Sunday, 28 August 2016
Last updated 1 day ago
Dec 9 2011 | 10:01am ET
Hedge fund billionaire Leon Cooperman has beaten a $5 million penalty for unpaid taxes.
The Internal Revenue Service has settled its case against Cooperman, stemming from what the Omega Advisors founder says was bad tax advice. Instead of the $5 million penalty, Cooperman will pay only $29,191, as well as the $14 million plus interest in unpaid taxes.
The billionaire argued that he had acted in good faith and shouldn't be so harshly penalized.
Cooperman's problem is this: He seeded Jana Partners, and then donated his stake in the hedge fund to his charitable foundation. Independent appraisers valued that stake at $43 million, and Cooperman, on the advice of his tax preparer, deducted the donation.
Cooperman now concedes, you aren't allowed to deduct non-publicly-traded securities donated to your own foundation. But he said that neither he nor his tax preparer were aware it wasn't allowed, and that he was "mortified" when the bill came.