7 ms·
My guess is he used a self-directed IRA that he converted into a Roth.
by joshfraser 5y ago
My guess is he used a self-directed IRA that he converted into a Roth.
- vasilipupkin 5y agodid he place the shares into IRA before any outside round though? because otherwise, he would have violated contribution limits?
- lotsofpulp 5y agoI would assume he did, unless there is any proof otherwise. ProPublica specifically omitted this information, so assuming that it was all kosher seems reasonable.
- joshfraser 5y agoHe would have deposited them at company formation when they were essentially worthless.
- lotsofpulp 5y agoRight, so this is an example of journalism that reduces people’s trust. Or at least it did mine with regards to ProPublica, which I had previously held in higher regard.
- vasilipupkin 5y agoright, but then how did he convert them to roth? roth has contribution limits, right? Ah, there are no limits for backdoor conversion.
- nrmitchi 5y agoYou're also not allowed to put ISOs or anything "earned" into a Roth IRA (or buy it from yourself). The problem here is that this was clearly a prohibited transaction, but the IRS state of limitations is effectively 3 years for stuff like this (unless you have really pissed someone off). It's likely that by the time the stock was worth enough (in terms of 409A guesstimate) to look in to, or there was any kind of reportable transaction showing a gain, the time frame on investigating the initial transaction was long past.
- TAForObvReasons 5y ago> IRS records show that in 1999 Thiel purchased 1.7 million shares of his startup, which would soon become PayPal, for just $1,700 — a tenth of a penny per share > Even though Thiel's startup received millions in funding within months, Pensco still told the IRS these founders' shares were worth less than $1,700 at the end of 1999. Under certain circumstances, there is no statute of limitations. If Pensco did knowingly misrepresent the value of the shares, and if the funding round did imply a wildly different valuation, IRS could still pursue the case.
- lotsofpulp 5y ago> The problem here is that this was clearly a prohibited transaction I have been unable to find any source for this claim. Even ProPublica, the people with the original documents and the most incentivized to break the news, do not claim this.
- nrmitchi 5y agoProPublica making a public claim of a tax crime is much more likely to be considered libel than an insignificant person on HN doing the same.
- 5y ago