US hedge fund executives pay $7 billion to settle tax dispute
The payment is related to a dispute over decisions by the firm's Medallion fund between 2005 and 2015 and the way it was reported to the Internal Revenue Service, the US tax authorities: the IRS accused Renaissance Technologies of declaring short-term trading gains as less heavily taxed long-term profits.
Renaissance Technologies, known for investment strategies based on complex computer models capable of digesting large amounts of information, said in the letter that the company "engaged for several years in the IRS Appeals process, in which we vigorously advocated the correctness of Medallion’s tax reporting."
However, Renaissance's board "concluded that the interests of our investors from the relevant period would be best served by agreeing to this resolution with the IRS, rather than risking a worse outcome."
The payments will be made by a group that includes seven people who were members of the board between 2005 and 2015, as well as their spouses.
According to the Wall Street Journal, Medallion only manages money from company employees and a few relatives, not from outside investors.
The company declined to comment when contacted by AFP, and the IRS did not immediately respond to request for information.