In the latest update on the FTX bankruptcy case, the cryptocurrency exchange challenges the IRS’s estimated tax claims of $24 billion.
Key Takeaways
- FTX challenges the IRS’s estimated tax claims of $24 billion, requesting a tax bill of zero dollars, alleging that the IRS’s figures are baseless and disproportionate to FTX’s earnings and potential debt obligations.
- The IRS initiated tax audits on FTX in February 2023, initially estimating claims at $44 billion in April, later revised to $24 billion in November, a figure FTX contends is hindering the approval of its Chapter 11 plan.
- FTX asserts its tax returns show no liability and over $11 billion in net taxable losses, contradicting the IRS’s claims. The exchange plans to file an amended Chapter 11 plan in mid-December and aims to confirm the plan by June.
FTX Challenges IRS’s $24 Billion Tax Claims
In a significant development in the FTX bankruptcy case, the cryptocurrency exchange is contesting the Internal Revenue Service’s (IRS) estimated tax claims of $24 billion.
Sam Bankman-Fried steps down as FTX CEO as his crypto exchange files for bankruptcy. The same day FTX, faces potential hack, sees mysterious outflows totaling ore than $600M. Users are advised not to update & to delete the app.#Hacked #FTXbankruptcy #FTX #cryptocrash #Crypto pic.twitter.com/HXw9QSBsuc
— ∼Marietta (@MariettaDaviz) November 12, 2022
FTX has appealed to a Delaware bankruptcy judge, urging the tax bill to be set at zero dollars, alleging that the IRS’s claims are exaggerated and lack supporting evidence.
IRS Estimate with FTX’s Financial Position
FTX argues that the IRS’s tax claims are disproportionate to its earnings and potential debt obligations. The IRS initiated tax audits in February 2023, initially estimating claims at $44 billion in April.
However, this figure was later revised to $24 billion in November. FTX contends that these estimates are baseless and could halt the confirmation of its Chapter 11 plan, causing delays in distributing assets to creditors and customers.
Ongoing Dispute Impacting Bankruptcy Proceedings
This dispute over tax claims is a pivotal issue in FTX’s ongoing bankruptcy proceedings. It introduces uncertainty into the timeline for creditor repayments, potentially affecting the confirmation of FTX’s Chapter 11 plan. FTX plans to file an amended plan in mid-December, initiating the solicitation of votes in March with the goal of confirming the plan by June.
To Conclude
The FTX bankruptcy case takes a contentious turn as the exchange challenges the IRS’s $24 billion tax claims, seeking to set its tax bill at zero dollars.
This dispute adds complexity to FTX’s Chapter 11 plan approval, impacting the timeline for creditor repayments and potential plans to restart the exchange for international customers.
