The son of the founder of the troubled Daiei big box stores and former owner of the Daiei Hawks pro baseball team (now the Softbank Hawks), Tadashi Nakauchi, age 50, was arrested this week for failing to declare about 500 million yen (roughly $5.5 million) given to him by his father before his death. See the article here

The prosecutors view this as a violation of the Japan Inheritance Tax Law. Japan has an inheritance system that is widely viewed, even by experts in the field, as confiscatory and skewed towards eliminating family wealth succession. Naturally, this has led to a thriving practice of efforts to avoid the law. The Nakauchi case offers a fine example of how not to do it.

Allegedly, Nakauchi borrowed about 1 billion yen from a bank in June 2002, taking out a mortgage on a house he co-owned with his father in Ota Ward, Tokyo, to finance the loan. He sold the house three years later, using all the proceeds to repay his own debts. Thus the authorities are now saying that his father effectively gifted him with 500 million yen.

Frankly, there surely are better ways to handle an inter-generational family transfer that do not evoke such a response.