Tax rules could force Bezos to play active role at Wash Post

It was unclear how Bezos - the world's 19th richest person with a fortune of $25.2 billion, according to Forbes magazine - would manage his new businesses for tax purposes. U.S. individual tax returns are private, meaning that he has no obligation to disclose publicly how he might use the newspaper purchase to his tax advantage. His 2012'pensation from Amazon was $1.7 million; he owns nearly 19 percent of Amazon.In an effort to root out tax shelters, Congress passed tax rules that prevent an individual from claiming business tax breaks without playing an active role in the business itself.Before the law, "people would be passive investors in a business, the business would throw off losses and they would use depreciation losses to offset other i'e," said David Kautter, managing director of the Kogod Tax Center at the Kogod School of Business at American University.

To realize the business tax benefits, Bezos may need to spend 500 hours a year in managing The Post's business, tax experts said, citing Internal Revenue Service rules. That'es to an average of 9.6 hours a week.Such rules may influence Bezos' participation at the Post. An Amazon spokesman for Bezos did not respond to requests for'ment. A Post spokeswoman declined to'ment.The law is murky in defining what qualifies as business activity for tax breaks, and subject to interpretation, but it generally includes making decisions and telling people what to do, experts said."A lot of it depends on how you count hours ... It's a fair amount of time you have to spend, it's not inconsequential," said Bill Smith, a managing director with CBIZ MHM, an accounting firm.

The paper's operations will be kept separate from Amazon'. The deal is notable also because Bezos bought The Post's assets, not shares in the Washington Post Co, which would not entitle him to business tax breaks. The Post's parent'pany will be selling some additional publishing assets, but no real estate, into a limited liability Delaware'pany set up for Bezos.Bezos faces the same tax considerations as anyone buying a business, accountants said."This is designed so that he can save on taxes," said David Lifson, an accountant with Crowe Horwath LLP, who advises wealthy clients. "It's no different than if he was buying a hotdog stand."



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