Hedge Fund Liable for Deutsche Bank Securities Tax Deferment (1)

A hedge fund’s treatment of securities nominally owned by Deutsche Bank AG should be disregarded because the fund directed their trade, validating US income adjustments imposed on the fund, the US Tax Court ruled Wednesday.

GWA LLC, a Connecticut-based hedge fund managed by George A. Weiss, challenged more than $500 million worth of income adjustments brought by the IRS for 2009 and 2010, plus accuracy-related penalties. The agency said GWA had, in substance, owned a basket of securities traded under its direction but failed to report their associated gains on an annual basis.

The hedge fund petitioned the court for ...