Blackstone: Loophole report a 'myth'

The Blackstone Group has slammed a New York Times article that said the firm is using a loophole to get millions back in taxes. The New York-based private equity giant said The New York Times article, published Friday, was “filled with inaccuracies, myths and misrepresentations.” The Times said Blackstone used a tax strategy that would return $553 million in tax dollars, plus an additional $200 million, over a 15-year period. The tax maneuver was based on “good will,” the value of Blackstone’s name, an intangible asset. “Blackstone is not in anyway taking advantage of tax loopholes,” the firm said in a statement, “but rather is using a standard tax method used widely by private and public companies when business assets are sold.” When Blackstone sold its shares to the public, it was a stake in the management company and not its funds, so the firm’s partners paid a 15% capital gains tax. The firm then received deductions for $3.7 billion in good will at a 35% rate. Blackstone said that its partners are expected to pay more than $900 million in taxes from the IPO and that the Times used a low discount rate in order to mischaracterize tax benefits. The firm also denied that it would receive payments or tax credits from the government.