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.
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 Bankman-Fried and CEO Caroline Ellison, were liable for
worldwide income taxes.
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.
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 Bankman-Fried and CEO Caroline Ellison, were liable for
worldwide income taxes.
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- Source: https://www.financemagnates.com//cryptocurrency/ftx-settles-24-billion-tax-dispute-with-internal-revenue-service/
