Rich get richer with IRS loophole in sunny Bermuda

Billionaire hedge-fund moguls are getting comfortable with a US tax loophole to fatten their already plump bottom lines.

All it takes to avoid tens of millions of dollars in taxes is a short trip to Bermuda — not by them, but their cash.

Hedgies like John Paulson and Steve Cohen are forming reinsurance companies in tax-free havens like Bermuda or the Cayman Islands — and then transferring cash from their funds to the reinsurance companies.

The cash, classified as insurance company reserves, is then transferred back into the funds as reserves to be invested for future claims.

Thanks to an IRS loophole, profits from these insurance companies aren’t taxed — until the stake in the fund is sold, and that could be years down the line.

Last Edited by mrmuffins69 on 02/22/2013 09:58 PM