Wal-mart pays itself rent -- and cuts its taxes


Svelte tax strategies are the focus of many an accounting office in large corporations these days. Saving millions (or hundreds of millions) of dollars in taxes makes a team of tax attorneys a very wise investment for most companies.

So, it comes as no surprise that the world's biggest retailer -- Wal-Mart Stores Inc.(NYSE:WMT) --- has one of the more clever tax strategies I've seen in a while for a company that has thousands of outlets and locations across the U.S. Wal-Mart pays billions of dollars a year in rent for its stores, which are peppered throughout almost every state in the U.S.

But in a rather deft tax strategy, the company has been paying most of that rent -- we're talking about billions here -- to itself, and then it deducts that amount from its state taxes in the 25 states that allow the deduction.

Bottom line? This strategy has saved Wal-Mart from paying several hundred million dollars in taxes. Second bottom line? Wal-Mart is far from alone here. It's too bad state tax laws aren't very efficient at catching and sealing loopholes like this.

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