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As discussed previously, this "trick" is actually explicitly not permitted, because you could do something like say "My stock is only work $0.001 each ;)" while
by nrmitchi 5y ago
As discussed previously, this "trick" is actually explicitly not permitted, because you could do something like say "My stock is only work $0.001 each ;)" while simultaneously selling to investors are orders-of-magnitude higher valuations.
I mean, let's be real: the argument in defense of this is that Thiel bought his founders shares at "a fair value". There were 3 original founders, so the argument is that the company had a fair value of.... ~$5k?
> you put in a few thousand dollars worth of them each year before you valuation skyrockets
You can't transfer assets into an IRA like this either.
- spamizbad 5y agoSo how'd he do it?
- nrmitchi 5y agoWhat do you mean? Just because something is a prohibited transaction doesn't mean there is a magical fairly that ensures you don't. I'm sure you are aware that the audit-rate for wealthy individuals is (and was) significantly lower than other income brackets. There is no magical automated system that is going to catch and flag a not-arms-length transaction, and I'm sure he (well, his legal team) is sitting around saying "well it's a shame this wasn't caught at the time, you know, statute of limitations and such".