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No, but it is an avoidance mechanism specifically designed to avoid tax on income. If an independent third party has deemed your stock sufficiently valuable (a
by nmfisher 4y ago
No, but it is an avoidance mechanism specifically designed to avoid tax on income.
If an independent third party has deemed your stock sufficiently valuable (and stable) to lend money against, then you should be taxed on that loan. You can get a credit when you repay the loan (to offset tax on the income you used to repay).
- renonce 4y agoNot familiar with the US tax code, but if Musk borrows $1b with a portion of his Tesla stocks as collateral, will he be charged capital gains tax by assuming that these stocks are now worth $1b?
- prottog 4y agoIn the US and most places, you are only liable for capital gains tax on realized gains. The shares have to change hands before a tax is due.
- WalterBright 4y agoWhen you die, the value of the stock at time of death gets whacked by inheritance tax, which is 40% at the federal level and 20% at the state (in Washington) level.
- deleted 4y ago[deleted]
- WalterBright 4y agoYou'll have to realize the gain eventually, and pay the tax.
- nmfisher 4y ago1) You wouldn’t work for payment of an unspecified amount at an indeterminate future date. “Eventual tax” is not the same as “tax now”. 2) Likewise, paying a 2022 debt in 2027 dollars makes their effective tax rate even lower. 3) I don’t get to defer my income tax payments until a favourable year of my choosing, neither should the rich 4) that’s what the credit is for.