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

Post by lotsofpulp » Fri, Sep 03, 2021, 1:22 PM UTC

matheusmoreira wrote: post #71

ceilingcorner wrote: post #41

The amount of human capital that has gone into financial engineering is depressing. Thousands of brilliant minds who are designing complex financial products instead of useful technology.

Frustrating, isn't it? I feel the same way about YouTube celebrities and sports players making millions while actually useful professions make significantly less. From what I've read the better paid doctors make about 300k/year. I also feel the same way about most consumer technology being developed today. It's mostly advertising and intellectual property exploitation. Nothing particularly useful, really. Yet the peo…

Post by lotsofpulp » Fri, Sep 03, 2021, 1:29 PM UTC

irjustin wrote: post #17

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.

Post by loeg » Fri, Sep 03, 2021, 2:25 PM UTC

justinjoshuak wrote: post #67

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.

That's not really what's happening here. Tax obligations under the law are not clear cut. There's ambiguity. The law is often general in nature and old. It may not be clear how the law applies to a specific business. A large business could seek out the opinion of ten different tax professionals and get a range of answers of how much tax the law requires them to pay. Even the IRS may not be certain. It's not unusual o…

Post by Tycho » Fri, Sep 03, 2021, 2:42 PM UTC

Post by smabie » Fri, Sep 03, 2021, 4:51 PM UTC

dailo10 wrote: post #80

justinjoshuak wrote: post #67

Earlier quoted context omitted.

That's not really what's happening here. Tax obligations under the law are not clear cut. There's ambiguity. The law is often general in nature and old. It may not be clear how the law applies to a specific business. A large business could seek out the opinion of ten different tax professionals and get a range of answers of how much tax the law requires them to pay. Even the IRS may not be certain. It's not unusual o…

Except in this case they went too far and the IRS busted them - to the tune of $7B. Let’s not pretend like they weren’t trying to get away with not paying their fair share of taxes here. And to OP's point - if the punishment was in proportion to how much they tried to steal - well, you’d probably see a lot less “creativity” in these tax schemes.