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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

#31

Post by lmm »

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…

So why does it matter who is executing the trades? You can get the low tax rate for investing in shares that are brought and sold 100,000 times a day, but only if someone else decides which shares to buy and sell when? And that's somehow better for long-term investment? What nonsense.

Tax all income at the same rate and you'd eliminate this whole class of problems. Get rid of the idea of choosing when to realize your gains while you're at it.

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

#32

Post by djanogo »

philip1209 wrote: post #16
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.

But they patented it, so other companies (Fidelity, Schwab etc.,) can't use it.

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

#33

Post by inter_netuser »

Kranar wrote: post #28
jlawson wrote: post #24

Earlier quoted context omitted.

Imagine you steal 500 bucks and if caught, the only punishment is to pay back 600 years later. You'd have be almost certain of getting caught for it to not be a great idea.

Imagine you steal 500 bucks, invest it for 10 years turning it into 1000 dollars, and the punishment is to pay a fine of 700 dollars.

Basically, every ICO, only with much bigger numbers.

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

#34

Post by dragonwriter »

renewiltord wrote: post #30

Huh, I recall people saying this 5 years ago only to be shouted down. I guess they stand vindicated. Pity they didn't have a way to monetize their correctness.

> Huh, I recall people saying this 5 years ago only to be shouted down.

It was seven years ago, it was (among others) Sen. Levin, and they weren't shouted down; six years ago the IRS publicly agreed that the tax treatment was wrong and notified people how similar cases should be treated and must be reported going forward. What has gone on in the interim was Renaissance fighting that decision being applied to them.

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

#35

Post by andruby »

shrubble wrote: post #29

7.7 billion in 2021 dollars must be much less than 6.8 billion in 2010 dollars (2005 to 2015 so figure 2010). What is a typical rate of inflation, compounded over 10 years from 2010 to 2021?

Wolframalpha is great for things like this

7.7B usd in 2021 is equivalent to 6.33B usd in 2010. [0]

Or the inverse: 6.8 (2010 usd) is 8.28 (2021 usd) [1]

[0] https://www.wolframalpha.com/input/?i=7.7+usd+in+2010

[1] https://www.wolframalpha.com/input/?i=6.8+2010+usd+in+2021

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

#36

Post by mertd »

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.

They saved 6.8B seven years ago. If they put that money in broad market index, they already made the fine amount by now and then some.

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

#37

Post by lvs »

jlawson wrote: post #24
ummonk wrote: post #19

Earlier quoted context omitted.

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

Imagine you steal 500 bucks and if caught, the only punishment is to pay back 600 years later. You'd have be almost certain of getting caught for it to not be a great idea.

That's basically an involuntary loan.

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

#40

Post by 29athrowaway »

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.

The IRS can not only give you civil penalties like fines. They can also give you criminal penalties. They also have their own courts where you almost always lose.
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