Major U.S. companies are exploiting a tax break that was originally intended to help family farmers in order to avoid billions of dollars in taxes, according to an investigation by The New York Times.

The so-called “like-kind” tax break allows companies to exchange one asset for another without incurring taxes. It has gradually mutated over the past 90 years to provide subsidies for entities as diverse as rental truck fleets, vacation homes, oil wells and racehorses.

The government estimated the like-kind tax break, which is in practice a tax expenditure, diverts less than $3 billion annually from Treasury coffers. But The Times said the true amount could instead be far higher.

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The newspaper identified major corporations, such as Cendant, Wells Fargo and General Electric, as having “routinely pushed the boundaries while claiming lucrative tax savings,” according to its analysis of federal court evidence.

“Tax expenditures are very similar to entitlement programs, so they’re easy to start,” George Yin, a former Congressional staff expert on taxes who is now a University of Virginia School of Law professor, told The Times.

“But once a tax break gets started, people think they’re entitled to it, so they are very difficult to end.”

The Times noted many tax breaks begin with narrow definitions, but expand into vast subsidies that escape the Internal Revenue Service’s ability to monitor them.

A key element of the like-kind tax break is that companies cannot use the proceeds of an asset sale for any purpose other than buying a replacement. It is intended to encourage reinvestment, and provides that companies selling an asset deposit the proceeds into an escrow account controlled by a third party.

The Times reported testimony and documents at a recent federal trial indicated that a subsidiary then owned by JPMorgan Chase did nothing as companies — most of which were also major depositors — “bent the rules” governing the exchanges of property.

At least a half dozen companies retained varying levels of control of large funds held in escrow by the JPMorgan subsidiary, the newspaper reported, according to evidence at the trial. They included Wells Fargo, Volkswagen, BMW, Cendant (now the Avis Budget Group) and GE.

A Wells Fargo spokesman declined comment, and officials at Volkswagen, BMW and Avis Budget Group said their companies were in compliance with IRS rules. JPMorgan said its employees never violated tax laws. Likewise, a GE Capital spokesman said its outside tax advisers concluded the arrangements met IRS requirements.

The federal lawsuit involving the then-JPMorgan subsidiary was dismissed, but the IRS is still reviewing the actions of the some of the companies involved, according to The Times.

The fiscal cliff deal passed last week preserved billions of dollars in various corporate tax giveaways, including more than a dozen tax loopholes that will benefit Wall Street firms and large corporations, according to The Huffington Post.

The corporate loopholes were tacked onto the main bill, and include carve-out measures such as the "active financing" exception that permits businesses earning interest on overseas lending to defer U.S. taxes on that income indefinitely.

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