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This is simply a tax move. Dorsey is going to pay hundreds of millions in capital gains taxes when Square goes public later this year. He gets to take this as a
by gsibble 11y ago
This is simply a tax move. Dorsey is going to pay hundreds of millions in capital gains taxes when Square goes public later this year. He gets to take this as a loss which he can write off against those taxes. It's essentially free. Great PR stunt but doesn't cost him a dime.
- eis 11y agoNow if you could explain how $190 million in losses can save $190 million in taxes, that would be great. Hint: it doesn't work this way.
- gsibble 11y agoNo, it doesn't. But $190 million in losses can be written off against $190 million in gains.
- wellsjohnston 11y agoHe doesn't get to take this as a loss though, he's giving it away. It would be a loss if he invested in Twitter and then sold at a lower price.
- gsibble 11y agoTwitter is buying the stock back from him at $0. You can't just donate stock to a company. That stock's nominal value is $200,000,000. So he takes a loss of $200,000,000 which he can write off against any gains he gets from Square's sale.
- corysama 11y agoOption 1) $200MM loss today, $200MM gain tomorrow, $0 taxes in April. Net result: $0 Option 2) Keep your $200MM today, $200MM gain tomorrow, $70MM taxes in April. Net result: +$130MM Why would anyone want Option 1?
- ViViDboarder 11y agoHow can you write off gifts? Twitter is not a 401c3. This isn't a donation.
- gsibble 11y agoYou can give gifts to a corporation. Twitter is buying the stock back at $0.