FTX reboot was stabbed in the back by the IRS, how should the $24 billion in taxes be repaid?

Original | Odaily

Author | Jk

On December 11, local time in the United States, FTX lawyers said in a new court filing that if the IRS continues to pursue the $24 billion tax claim filed, the final result can only be to slow down the return of customer funds. This result will significantly slow down the progress of FTX’s restart.

Despite FTX’s claim that it does not owe anything to the IRS,the IRS has filed claims in the amount of a whopping $24 billion; Considering that FTX’s managers have recovered about $7 billion in assets so far, including $3.4 billion in cryptocurrency, this tax amount is more than three times the current amount of FTX’s current assets. **

According to the filing, the FTX debtor claims to have “never earned anything close to supporting the IRS’s $24 billion tax claim.”

Initially, the IRS filed a $43 billion claim, but in November it reduced that figure to $24 billion, but it’s still astronomical for FTX, which is currently restarting a little better.

“This Alice in Wonderland-esque argument is not legally supported,” FTX said in its filing. **

The IRS claim “does not apply to estimates.”

Determining taxes is extremely difficult, and FTX may not owe any taxes

In terms of adducing evidence for tax claims, FTX’s debtors allege that the IRS did not provide basis for their claims. In fact, this kind of basis is extremely difficult to provide — the authorities must clearly distinguish which cryptocurrencies belong to which property categories, and whether the assets belong to persons with ties to the United States, or simply foreign traders who use FTX’s services.

In its short three-year lifespan, FTX has not distributed dividends or earnings and “has never earned anything close to supporting the IRS’s $24 billion tax claim,” the lawyer wrote. On the contrary, FTX lost a lot of money.

Under U.S. tax law, gains on assets such as the sale of stocks are not taxed if they are lost. FTX makes a similar argument: Attorneys argue that the court-supervised estimation process will show that FTX has lost money in the three years of its operation, so it is unlikely that it owes the IRS any larger amounts, and that any funds it may be forced to pay would harm FTX’s victims.

**“The only way for the IRS to recover is to take the rewards from the victims. Since there is no basis for filing a tax claim against the debtor, the IRS relies on its own process only to delay the distribution to the real victim,” the lawyer argued in the filing.

The parties will argue in court Tuesday about the best procedure to determine the legal portion of an IRS claim. FTX wanted to set a fast timeline for estimating claims; The IRS argues that its audit is ongoing, so it would be inappropriate to ask a judge to estimate the amount of tax that FTX may owe.

It now appears that based on the current financial recovery of around $7 billion, it is very likely that the IRS will amend the $24 billion claim to at least partially reclassify it as lower-priority unsecured debt.

“The government does not seek windfalls, only to determine the correct amount of tax liabilities,” federal attorneys said in the filing.