4 ms·

> that's clearly not the intent of Roth IRA Would you say the same if someone used a Roth to buy Bitcoin when it was trading at pennies or Gamestop before it b

by fny 5y ago

> that's clearly not the intent of Roth IRA Would you say the same if someone used a Roth to buy Bitcoin when it was trading at pennies or Gamestop before it blew up? What's wrong with having the right to invest in your own company? That company pays corporate income taxes. You pay income tax as an employee. Also, everyone seems to forget Peter Thiel was part of the middle class when he did this...

DeRock 5y ago
Thats not the right analogy. This would be more akin to selling your own bitcoins to yourself (into an IRA) for pennies on the dollar.
mullen 5y ago
The Roth IRA is not suppose to be a tax shelter for people to get super rich off their own creations. You are not getting a reduced priced Bitcoins or Gamestop stock. You are gambling with your own funds based on information that everyone else has and paying the same price as anyone else. If you get Bitcoins and/or Gamestock at a reduced price, then you are abusing the Roth IRA and the IRS should stop and fine you.
- lotsofpulp 5y ago
  Did that happen? Even ProPublica does not claim it.
  - medvezhenok 5y ago
    Would Thiel have been willing to sell his shares to someone else at $0.001 at the time he put them into the IRA? Because that's ultimately what market value is about. It's also one of the valuation proposals for people playing valuation games with illiquid assets. You can declare them at whatever value you want (and pay tax on that value), but you are forced to sell if someone offered you that value for the asset (if you claim your house is worth $1M, we'll let you pay property tax on $1M, but if someone offers you $1.1M for your house, you're forced to sell). That would cut down on people inflating/deflating asset valuations to game tax codes.
    - lotsofpulp 5y ago
      I am not interested in what would have, could have, or should have happened. I am trying to find out what did happen, and any evidence to support it. You have an interesting proposal for valuations though, although, it seems to have a few logistic hurdles that cross my mind.
      - machinebun 5y ago
        What happened was Thiel buying 1.7M shares of stock in his own startup at a value of $0.001 per share in 1999 in his Roth IRA (and then cashing out for $30M+ in 2002). It's debatable whether it was legal (because he was an officer/director of the company and that law is on the books), but the better question would be - should it have been illegal, and the answer to that, in my opinion, is a resounding yes. I believe non-public investments should be banned from Roth IRAs (and that we should close all of the backdoor loopholes to them as well). They were meant for a certain group of people at the outset and were then twisted around in knots to provide more tax-breaks for the well-off (which should be rolled back). I think mega backdoor Roth should not be a thing, rollover Roth IRA should not be a thing - bring Roth back to it's original vision.
        lotsofpulp 5y ago
        >It's debatable whether it was legal (because he was an officer/director of the company and that law is on the books) I am interested in finding out the answer to this, as others have posted in this thread the text of the law which makes it seem like he should not have been able to, and what reasoning could possibly have made it legal.
        didibus 5y ago
        You won't find the answer, because you're innocent until proven guilty. The laws are not formally defined, it would need to go in front of courts, and then people could argue whatever interpretation and evidence they want to convince one way or another. I think what's more clear is that it's clever and probably an unintended loophole, be it technically legal or not isn't so important. What matters in the end is a bunch of money didn't go to maintaining society's infrastructure, paying for military, and all that, instead money from other sources and other people's pockets was used. Do you care? Do we care? I think that's the more relevant dimension to think about and discuss.

by fny 5y ago

DeRock 5y ago

Thats not the right analogy. This would be more akin to selling your own bitcoins to yourself (into an IRA) for pennies on the dollar.

mullen 5y ago

The Roth IRA is not suppose to be a tax shelter for people to get super rich off their own creations. You are not getting a reduced priced Bitcoins or Gamestop stock. You are gambling with your own funds based on information that everyone else has and paying the same price as anyone else. If you get Bitcoins and/or Gamestock at a reduced price, then you are abusing the Roth IRA and the IRS should stop and fine you.

lotsofpulp 5y ago
Did that happen? Even ProPublica does not claim it.
- medvezhenok 5y ago
  Would Thiel have been willing to sell his shares to someone else at $0.001 at the time he put them into the IRA? Because that's ultimately what market value is about. It's also one of the valuation proposals for people playing valuation games with illiquid assets. You can declare them at whatever value you want (and pay tax on that value), but you are forced to sell if someone offered you that value for the asset (if you claim your house is worth $1M, we'll let you pay property tax on $1M, but if someone offers you $1.1M for your house, you're forced to sell). That would cut down on people inflating/deflating asset valuations to game tax codes.
  - lotsofpulp 5y ago
    I am not interested in what would have, could have, or should have happened. I am trying to find out what did happen, and any evidence to support it. You have an interesting proposal for valuations though, although, it seems to have a few logistic hurdles that cross my mind.
    - machinebun 5y ago
      What happened was Thiel buying 1.7M shares of stock in his own startup at a value of $0.001 per share in 1999 in his Roth IRA (and then cashing out for $30M+ in 2002). It's debatable whether it was legal (because he was an officer/director of the company and that law is on the books), but the better question would be - should it have been illegal, and the answer to that, in my opinion, is a resounding yes. I believe non-public investments should be banned from Roth IRAs (and that we should close all of the backdoor loopholes to them as well). They were meant for a certain group of people at the outset and were then twisted around in knots to provide more tax-breaks for the well-off (which should be rolled back). I think mega backdoor Roth should not be a thing, rollover Roth IRA should not be a thing - bring Roth back to it's original vision.
      - lotsofpulp 5y ago
        >It's debatable whether it was legal (because he was an officer/director of the company and that law is on the books) I am interested in finding out the answer to this, as others have posted in this thread the text of the law which makes it seem like he should not have been able to, and what reasoning could possibly have made it legal.
        didibus 5y ago
        You won't find the answer, because you're innocent until proven guilty. The laws are not formally defined, it would need to go in front of courts, and then people could argue whatever interpretation and evidence they want to convince one way or another. I think what's more clear is that it's clever and probably an unintended loophole, be it technically legal or not isn't so important. What matters in the end is a bunch of money didn't go to maintaining society's infrastructure, paying for military, and all that, instead money from other sources and other people's pockets was used. Do you care? Do we care? I think that's the more relevant dimension to think about and discuss.