FTX Settles $24 Billion Tax Dispute with Internal Revenue Service
FTX has reached a settlement with its largest creditor, the Internal Revenue Service (IRS). This agreement resolves a significant $24 billion tax dispute that has been looming over the exchange's restructuring process. Initially, the IRS claimed FTX owed over $44 billion in taxes, but this amount has been substantially reduced as part of the settlement.Implications and CertaintyUnder the terms of the settlement, FTX will pay the tax agency $200 million as a priority tax claim within 60 days of the court's approval of the exchange's reorganization plan, as highlighted in a filing presented yesterday (Monday). Additionally, the IRS will collect $685 million, which will be paid after other creditors and customers have been compensated.The settlement provides much-needed certainty for FTX's creditors and customers regarding the recovery process. By resolving the tax dispute, FTX can now focus on implementing its reorganization plan and distributing assets to stakeholders. The agreement also mitigates the risk of prolonged litigation, which could have further complicated the exchange's bankruptcy proceedings.While FTX acknowledged its tax obligations, it disagreed with the IRS regarding the amount and specific reasons for the tax liability. The exchange argued that it should not be held responsible for funds misappropriated by its former CEO, Sam Bankman-Fried, and disputed the IRS' calculations for employment taxes related to executive salaries, Cointelegraph reported.Tax Claims against FTXAdditionally, FTX contended that it has valid deductions and losses that the IRS is unfairly disallowing due to documentation issues. Last year, the US Department of Treasury and the IRS filed claims totaling $44 billion against FTX and its affiliates. This tax claim highlighted the complexities and consequences of the FTX bankruptcy, Finance Magnates reported.These claims targeted multiple FTX entities, including the Bahamas-registered FTX Trading Alameda Research, West Realm Shires, Ledger Holdings, and Blockfolio, among others. The largest tax claims were directed at Alameda Research LLC, with staggering individual claims of $20.4 billion and $7.9 billion and additional claims against Alameda Research Holdings Inc. totaling $9.5 billion. The $20.4 billion claim related to partnership and payroll taxes, which were marked as a priority over other unsecured creditors. Despite operating outside the US, key FTX executives, including founder Sam Bankman-Fried and CEO Caroline Ellison, were liable for worldwide income taxes. This article was written by Jared Kirui at www.financemagnates.com.
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FTX has reached a settlement with its largest creditor, the Internal Revenue Service (IRS). This agreement resolves a significant $24 billion tax dispute that has been looming over the exchange's restructuring process. Initially, the IRS claimed FTX owed over $44 billion in taxes, but this amount has been substantially reduced as part of the settlement.
Implications and Certainty
Under the terms of the settlement, FTX will pay the tax agency $200 million as a priority tax claim within 60 days of the court's approval of the exchange's reorganization plan, as highlighted in a filing presented yesterday (Monday). Additionally, the IRS will collect $685 million, which will be paid after other creditors and customers have been compensated.
The settlement provides much-needed certainty for FTX's creditors and customers regarding the recovery process. By resolving the tax dispute, FTX can now focus on implementing its reorganization plan and distributing assets to stakeholders. The agreement also mitigates the risk of prolonged litigation, which could have further complicated the exchange's bankruptcy proceedings.
While FTX acknowledged its tax obligations, it disagreed with the IRS regarding the amount and specific reasons for the tax liability. The exchange argued that it should not be held responsible for funds misappropriated by its former CEO, Sam Bankman-Fried, and disputed the IRS' calculations for employment taxes related to executive salaries, Cointelegraph reported.
Tax Claims against FTX
Additionally, FTX contended that it has valid deductions and losses that the IRS is unfairly disallowing due to documentation issues. Last year, the US Department of Treasury and the IRS filed claims totaling $44 billion against FTX and its affiliates. This tax claim highlighted the complexities and consequences of the FTX bankruptcy, Finance Magnates reported.
These claims targeted multiple FTX entities, including the Bahamas-registered FTX Trading Alameda Research, West Realm Shires, Ledger Holdings, and Blockfolio, among others. The largest tax claims were directed at Alameda Research LLC, with staggering individual claims of $20.4 billion and $7.9 billion and additional claims against Alameda Research Holdings Inc. totaling $9.5 billion.
The $20.4 billion claim related to partnership and payroll taxes, which were marked as a priority over other unsecured creditors. Despite operating outside the US, key FTX executives, including founder Sam Bankman-Fried and CEO Caroline Ellison, were liable for worldwide income taxes. This article was written by Jared Kirui at www.financemagnates.com.
