Trader nailed with $172 million bill in back taxes, asks 'What's the IRS?' BY Bill Hutchinson DAILY NEWS STAFF WRITER Tuesday, August 24th 2010, 9:32 PM He failed as a day-trader and barely survived in New York on a beer budget, but Marcos Esparza Bofill has been hit with a $172 million tax bill by the IRS. "Who's the IRS?" Esparza Bofill, a twentysomething Spanish émigré, asked a friend who alerted him to his astronomical back taxes. Esparza Bofill moved to New York from his native Spain in 2006 to try his hand at day-trading. When he nearly went bust after a year, he moved back home. "He lost money while he was here. He couldn't afford rent," said friend Adam Baruchowitz of Brooklyn. Esparza Bofill didn't file an income tax return for the year he was here swapping stocks - and that's leading to big problems with Uncle Sam. The feds tracked his every trade. But because Esparza Bofill never accounted for his losses or expenses in tax filings, the IRS presumed he made a pure profit - a staggering $500 million in income. "He definitely wasn't a $500 million-a- year earner," another friend, who asked not to be identified, told the Daily News Tuesday. "He lives a very modest life," the friend said of Esparza Bofill, whose tastes lean more toward garage music than the symphony. "So just to think that all of a sudden he owes $172million is pretty ridiculous." A tax-lien notice the IRS sent to Esparza Bofill's old walkup apartment in Alphabet City was posted Tuesday on thesmokinggun.com website. Esparza Bofill declined to comment Tuesday. "He doesn't know what's going on, ya know. Like, he's not an American native," said the friend. "So, all of a sudden, the IRS is looking for him, and the first thing he says to me is, 'Who's the IRS?' "He thought I was joking when I first started talking to him about it," the friend added. "I said, 'No, it's not a joke, man. This is for real.' I'm like, 'Try to Google yourself,' and all of a sudden three blogs popped up." Manhattan CPA Marc Albaum said Esparza Bofill's problems with the IRS are not unusual. "If you don't file, the IRS assumes that you have 100% profit, that basically it's as if you bought the stock at no cost," Albaum said. "Now, the remedy for this is simply to file. He could wipe out anything he owes," said Albaum. whutchinson@nydailynews.com http://www.nydailynews.com/ny_local...ader_nailed_with_172m_bill.html#ixzz0xeOe68Ky
I'd say I understand, but my "issue" with the IRS wasn't to the tune of millions.:eek: I thought their wanting $97,000 from me was bad... Wait, it was bad!
This is pretty common as the IRS works on the honor system for people to report the cost basis of their transactions. Of course all of the consistently profitable traders I know have exactly $3k in losses each year on their schedule D's.
Can't drum up any sympathy for someone who has not paid their taxes. Not that I think the govt. is doing anything productive with them. It's just that I have paid so much for so little, so I hate to see anyone get away with not paying them. Are we creating a nation of people with no self respect? I saw an article today on Yahoo news: "It's OK to Walk Away from your Mortgage" or some such thing. I do not mean to be callous. There are definitely people who have lost their jobs and have no other choice. It's those who do have a choice that I am wondering about.
I think both the bank and the borrower have standing to sue the appraiser for fraud. I see nothing wrong with the borrower moving to void the contract using the legal system to squeeze out a few years of mortgage free living.. reality is for most its their sole asset and only chance to suck out any equity after their propery values have dropped 50%.