Offshore Portfolio Investment Strategy - OPIS

DEFINITION of 'Offshore Portfolio Investment Strategy - OPIS'

A tax shelter product designed to create large, seemingly real losses to be used for tax sheltering. This tax shelter involves creating a shell company, which enters into a long chain of sophisticated and complex financial investments. These investments usually create fake accounting losses that are more than 100 times larger than the real financial loss. Ultimately, these large losses are then used to offset legitimate capital gains, allowing the tax shelter's creators to pay less tax.

BREAKING DOWN 'Offshore Portfolio Investment Strategy - OPIS'

OPIS represents only one of the many unethical tax shelter products that were used in the late 1990s. As these abusive strategies became more and more popular, the IRS started to perform audits on those using this strategy in order to dissuade its use.

By the time the IRS took action, millions, if not billions, of tax dollars were being defrauded. For example, one OPIS user spent about $550,000 to create a fake accounting loss of $60 million. Although the use of OPIS was eventually stopped, other unethical tax sheltering strategies, such as bond linked issue premium structures (BLIPS), emerged to take its place.

RELATED TERMS
  1. Custom Adjustable Rate Debt Structure ...

    A type of tax shelter product used by high net worth individuals ...
  2. Shell Corporation

    A corporation without active business operations or significant ...
  3. Tax Shelter

    A legal method of minimizing or decreasing an investor's taxable ...
  4. Asset Management

    1. The management of a client's investments by a financial services ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  3. Personal Finance

    Pros And Cons Of Offshore Investing

    Tax loopholes are shrinking, but there are still plenty of viable prospects. Get the big picture.
  4. Economics

    Understanding Cost-Volume Profit Analysis

    Business managers use cost-volume profit analysis to gauge the profitability of their company’s products or services.
  5. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  6. Investing Basics

    How to Analyze a Company's Inventory

    Discover how to analyze a company's inventory by understanding different types of inventory and doing a quantitative and qualitative assessment of inventory.
  7. Professionals

    A Day In The Life Of A Public Accountant

    Here's an inside look at the workdays of two experienced CPAs, to give you an idea of what it might be like to pursue a career as a public accountant.
  8. Professionals

    A Day in the Life of a Public Accountant

    There’s no typical day in the life of a public accountant, but one accountant’s experience may shed some light on what the career entails.
  9. Investing Basics

    Analyze Cash Flow The Easy Way

    Cash flow statements reveal how a company spends its money and where that money comes from.
  10. Stock Analysis

    From Shampoo to Soup, Unilever Has it Covered (UL)

    Open your fridge, your pantry, your bathroom cabinet and you'll find the Unilever logo. Here's how the company got so enormous.
RELATED FAQS
  1. How do I open a Swiss bank account, and what makes them so special?

    Surprisingly, opening a Swiss bank account is not that much different from opening a standard bank account because you have ... Read Full Answer >>
  2. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  3. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  4. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  5. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  6. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center