few people in the IRS scratch their heads too.. and wonder if it is a loophole... and how long it takes for them to close it.
guest:
It probably is a loophole of some sort but the IRS really don't take prisoners kitz. They are very very scary.
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