Golf Carts to Island Divorces: 10 Notorious Tax Loopholes

By Karen Fickes and Warren Joseph of Bloomberg BNA - 2012-06-20T21:55:57Z

Photograph by Caroline Woodham/Getty Images

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Island divorce

In the 1970s, many married couples realized they were paying more taxes than unmarried couples with the same income. Some couples flew to the Caribbean in December, divorced, and remarried in January, using the tax savings to pay for their vacation. The IRS deemed this a sham. A 1980 visit to the courts for one couple was inconclusive; the Tax Court found that the divorce wasn't valid, but the appeals court remanded the case for further findings. Rumor has it that some couples decided fighting the IRS wasn't worth the trouble and stayed divorced (but happily together).