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Wal-Mart (NYSE: WMT), like any company, never wastes a chance to reduce its tax footprint in every state it operates in. In North Carolina, though, the world's largest retailer recently had a beef with taxing authorities concerning rent deduction on its tax forms for locations in that state. Problem is, Wal-Mart had to pay about $33.5 million in taxes for rent it paid to its own Wal-Mart real estate units, then pay the taxes, and now, wants a refund.A court said that it could not have a refund, and a legal beef ensued. Can Wal-Mart really take a deduction for rent on its own stores that have ownership by...Wal-Mart itself (though real estate holding units)? Another day, another tax loophole in corporate America.
The outcome here could set a precedent for other companies that pay rent to real-estate investment trust units that transfer tax-free income to their owners. In this case, the "owner" is Wal-Mart itself. According to The Wall Street Journal, Wal-Mart may have saved $230 million in state taxes over the last four years in many U.S. states where is operates store locations.
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