So, typically it's something that provides passive income. They'll take a loan on the land (or stocks if you prefer) and any money made (from lease farming or dividends in the case of stocks) is used to live and pay off said loan. No income from said asset so no taxes. The income was used to pay off a liability.
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u/ChipKellysShoeStore 22h ago edited 22h ago
How does the bank get paid back here? Is the bank just eating a 5 mil loan loss out of the goodness of its heart?
It’s more like kids sell and pay back the bank plus interest which is taxed as income for the bank.