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Renaissance executives agree to pay around $7B to settle dispute with IRS

reuters.com

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Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#11

Post by kyleee »

mikeyouse wrote: post #8
ksherlock wrote: post #6

Earlier quoted context omitted.

From the WSJ report: Because the settlement relates to the tax treatment of Medallion’s gains, it doesn’t affect the fund’s historic returns, which top almost every other hedge fund.

For a fun exercise, these activities took place between 2005 and 2015 -- call it 2010 to split the difference. If you assume that they knew they'd likely get dinged for the $7B and just kept that amount in their fund and invested it alongside their employee money - how much profit did they make by litigating this for 10 years to delay the payout?

Is this a new common core 5th grade curriculum maths word problem?

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#12

Post by loeg »

Barrin92 wrote: post #10

It's always amazing to me how in the world of high profile white collar criminality you can make billions and your punishment is to pay a few percent of it back. I wish ordinary theft worked like this. Steal 500 bucks and your punishment is to return 100.

Your figures are sort of backwards. The article claims they saved $6.8B in taxes and will owe $7.7B in fines.

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#13

Post by cidquick »

mikeyouse wrote: post #8
ksherlock wrote: post #6

Earlier quoted context omitted.

From the WSJ report: Because the settlement relates to the tax treatment of Medallion’s gains, it doesn’t affect the fund’s historic returns, which top almost every other hedge fund.

For a fun exercise, these activities took place between 2005 and 2015 -- call it 2010 to split the difference. If you assume that they knew they'd likely get dinged for the $7B and just kept that amount in their fund and invested it alongside their employee money - how much profit did they make by litigating this for 10 years to delay the payout?

0, the Medallion fund is capacity constrained.

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#14

Post by loeg »

tedunangst wrote: post #7
putlake wrote: post #5

Earlier quoted context omitted.

This isn't insider trading. It's tax fraud.

Nobody cares what it is or isn't. They're rich, they're bad, they need to be punished.

We can easily be clear and correct in describing malfeasance, so why not avoid the confusion of making obviously false statements?

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#15

Post by ksherlock »

hamburgerwah wrote: post #3

Largest insider trading ring in history and still running. To agree to 7 billion you can guarantee they are walking away with at least 60 billion squirreled away unseen.

You can do a little math to get a ballpark number. $7 billion includes penalties, the actual tax avoided was closer to $6 billion. Over 10 years (2005-2015), so $600 million per year. If you assume short term capital gains is 37% and long term capital gains is 20%, that (600 / .17) works out to $3.5 billion/year (or $2.9 billion after taxes). $29 billion over 10 years.

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#16

Post by philip1209 »

djanogo wrote: post #9

I wonder if Vanguards patented way to manage their funds to reduce taxes be affected by this settlement.

Vanguard already gets a blind eye for their management structure’s taxation because they manage the retirement accounts of so many common people without greed.

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#17

Post by irjustin »

putlake wrote: post #4

Here's how they structured their affairs to claim long-term capital gains (via Sen. Carl Levin's testimony [0]): The key financial product involved in these fictions is called a ``basket option.'' ...basket option basics worked like this: The bank sold its hedge fund client a structured financial product, called an ``option,'' whose payoff equaled the profits generated by a ``basket'' of securities held in a designat…

Thanks, this is helpful to understand.

They had to know this was a risky play and trying to dodge taxes based on language written in the law by skirting what "ownership" means.

The bet didn't pay out because it caught the attention of one dogged person.

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#18

Post by vpribish »

mikeyouse wrote: post #8
ksherlock wrote: post #6

Earlier quoted context omitted.

From the WSJ report: Because the settlement relates to the tax treatment of Medallion’s gains, it doesn’t affect the fund’s historic returns, which top almost every other hedge fund.

For a fun exercise, these activities took place between 2005 and 2015 -- call it 2010 to split the difference. If you assume that they knew they'd likely get dinged for the $7B and just kept that amount in their fund and invested it alongside their employee money - how much profit did they make by litigating this for 10 years to delay the payout?

dated info here, but they've always said the fund is capacity-limited so has to throw off billions in profits per year, it does not get to stay and compound.

Re: Renaissance executives agree to pay around $7B to settle dispute with IRS

#19

Post by ummonk »

loeg wrote: post #12
Barrin92 wrote: post #10

It's always amazing to me how in the world of high profile white collar criminality you can make billions and your punishment is to pay a few percent of it back. I wish ordinary theft worked like this. Steal 500 bucks and your punishment is to return 100.

Your figures are sort of backwards. The article claims they saved $6.8B in taxes and will owe $7.7B in fines.

To clarify, the 7.7 billion figure is the 6.8 billion owed plus ~900 million in interest and fines.
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