Yes, it is legal, but it isn’t remotely fair.
So last year I valued my “brand” at millions of dollars, billions, even. I did this because I had some other form of tax dodge to prevent paying out actual tax money. Then the next year, I don’t pay any tax on spite of profits, because my “brand” I now value at a tiny fraction of what I did previously, causing a huge net loss.
I then play around with those values until, lo, an entire decade has passed without losing — sorry, paying — tax.
As for audits, unless someone publishes some proof of his audit, I’ll assume he’s lying about that too.