alt Hacker NewsYour analogy suggests a deferment of taxes paid but not elimination.
In your example, they still own all the gold and would eventually pay taxes on any liquidation.
I bring this up because I, too, am as interested in your parent to know the original inspiration for these parts of the tax code…
Further: I have a suspicion that this should be applied differently to C-corps vs. pass through entities in the same way that corporate taxes and retained earnings are…
The depends on how you implement it.
You could also just don't allow to deduct taxes on the work out into digging out the gold.
In the end I do not care. But i feel like people would be equally ignorant if it was proposed to tax the software in other ways (eg VAT on the derived services from operating).
Regardless, these are the discussions to have.