DALLAS (CN) - On the first day of cross-examination, Internal Revenue Service attorneys accused former Texas billionaire Sam Wyly of looking into renouncing his U.S. citizenship to reduce his tax liabilities.
Wyly, 81, testified for more than 90 minutes Monday during the second week of his bankruptcy trial.
Wyly and his brother Charles' widow, Carolyn Wyly, filed for Chapter 11 bankruptcy protection in October 2014 to stave off a $299 million judgment in the Securities and Exchange Commission's favor.
A Manhattan federal jury found that the brothers made $550 million from more than 700 hidden transactions in 40 companies operated by offshore Isle of Man trusts that shuffled money between the Cayman Islands and Dallas.
The IRS intervened in the bankruptcy and is demanding $2.2 billion in back taxes and penalties.
Assistant U.S. Attorney Holly Church entering into evidence 2004 correspondence between the Wylys' staff and attorneys that indicate his interest in renouncing his citizenship.
Church entered additional correspondence into evidence from the early 1990s from the family's attorneys that indicate that if the IRS ever went after the offshore trusts, the family "could litigate it for years and settle for pennies on the dollar."
IRS attorneys say the offshore trusts were used to hide income that funded the expensive lifestyle of Wyly and his family.
Wyly's attorneys disagree, calling the dispute an honest difference of opinion on tax law.
Wyly testified on Friday that he filed for bankruptcy to make the IRS "put up or shut up" about its tax claims, and to spare his children uncertainty after years of audits.