farnamstreet Posted May 21, 2012 Posted May 21, 2012 According to Kleinbard, Fairfax broadly misrepresented the deal to the IRS. One example cited was the company’s claim that, “Fairfax had complete risk of loss with respect to the purchased shares, and the possibility of benefiting from their long-term appreciation.” http://www.thefinancialinvestigator.com/?p=702
Parsad Posted May 21, 2012 Posted May 21, 2012 According to Kleinbard, Fairfax broadly misrepresented the deal to the IRS. One example cited was the company’s claim that, “Fairfax had complete risk of loss with respect to the purchased shares, and the possibility of benefiting from their long-term appreciation.” http://www.thefinancialinvestigator.com/?p=702 Did Boyd get fired from the Post? Does the Post know he's running this blog if he hasn't been fired? Who is funding this blog? Isn't it interesting how both Hempton and Boyd are running blogs? This guy has been full of crap for the last decade, and someone is pulling the wires behind the puppet even now. Cheers!
ragu Posted May 25, 2012 Posted May 25, 2012 According to Kleinbard, Fairfax broadly misrepresented the deal to the IRS. Thanks for posting this. I hadn't really understood what the underlying issue was in this case up until I read this. The link to the Kleinbard report is in the post linked in the OP. However, Kleinbard makes such a compelling case that I thought it was worth linking to it directly. I wouldn't bet on a favorable ruling for Fairfax here. Best, Ragu Disclosure: No position in Fairfax.
MrB Posted May 25, 2012 Posted May 25, 2012 According to Kleinbard, Fairfax broadly misrepresented the deal to the IRS. Thanks for posting this. I hadn't really understood what the underlying issue was in this case up until I read this. The link to the Kleinbard report is in the post linked in the OP. However, Kleinbard makes such a compelling case that I thought it was worth linking to it directly. I wouldn't bet on a favorable ruling for Fairfax here. Best, Ragu Disclosure: No position in Fairfax. I stopped reading here, "I am to be compensated at the rate of $1,000.00/hour for my work; my compensation is not contingent on the outcome of the litigation or the conclusions that I have reached." LOL
ragu Posted May 25, 2012 Posted May 25, 2012 I stopped reading here, "I am to be compensated at the rate of $1,000.00/hour for my work; my compensation is not contingent on the outcome of the litigation or the conclusions that I have reached." LOL MrB, It's too bad you stopped reading there. If you believe the terms of his compensation prejudice his analysis, I'd love to hear rebuttals. As I said before, he makes a pretty compelling argument based on the facts, especially the terms of the 2003 Notes issued originally by Fairfax in connection with this transaction. Best, Ragu
Guest Dazel Posted May 25, 2012 Posted May 25, 2012 Ragu, With all due respect...Fairfax went to the IRS first to make sure it qualified. And the fact is everyone on this board would love to see Fairfax stock price tank on t his nonsense...so go for it...We will be ready to buy. Good luck. Dazel
Uccmal Posted May 25, 2012 Posted May 25, 2012 Ragu, Your flogging a dead horse. Reviewed and closed by all parties concerned, except apparently the wingnut contingent. and, even if it wasn't - What difference would it make now? A bunch of restatements and adjustments to NOLs, a small fine, and an agreement "to not do it again". Just sayin.
ragu Posted May 25, 2012 Posted May 25, 2012 ...so go for it... Dazel, I'll be happy to respond if you'd be kind enough to clarify what you meant by this. Best, Ragu
ragu Posted May 30, 2012 Posted May 30, 2012 While I wait on a clarification on the latter part of your post, I thought I'd address what you say below about this case. With all due respect...Fairfax went to the IRS first to make sure it qualified. Indeed, but there seems to be some misunderstanding about the issue that Fairfax actually obtained a private letter ruling from the IRS on. Apart from the unwinding, there were two transactions that were part of this arrangement: 1. The initial issuance of the Notes in March 2003 2. The refinancing of the same in late 2004 Ernst and Young asked for a ruling on the refinancing from the IRS. From page 57 of the report: The gist of the private letter ruling that E&Y requested was that the 2004 refinancing would be treated as a new transaction, and not linked to the March 2003 Transaction in a way that would lead to the conclusion that the exchange privileges in the 2003 Notes and 2004 Notes were a series of sequential options, thereby triggering the Sequential Options Rule and disqualifying Fairfax from relying on the 24 Month Safe Harbor. As previously noted, in this ruling process the Internal Revenue Service was not asked to consider, and it did not consider, whether Fairfax in fact owned the 4.3 million shares of Odyssey Re stock that were the subject of the March 2003 Transaction. Instead, the Service assumed that this was true, relying on an express representation to that effect in E&Y’s ruling request. (emphasis supplied) Section "VIII. CONSOLIDATED RETURN REGULATIONS" of the Kleinbard report, beginning on page 55, discusses the refinancing and the implications for consolidation of Odyssey Re in Fairfax's tax returns. From page 58 of the report: The core representations made in the E&Y Ruling Request (that Fairfax believed it was unlikely that the exchange rights would be exercised, that Fairfax did not necessarily think it undesirable that they might be exercised, and that the idea of rolling over the 2003 Notes was a new idea in March 2004 in response to unexpected appreciation in the price of Odyssey Re stock) are all flatly contradicted by statements and even express covenants made by senior officials of Fairfax and their outside financial accounting firm (PWC), as set out in Section V and this Section VIII. (emphasis supplied) HTH, Ragu
Parsad Posted May 30, 2012 Posted May 30, 2012 Ragu, you should really check the sources involved. Roddy Boyd is pushing the assertions...Sam Antar is tweeting about it (http://es.twitter.com/SamAntar/status/204359301026955264)...and tell me who is funding Boyd's blog? We saw this a couple of times before when Eavis went on his own and when Fabrice Taylor bought "Frank" magazine to turn it into an investigative magazine on Bay Street. Both tanked and went back to writing for papers, because they haven't got a clue what they are talking about, and rely on other people as sources without doing any due diligence themselves. Really, ask yourself why Boyd is writing a blog and exactly who is funding it since he's probably got less than two nickels to rub together. And why would a 2003/2004 issue be suddenly popping up on Boyd's radar screen...oh because the guys funding him are set to go to trial in September! Cheers!
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now