(I don't know if this is addressed in the article - the site seems to have fallen over.)
Another one is legal forms required for producers and actors - there are forms that each actor must fill out, these must be verified and kept. Not doing so is a felony.
As long as a 3rd party is involved, and "films" it (still, unmanned camera in the room) and everyone fills out the paperwork, and the 3rd party handles the payment (minimum wage for party A, minimum wage + $X for party B), party A "buys some porn" at the curious cost of minimum wage + $X.
Am I missing something? Did I explain this poorly?
There is a gift tax, but it's paid by the donor, and they can give up to the annual exclusion amount a year without hitting it. This year, the limit's $14,000.
Once a gift goes past that for the year, the excess starts counting against the donor's lifetime exclusion and needs to be reported on the donor's taxes. Gift taxes come into play once the lifetime exclusion limit is exceeded, and it's $5.4 million.
Remembering this would put a stop to 90% of legal "discussions" on HN.
A police trooper pulled me over for ~80 in a 65 (deserted highway at night). He somehow transposed the last two numbers in my license plate, so I obviously assumed I was home free. Until, while I was on the stand, the judge just looked at me for about 10 seconds, said "Were you driving the car?" "[pause] Yes, your honor." "[gavel slam] Guilty."
It's the other situation where law stops being code. If you do something that is technically illegal but probably oughtn't be then the law can be reinterpreted in your favor.
Assuming you followed the absolute letter of the law with your totally-not-a-brothel then you would be fine (until the law is amended).
Select parts of laws may have the rigor of a programming language, but the greater portion expresses things for humans, with human ambiguity.
"money or its equivalent"
"offers"
"adultery"
"fornication"
etc.
The law is written in terms of broad concepts that a judge can interpret. In most cases there is no such thing as "absolute letter of the law", partly because English makes that impossible, but mostly because legislating such strict specific definitions would be a bad idea. I think the impossibility of bug-free software makes it clear that we wouldn't want laws written like code.
I'm not sure your example was the best for showing there aren't loopholes based on overly literal interpretations, given that the tax code is notorious for them.
I hope the point was clear though, that the "spirit of the law" is a real thing, and most clever loopholes will not work with a human judge.
I get a handful of calls per year from guys who think
they're the first geniuses to come up with the great
idea of setting up a "Freeman Brothel" and calling it
a "film studio."
They're all disappointed when I tell them that they're
not getting away with this "brilliant plan" unless they
take so many steps to make it look legitimate that it
will, in fact, become a legitimate porn production
enterprise — in which case, why bother with the ruse in
the first place?One of the things the article points out is that if you're going to "exploit the loophole", it's going to take about as much work as actually running a production company. This seems to be the case here.
(And, presumably the guys in question are also keeping records of the actresses, filling out all the paperwork, etc. No fun going to prison for fucking a 17 year old on camera.)