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. Tax Shelter

    A tax shelter is a vehicle used by taxpayers to minimize or decrease ...
  2. Tax Cheat

    An individual (or group) who, through fraud, dishonesty or avoidance, ...
  3. Tax Loss Carryforward

    A tax loss carryforward is a provision that allows a taxpayer ...
  4. Net Of Tax

    Net of tax is an accounting figure that has been adjusted for ...
  5. Tax Planning

    Tax planning is the analysis of a financial situation or plan ...
  6. Shell Corporation

    A shell corporation is a corporation without active business ...
Related Articles
  1. Managing Wealth

    Get A Step Up With Credit Shelter Trusts

    Don't let unexpected taxes eat away at your inheritance or burden your heirs.
  2. Taxes

    4 Reasons Why Delaware Is Considered a Tax Shelter

    Understand what a tax shelter is and how one is created. Learn why Delaware is considered a tax shelter.
  3. Small Business

    Buying Followers On Social Media Sites

    "Follower sellers" create numerous fake accounts and program them to like or follow a certain page for a price.
  4. Insights

    Why Donald Trump May Never Pay Federal Income Tax Again

    The alleged billionaire, last known to have paid up in 1977, may not have to until 2042 - if then.
  5. Managing Wealth

    Assets the Ultra-Rich Use to Reduce (or Avoid) Taxes

    Paintings, oil wells and yachts can get great tax write-offs for their wealthy owners. All it takes is some smart gaming of the tax code.
  6. Insights

    U.S. Inflation Rises at Fastest Pace in 5-Months

    U.S. inflation rose 0.3% in the month of September keeping an interest rate increase in December on the table.
  7. Tech

    Using Tax-Loss Harvesting to Keep Your Gains

    Harvesting tax losses is a key skill that investors can use to keep more of their money in their pockets the next time they file taxes.
  8. Taxes

    Capital Losses and Tax

    Capital losses are never fun to incur, but they can reduce your taxable income. Knowing the rules for capital losses can help you maximize your deductions and make better choices about when to ...
  9. Investing

    Capital Gains Strategies for High Returns

    Investors who have made significant gains face potential tax liabilities when they sell. Here are some strategies to reduce taxes.
  10. Taxes

    How Much Tax Do You Really Pay?

    When you add direct and indirect taxes together, your real tax rate is much more than you expected.
Hot Definitions
  1. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  2. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  3. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  4. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  5. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
  6. Interest Coverage Ratio

    The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest ...
Trading Center