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Comment by haliskerbas | Hacker News Reader

I thought self dealing was usually illegal. I can’t sell my family member my house for $1 for example. But you can do the same thing with companies?

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You can sell your house to a family member for $1. (There might be tax implications if you sell a $100,000 property for $1 to avoid gift tax limits or whatever, but that’s a separate issue.) I sold my car to my sister in law for $1.

Self dealing is also permissible with companies. Corporate officers and directors must still meet their fiduciary duties to shareholders. And the potential for conflict of interest changes how courts will evaluate the transaction if a shareholder complains about a breach of fiduciary duties. Ordinarily, in Delaware, operate transactions are protected by the “business judgment rule” that gives wide latitude to corporate officers and directors. https://plusblog.org/2023/11/28/the-business-judgement-rule-.... But if there is self dealing, courts will scrutinize the actual fairness of the transaction. But self dealing isn’t per se impermissible.

This is why many states base the sales tax of used cars sales on the market value, not the actual sales price.

Sales tax was already paid when it was new, the state got its due. That kind of idiotic policy is how expensive and collector cars get owned under an LLC and the LLC changes hands rather than the title. Thus the rich bypass all that BS it's only for the gullible plebs.

Sounds like tax evasion.

You mean avoidance.

> I can’t sell my family member my house for $1 for example

In most countries you absolutely can. The difference between market value and the sale price might be considered and taxed as a gift, but such a deal is generally not prohibited.

If I overpay for a house, shouldn’t it be taxed as a gift too? :p

Depends on the circumstances, but quite possibly?

Yes, self-dealing is illegal when taken to mean a precise legal term; a fiduciary using that position to carry out a transaction in their own self-interest and against the interests of their beneficiaries.

Yes, and just like anti-trust law doesn’t make monopolies illegal, it’s not the self-dealing that’s illegal, it’s the abuse of the process (as you say).

Obviously you can sell house for $1 to a family member, this will not help to avoid taxes though, as tax office for taxing purposes evaluates value of the house independently.

I know for certain that in Virginia you can sell a house for any price you want, because I transferred one to a family member for zero. Of course the county's assessor had other ideas about the value for tax purposes, but the official deed was recorded at $0.

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