That sounds more like tax evasion, using business bad debts[1]: the rug store is owned by a parent corporation from whom the property is leased (and/or which provides other goods/services, like the rugs themselves). A rate is charged in excess of the store's profit such that the store is in debt to the parent corp when the store goes out of business. The parent corporation makes off with the profits, offset by the tax break from dissolving the partner's debts.
Then again, I have no idea how taxes work and can't help but view everything pessimistically :(
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