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>I sell enough shares to match my losses and buy a $175mil mansion If you had $175M to buy a mansion and paid $0 tax, you must have had $175M of losses as well

>I sell enough shares to match my losses and buy a $175mil mansion If you had $175M to buy a mansion and paid $0 tax, you must have had $175M of losses as well. To have $175M of losses, you had to have paid $175M for those Theranos and Juicero shares. So you already had $175M sitting around in your bank account a few years ago. You could have just left it there and bought your mansion now. Your scheme gained you nothing, in fact you are worse off because you had to sell $175M of your Uber shares, which you wouldn't have had to sell if you had just kept your $175M in your bank account rather than investing in Juicero and Theranos. My point is that the $175M you had in your bank account years ago was already realized and fully taxed because it was cash. So being able to spend it on a mansion is fair because it's already fully taxed. You used it up on your mansion and cannot spend it on anything else. If you want to buy a second mansion you'll have to find some new fully taxed money (such as sell more Uber shares and actually pay capital gains tax on them).

Chris2048 5y ago
You need to account for the purchase of Uber shares here: > you had to sell $175M of your Uber shares If you had these separately to the Theranos etc shares, you had to buy them. Since the $175M was a full loss of $175M then that can't account for the (non-losing) Uber shares. > you had to sell $175M of your Uber shares, which you wouldn't have had to sell if you had just kept your $175M in your bank account You'd need to know to only invest in Uber, and not in Theranos etc to do this. The idea of the portfolio is you need to invest broadly to allow for the successes. If you kept the $175M in your bank account, you wouldn't be able to achieve that.
- Thorrez 5y ago
  Yeah, I agree with all that. But I want to clarify a little. >If you had these separately to the Theranos etc shares, you had to buy them. Since the $175M was a full loss of $175M then that can't account for the (non-losing) Uber shares. Yep. So you had to have more than $175M of fully taxed money at the beginning. But most of that stayed in Uber, only a small percent of the Uber stock needed to be sold. This makes my original argument stronger, but only slightly. Since it only made my argument slightly stronger I didn't bother mentioning it. >You'd need to know to only invest in Uber, and not in Theranos etc to do this. The idea of the portfolio is you need to invest broadly to allow for the successes. If you kept the $175M in your bank account, you wouldn't be able to achieve that. Sure. But my main point is that this isn't a method to spend money while delaying tax on it. m_ke seemed to be saying a billionaire can spend money on a mansion without paying tax on it right away, but that $175M at the beginning already had tax paid on it. So the $175M spent on the mansion was fully taxed already. A diversified portfolio helps with optimizing stock sales to delay some taxes. But enough taxes are still paid early such that every dollar spent is fully taxed by the time it's spent.
kenneth 5y ago
A simpler example: Today you buy $100 of Theranos and $100 of Uber. Tomorrow your Theranos is worth $0 and Uber is worth $200. You put in $200, you still have $200, you use the Theranos loss to offset the Uber win. This is good, this is how things should work. But some here would say "OMG he evaded taxes on the $100 Uber gain!" Tax loss harvesting is not a loophole, it's exactly the right thing to have, and it's available to everyone.

Chris2048 5y ago

You need to account for the purchase of Uber shares here: > you had to sell $175M of your Uber shares If you had these separately to the Theranos etc shares, you had to buy them. Since the $175M was a full loss of $175M then that can't account for the (non-losing) Uber shares. > you had to sell $175M of your Uber shares, which you wouldn't have had to sell if you had just kept your $175M in your bank account You'd need to know to only invest in Uber, and not in Theranos etc to do this. The idea of the portfolio is you need to invest broadly to allow for the successes. If you kept the $175M in your bank account, you wouldn't be able to achieve that.

Thorrez 5y ago
Yeah, I agree with all that. But I want to clarify a little. >If you had these separately to the Theranos etc shares, you had to buy them. Since the $175M was a full loss of $175M then that can't account for the (non-losing) Uber shares. Yep. So you had to have more than $175M of fully taxed money at the beginning. But most of that stayed in Uber, only a small percent of the Uber stock needed to be sold. This makes my original argument stronger, but only slightly. Since it only made my argument slightly stronger I didn't bother mentioning it. >You'd need to know to only invest in Uber, and not in Theranos etc to do this. The idea of the portfolio is you need to invest broadly to allow for the successes. If you kept the $175M in your bank account, you wouldn't be able to achieve that. Sure. But my main point is that this isn't a method to spend money while delaying tax on it. m_ke seemed to be saying a billionaire can spend money on a mansion without paying tax on it right away, but that $175M at the beginning already had tax paid on it. So the $175M spent on the mansion was fully taxed already. A diversified portfolio helps with optimizing stock sales to delay some taxes. But enough taxes are still paid early such that every dollar spent is fully taxed by the time it's spent.

kenneth 5y ago

A simpler example: Today you buy $100 of Theranos and $100 of Uber. Tomorrow your Theranos is worth $0 and Uber is worth $200. You put in $200, you still have $200, you use the Theranos loss to offset the Uber win. This is good, this is how things should work. But some here would say "OMG he evaded taxes on the $100 Uber gain!" Tax loss harvesting is not a loophole, it's exactly the right thing to have, and it's available to everyone.