Original - Odaily

Author - jk

On December 11, local time in the United States, FTX lawyers stated in a new court filing that if the IRS continues to pursue the $24 billion in tax claims filed, the end result will only be to slow down the return of customer funds. This result will obviously delay the progress of FTX restart.

Although FTX claims it doesn’t owe the IRS anything,But IRS claims hit $24 billion; considering that FTX’s managers have recovered approximately $7 billion in assets so far, including $3.4 billion in cryptocurrencies,This tax amount is more than three times the amount of FTX’s current property.

The FTX debtors claimed to have never earned anything close to supporting the IRSs $24 billion tax claim, according to the filing.

The IRS initially filed a claim of $43 billion, but in November reduced that number to $24 billion, still an astronomical amount for FTX, which is currently enjoying a modest restart.

“This Alice in Wonderland-style argument has no legal support,” FTX said in its filing.

IRS claims not subject to estimates.

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

In substantiating their tax claims, FTXs debtors claimed that the IRS failed to provide a basis for their claims. In fact, this kind of basis is also extremely difficult to provide - authorities must clearly distinguish which cryptocurrencies belong to which property categories, and distinguish whether which properties belong to persons with ties to the United States, or simply foreign countries using FTX services. trading staff.

During its brief three-year life, FTX distributed no dividends or earnings and never earned anything close to supporting the IRSs $24 billion tax claim, the attorneys wrote. Instead, FTX lost a lot of money.

Under U.S. tax law, no tax is payable if there is a loss on the sale of assets such as stocks. FTX makes a similar argument:Attorneys believe a court-supervised estimating process will show that FTX lost money in its three years of operation and therefore is unlikely to owe the IRS any larger amount, and any funds it might be forced to disburse would harm FTX’s victims.

The IRSs only path to recovery is to seize returns from victims. With no basis for a tax claim against the debtors, the IRSs reliance on its own processes will only delay distributions to true victims,lawyers argued in the filing.

The two sides will argue in court on Tuesday about the best process for determining the legal portion of the IRS claim. FTX wanted to set a quick timeline for estimating the claim; the IRS argued that its audit was ongoing, so it would be inappropriate to ask a judge to estimate how much FTX might owe in taxes.

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

“The government is not looking for a windfall, just to determine the correct amount of tax liabilities, federal attorneys said in the filing.