Soros Pours Billions Into Foundations as Tax Deadline Looms
Soros has transferred $18 billion to his Open Society Foundations over the years to offset levies.
(Bloomberg) -- George Soros is giving his foundation a big inflow of money in part to minimize a tax bill hedge fund managers are facing this year.
Money managers have until the end of the year to pay taxes on fees they earned from investors in offshore funds and had deferred payment on. Many are now turning to charitable donations -- including to their own foundations -- to help offset the levies coming due.
Soros, founder of $26 billion Soros Fund Management, has transferred almost $18 billion to his Open Society Foundations over the past several years, according to a foundation official.
Tax experts have estimated that collectively managers have at least $100 billion offshore, based on tax-advisers’ conversations with clients, brokers and fund-service providers. A New York-based money manager such as Soros could be subject to a top federal income tax rate of 39.6 percent, plus state and city levies.
When Congress eliminated the tax break in 2008, it gave hedge fund managers until Dec. 31, 2017 to bring the cash home and pay the accumulated taxes.
At the end of 2013, Soros, 87, had amassed $13.3 billion in his Soros Fund Management through the use of deferrals, according to Irish regulatory filings. It’s unclear how much more that pool of money has grown since then. The sum of the total transfer to date was reported earlier Tuesday by the The Wall Street Journal.
A Hungarian émigré, Soros started his career in New York City in the 1950s and gained a reputation for his investing prowess in 1992 by netting $1 billion with a bet that the U.K. would be forced to devalue the pound.
His Quantum fund returned an average of 20 percent annually until 2011, when he returned outside investors’ money and converted his firm into a family office investing solely on behalf of Soros and his family members and his Open Society Foundations, a worldwide network of philanthropies that promotes democracy, the rule of law and economic advancement.
Open Society typically gives away about $1 billion a year, above the 5 percent generally required annually of private foundations by the Internal Revenue Service. Soros Fund Management will continue to manage the money it’s transferring to the foundations. The firm has returned 11 percent annualized in the last decade.
--With assistance from Miles Weiss
To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net, Margaret Collins in New York at mcollins45@bloomberg.net.
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella, Vincent Bielski