5 ms·
>"How is Thiel investing in his own company not considered a prohibited investment?" It should be, but the IRS doesn't catch every cheat, and as with most othe
by ABCLAW 5y ago
>"How is Thiel investing in his own company not considered a prohibited investment?"
It should be, but the IRS doesn't catch every cheat, and as with most other white collar crime, the responsibility can be laundered through a number of accountants and other professional staff, resulting in fines rather than jail time.
So a lot of rich people make a lot of questionable calls regarding how their assets are categorized and if they get caught out they generally just pay what they're supposed to have paid, or sometimes slightly less (some countries have legislation prohibition tax authorities from accepting settlement offer at under-assessed amounts, but there are ways around that too). If they're particularly risk-averse and ballsy, they'll ask for an advance ruling certificate or another pre-emptive ruling on their filings to confirm they're correct beforehand. You can bake those too, if needed.
- fny 5y ago1. Thiel was not rich when he did this. He was 32 with $2K tucked away in a Roth, maybe more in a standard IRA. 2. What he did was in no way illegal. He did not cheat the system. The IRS would have come down on him with a hammer already, and they haven't managed to figure out how to do it for the last decade.
- s1artibartfast 5y ago1. Thiel was not Mega rich, but he had money, he had worked as a lawer for a few years and managed his own venture capital firm. Either way, this is irrelevant as he met the income requirements to contribute to an IRA. 2. It very well may have been illegal, as mentioned in the top level post. The purchase price was the legal value, but using an IRA as a vehicle to invest in your own company appears be prohibited by IRA regulations. At the time, it was a purchase <$2000, and may not have been reviewed. If paypal was someone else's company, there would be no legal issue.
- Taniwha 5y agoessentially it seems that his venture capital firm IS his Roth IRA - and it was making the investments - definitely not hands off
- ABCLAW 5y ago>The IRS would have come down on him with a hammer already Part of my work is in financial investigations. The finances of large, multi-entity organizations are expensive to create, difficult to parse, and require extensive periods of time of trained, expensive staff to understand. Assuming that 'things would have been caught' flies in the face of the fact that they almost never are. Accounting rules change frequently, software systems for logging information is changed, and records are lost. Emails have to be read in tandem with entries to understand the intentions. Even in cases where we have confessions that someone has embezzled money, we often need to spend multiple weeks tracking down records to isolate when/where/how it occurred. Even during audits, requests for records can be baked. 'Random' samples of given entries can just exclude the questionable ones. I've appeared in front of federal tax courts in my practice, the game isn't fair - don't base your reasoning on the idea that it must be.
- abra0 5y agoSorry, what does "bake a request for records" mean?
- deleted 5y ago[deleted]