John Paulson with $1.5 billion. taxes for the big short bet in 2005

If you've seen the movie The Big Short, there was one character they left one. He was probably the biggest character of all because he made more than anyone by betting against US housing.

John Paulson made an enormous bet against subprime mortgages ahead of last decade's financial crisis, earning about $15 billion of profits for his funds and approximately $4 billion for himself. It's detailed in the book "The greatest trade ever" by Gregory Zuckerman.

One thing that book doesn't detail is the taxes. The tax code at the time allowed deferrals of the taxes due on the gain but only until April 15 this year. Now, he has to pay a bill estimated at $1.5 billion, according to the WSJ.

The drop compounds a problem for Paulson. In this past three years, his firm lost 3.14%, 27.3% and 20.27%.

Other fund managers including Stevie Cohen, David Einhorn and Daniel Loeb all face bills of more than $100 million and the total for all of them could be between $25 billion and $100 billion.

A fresh loophole may allow them to donate to charities to get a 100% deduction and those charitable trusts can even invest back in their funds.

Source: Bloomberg Pro Terminal

Read more:

• PAUL TUDOR JONES: The next recession will be ‘frightening’
• Jim Rogers about the bubbles, emerging markets, Asia and something else
• Linda Raschke on Twitter: “So nice when someone sums up timeless guidelines with such a well organized layout”
• Ray Dalio: “The World Has Gone Mad and the System Is Broken.”
• Bill Gross: Cheap is not always cheerful in value investing