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If rich person A sells $1,000,000 Boat to rich B, who intern sells rich guy A a $1,000,000 Car it has cost neither anything.

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I am not sure how this comment relates to the linked article. Are you saying, in your example, that there was $2M of luxury "purchases" to report, but they aren't really economically meaningful transactions?

It is not as simple as this. In most cases, capital gain tax is involved; however, very wealthy people usually have access to a number of tools to defer, or to completely avoid, certain taxes such as these.

In addition to taxes, the transaction most likely won't be frictionless, there are always accountants, bankers, and government registration fees to deal with, not to mention finder's fees.

One of the main ways to defer taxes for wealthy people is to borrow against appreciated assets (unrecognized income, not taxable) instead of selling the asset (recognized and taxable). The boat and car in the example are probably not owned free and clear.

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