by Ray Poirier |
Andy Beal, the poker playing Texas banker and Donald Trump financier, has lost his biggest bet, $1.1 billion.
Beal was caught up in the recent effort by the Internal Revenue Service to crack down on exotic tax shelters. His involved a loss of $1.1 billion from a $19 million investment in distressed Chinese business.
After a 15-day non-jury trial in Dallas, Texas, a federal judge found that the investment "lacked economic substance" to be taken as a tax deduction. However, he struck down the IRS effort to impose stiff penalties by saying Beal’s tax position was made in "good faith and with reasonable cause."
Beal, known for his high-stakes poker playing in Las Vegas with some of the more famous world-class poker players, didn’t care much for the attitude being shown by IRS agents.
He was quoted by FORBES as saying, "I am a good guy made to look like a bad guy for doing what every taxpayer does—appropriately use the law to minimize my taxes."
A true success story, Beal is the sole owner of Beal Financial Group and operates the company as an "S corp." As such all the profits and losses from his company go directly to his individual tax return. As for the Chinese investment, the IRS said the Beal loss was only $10 million, not $1.1 billion. He has paid all his taxes as well as a 40% penalty assessed by the IRS.
Should the judge’s decision stand, Beal will be entitled to a substantial refund.
Just last week, Beal’s bank joined with Donald Trump in a $100 million bid for bankrupt Trump Entertainment Resorts Inc. (TRMP), the company that owns three hotel/casinos in Atlantic City.
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