Thread by @arapaho415

@WendySiegelman @Agenthades1 @schwartzbCNBC Recap <thread>: @ellyn_gesell @itssuzann @ThomasS4217
Nov 13, 2019:
1/ "[T]he IRS Office of Appeals rejected a tax-avoidance maneuver involving so-called basket options. (cont)

https://twitter.com/zachmider/status/1194618835443372033

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 2/ ...That’s the type of transaction at the heart of a separate, larger case involving Simons’s 👉Renaissance Technologies👈 hedge fund. The decision, made public in a court filing in May [2019]⤵️... (con't)
findknowdo.com/sites/default/…

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 3/ ...could offer a preview of the tax agency’s reasoning in the Renaissance case."
"In a confidential decision in Dec [2018], the IRS held that GWA, a Hartford, Connecticut-based company run by hedge fund pioneer George A. Weiss, had under-reported ordinary income... (con't)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 4/ ...in 2009 and 2010 by a total of $527 million through its use of 👉basket options👈. The decision wasn’t made public until Weiss challenged the action in U.S. Tax Court this year [May 1, 2019, see tweet #2]. That case is pending." (more...)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 5/ "The Weiss case is 👉almost identical to the one involving East Setauket, New York-based Renaissance👈, arguably the most successful hedge fund in history. Both firms bought basket options from Deutsche Bank AG... (con't)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 6/ ...and claimed that the devices lowered the tax rate on some of their profits. Both spent years wrangling with IRS auditors before taking their cases to the agency’s Office of Appeals. It’s that office that issued the final determination against Weiss in Dec [2018]." (more)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 7/ "The appeals office has more latitude than IRS auditors to negotiate settlements. Renaissance told investors in Dec ['18] that it was 'exploring possible ways to conclude this dispute' w/the appeals office, including a settlement. (con't)
Apr 10 2019⤵️:

https://twitter.com/zachmider/status/1115960863368851456

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 8/ ...But the case was still unresolved as recently as March [2019], according to an update sent that month. By law, the IRS is prohibited from disclosing information about specific taxpayer audits." (more...)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 9/ "Over more than a decade, Renaissance used basket options sold by Deutsche Bank & Barclays Plc to shelter some $34bn of income in its flagship Medallion Fund, cutting the rate paid by investors by as much as 20 percentage points, the Senate Permanent Subcommittee... (con't)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 10/ ...on Investigations concluded in a 2014 report. Medallion is owned almost exclusively by Renaissance employees."
"Deutsche Bank sold such options to at least 13 hedge funds during the late 1990s and early 2000s, including GWA and Renaissance... (con't)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 11/ ...according to the Senate report."
"Weiss’ case appears to be the first dispute involving the options to proceed to court."
"Deutsche Bank stopped selling basket options that offered a tax benefit after the IRS declared in a 2010 memo that it considered them abusive. (con't)

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 12/ Barclays stopped in 2013." /end
BTW, a new book is out on James Simons:
The Man Who Solved the Market
How Jim Simons Launched the Quant Revolution
By Gregory Zuckerman
penguinrandomhouse.com/books/557104/t…

@WendySiegelman @Agenthades1 @schwartzbCNBC @ellyn_gesell @itssuzann @ThomasS4217 @Stephaniefishm4