Hedge fund slammed over $6.8B in unpaid taxes seeks deal with IRS: report By Carleton English April 10, 2019 | 8:18pm Enlarge Image James Simons, founder of Renaissance Technologies AFP/Getty Images In a move that could severely ding investors, secretive hedge fund Renaissance Technologies is in talks to settle a dispute with the Internal Revenue Service over billions in unpaid taxes. SEE ALSO Big hedge funds make gains, most slump in 2018 returns RenTech’s flagship Medallion fund was determined to have avoided up to $6.8 billion in taxes over a 15-year period by the Senate’s Permanent Subcommittee on Investigations in 2014. Now the hedge fund is warning investors — who include the company’s billionaire founder and math whiz James Simons — that they could incur “substantial” payments if a deal over the tax dispute is hashed out, according to a December letter seen by Bloomberg, which first reported the news. The fund’s tax dispute centers on options it controlled tied to a portfolio of securities. The fund held the options long enough to qualify for long-term capital gains, which are far cheaper than short-term capital gains — even though the underlying securities the options were based on traded far more frequently, the subcommittee said. RenTech reported the earnings as long-term capital gains and has been fighting the IRS’ challenge to the strategy, known as “basket options.” The Medallion fund, open only to current and former RenTech employees, is known for its average annual returns of 40 percent a year net of fees. Simons is one of Medallion’s investors who can easily afford a bigger tax bill. The East Setauket, NY, resident — who founded the hedge fund known for sky-high returns in 1982 — is repeatedly named the nation’s highest earning hedge fund manager and is estimated to be worth $21.5 billion by Forbes. Reps for RenTech declined to comment.
There was a case I read once regarding the IRS where the judge ruled it was in society's best interest that the defendant pay more taxes. And that was the reasoning that was upheld at appeal. You gotta remember it's not your money. It belongs to the bureaucrats. They just let you borrow it. And then if you think that people who get paid by a public purse will ever rule against filling that purse.. I've got a bridge to sell you. Props to RenTech for thinking up this clever scheme. Their mistake is that they were the only ones doing it.
they do run a large equities book https://whalewisdom.com/filer/renaissance-technologies-llc and that's just US, 130 B total aum including non-medallion funds