This is one of our editors' picks from our ongoing roundup of Investigations Elsewhere.

As in other states, California lawmakers whose primary residences are outside the state capital get a tax-free allowance for living expenses on days when they work for the Legislature. But according to an investigation by the Orange County Register, "overlapping laws allow savvy politicians to leverage their tax-free allowance to buy homes, secure tax deductions and sometimes pocket hundreds of thousands of dollars in profit."

California offers one of the highest allowances in the country, roughly $140 per day. Its lawmakers also claim the allowance for more days of the year than other top-paying states, making for big payouts. Last year, when daily allowances reached $173 and many lawmakers were eligible for more than 200 days of payments, the per diem expenses cost cash-strapped California more than $4 million. For many legislators, this meant an additional (tax-free) $37,000 on top of their regular salary.

Meanwhile, some lawmakers are having it both ways: They’ve declared their Sacramento homes as their primary residences on tax forms, yet they still collect taxpayer money to cover living expenses "as if they were away from home." And this is legal, tax experts say, thanks to a loophole left by a patchwork of "federal and state tax laws, and state election laws, all of which have slightly different definitions of home." In fact, lawmakers can take the money even if their only home is in Sacramento.

For lawmakers who purchase and later sell houses in Sacramento, those per diem payments can boost profits significantly.

According to lawmakers, the Register reports, "they're just following the rules made for them. They acknowledge their untaxed allowance may appear lavish, but they insist it's really just a modest necessity – even when much of their lives are now based in Sacramento."