Tax scam records are pressed but never distributed or sold, in most cases...sometimes a small amount of them are leaked out to a discount wholesaler type company. The tax scam produced records are almost always LPs. Morris Levy of Roulette records was involved with these, as was Texan Huey Meaux.
When time came to "cook" the accounting books, they would say x amount of copies were pressed, but zero or a very low quantity of the pressing was sold at retail. Thus they were able to deduct unsold copies (really just sitting in a warehouse somewhere) as a cost of doing business allowance.
The Things to Come LP is aperfect example...the group had long since dissolved by the time the LP was pressed. Tax scam issues were done with zero involvement from the performers.
You left out a crucial piece of the scam.
They would create phony invoices showing "payments" for several copies, though only a handful (25-300 copies) were actually pressed. Then they would claim the sales were minimal and they had to dump the remainder as cutouts at a loss, again creating phony invoices.
There's no such thing as "cost of doing business allowance". There's income & there's expenses. Expenses that relate to sales have to match recorded sales. Unsold records would be considered inventory, the cost of which is an asset that can only be expensed when sold. Hence the need to create phony "dump" sales.
The purpose of this was to create phony losses. The scam labels were always set up as subsidiaries of the scammers' mother labels so they could use the phony losses as offsets against the real income of the mother label. The purpose was tax avoidance, hence the term tax scam label.
Tommy James, in his autobiography, gives a good description of this in relation to Levy's Tiger Lily label. Moishe had the added advantage of owning the Strawberries record store chain to use as a conduit for the alleged cutouts.
The most famous Tiger Lily is the Stonewall LP, copies of which have gone for 5 figures.
I don't think the Things To Come LP is a tax scam album per se. The story that went around was that someone had the tapes & pressed the copies to cash in on band member Russ Kunkel having become well known in the 70s.
It came out on Century, one of the top vanity labels ("give us your tapes & we'll make you x copies of it"), no different from scores of other now known "private" garage/psych/soul/etc records. It was more like Pretty "Mustache In Your Face" where some copies were pressed without the ban knowing it existed (though IIRC, that was done by producer Michael Quinton for promotion.
Things was a scam, but not a tax scam.
