San Francisco judge rejects Hawkins plea to use personal bankruptcy to cancel $20m of tax obligations.
According to a Forbes blog, US District Court judge Jeffrey S. White has upheld an earlier bankruptcy court ruling related to tax shelters Hawkins used to shield the personal wealth he gained from founding Electronic Arts in the 80s.
The judge said Hawkins knew he was insolvent after the IRS disallowed his tax shelters and that he “planned to defeat his taxes via bankruptcy and continue living the lifestyle to which he had grown accustomed.”
Evidence cited in the case included the $70,000 purchase of a Cadillac Escalade and monthly expenses in 2005 of $94,900.
Hawkins is now CEO of Digital Chocolate, but made his fortune as founder of EA. It was the demise of a subsequent business, 3DO, that caused his financial problems.
Here's how Forbes sums up his current tax predicament: "According to court records, the accounting firm KPMG convinced Hawkins that he could avoid taxes by employing exotic strategies to create the appearance of large capital losses without the real risk of loss.
"The ploys, known as the FLIP and OPIS shelters, involved use of offshore corporations, options and investments in offshore companies like UBS AG to artificially generate a high tax basis."
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Taxes are complex and the laws are constantly changing.
Obtaining the judgment cash from a suit can seem like the conclusion of an extended process. The IRS, however, could want a portion of that judgment. If you end up getting taxed more than you expected this year, an installment loan can help.
hazel R Jan 5th 2012 at 10:42AM
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