What did ex-Ernst & Young, ex-Pannell Kerr Forster, and ex-Deloitte employee Farhad Morishi have that […]
It’s probably safe to say that billionaire hedge fund manager Leon Cooperman doesn’t get poor service very often. As the founder of Omega Advisors and #655 by Forbes‘ last count, the man has arguably earned the right to demand only the best, especially when it comes to something as important as tax services.
How that Cooperman is just the latest billionaire to have tax issues (McCombs, Anschutz have had troubles recently) that might cause a less prudent mega-rich person to flip their lid (e.g. Ted Turner, Steve Jobs).
Cooperman recently received a letter from the IRS informing him that despite the generous gift of $43 million to his own foundation, the contribution could not be allowed because the donation was a non-marketable security made to a private foundation, which is not allowed by the IRS. Had he made the donation to say, NORML (he looks like he could get behind it, couldn’t he?), or some other public charity everything would have been hunky-dory.
Unfortunately for Mr Cooperman, this isn’t the case and the IRS sent him a bill for $14 million in back taxes and $5 million in penalties. Understandably, this aggression will not stand and the “plain-speaking” Coop has taken the case to court to insist that he relied on his accountants to get this shit right. It’s complicated, after all. It’s not about the money, it’s the principle. Coop would gladly schlep in suitcases of consecutively numbered hundos to settle this here and now but the penalties are uncalled for and he’s bound and determined to prove that. But who actually is to blame?
The lawsuit says Cooperman’s two personal returns claiming the deductions were prepared by his longtime accountant, Mark I. Gittelman, a CPA with Gittelman & Co., Clifton, N.J. The formal appraisals to support the claimed deductions were done by RSM Business Services and Duff & Phelps, Cooperman’s suit adds.
McGladrey does tax work for other Cooperman entities, including his hedge fund, Omega Advisors. Cooperman told Forbes that McGladrey knew he was planning to donate a nonmarketable security to his private foundation and take a deduction when the firm rendered its appraisal for a fee that Cooperman said was about $20,000.
Again, the money isn’t important but for crissakes, McGladrey, you just don’t half-ass your work for Leon Cooperman. Forbes was all over this issue back in ’04. Where were you in 2004? Stumping for John Kerry?
Of course we all know where this is eventually going – litigation! When rich people get wronged, someone inevitably pays and it sounds like LC is happy to sit tight and let the tax court do its thing. Once that’s resolved, he’ll turn his sights towards the responsible parties:
Cooperman clearly is thinking about malpractice litigation. He acknowledged McGladrey is likely to assert it didn’t prepare or sign the tax returns with the disallowed deductions, although the firm’s formal appraisal was attached.
Best of luck to everyone involved!
So you’re Julian Robertson and you’re a billionaire right? You’re on the Forbes list &mdash right behind that cheater Raj but ahead of Wilbur Ross! &mdash and you don’t have many worries.
Except for the City of New York trying to nab $27 million dollars from you! Subways stations falling apart, government employees being laid off. Bah. That’s over 1% of your net worth (based on Forbes’ latest count) and you’ll be damned if the City is going to get their grubby mitts on it.
At issue was Mr. Robertson’s whereabouts on four days during : April 15, July 23, July 31 and Nov. 16. The other 362 days were accounted for, with documentary proof of 183 days spent in the city and 179 spent outside. The New York State Department of Taxation and Finance argued that because he didn’t have documentary proof for the four days, he was therefore a resident and owed city taxes of $26,792,341.
Four days. Four days standing in between you and $27 million. As we mentioned, it’s not like this is a substantial amount but this was one of those qualitative over quantitative decisions: “$27 million, an amount important enough to the hedge-fund manager that he and his staff spent hours and developed a complicated calendar system to track his whereabouts.”
See? It’s the principle. Robertson is bending over backwards to play by the rules since he once told an assistant — who meticulously tracks New York City days and non-New York City days — that crossing the GW Bridge at 11:45 pm is considered a New York City day.
Between the human GPS and Robertson’s wife saying there was no way he was in the City — she doesn’t stand for him being ‘in her hair’ prior to vacay — the court was convinced that he wasn’t a New York City resident. Can’t say Robertson didn’t work for it.
In Tax Case, 4 Days Save Robertson $27 Million [WSJ]