A hedge-fund manager owes $1 billion in taxes after a loophole catastrophically closed
- John Paulson will have to pay $1 billion in taxes this year because of a tax loophole that is now closed.
- The hedge-fund manager made billions betting against subprime mortgages and was able to store the earnings in an offshore account for a decade.
- Paulson is a friend of Donald Trump, but his relationship will not get him out of paying what may be the largest tax bill ever.
Nobody looks forward to Tax Day, but at least most of us can pay our dues with one check.
When hedge-fund manager John Paulson pays his tax bill this year, he may need to send 11 separate checks to the IRS.
That's because Paulson currently owes $1 billion in taxes, according to The Wall Street Journal. The IRS only accepts checks that are worth less than $100 million.
Paulson made billions betting against subprime mortgages right before the financial crisis of 2007-2008. The bet made $15 billion for his hedge fund and an additional $4 billion for himself. At the time, he was able to postpone paying taxes on the earnings, thanks to a loophole in the tax code - but now he has to pay up.
The hedge fund manager originally had a bill of $1.5 billion to pay back to the government - thought to be the largest required payment ever - but he submitted $500 million late last year.
Paulson is not the only one to be hit with a giant tax bill this year. The Joint Committee on Taxation estimated that closing the loophole could bring in as much as $25 billion in tax revenue, but The Wall Street Journal suggests the benefits could be much higher.
Paulson, a friend of Donald Trump, made another risky bet by becoming one of the first on Wall Street to back the then presidential candidate. Vanity Fair noted Paulson was a donor and financial advisor who helped get Trump elected.
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