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Elon bought twitter with unrealized capital gains.
by jackmott42 3y ago
Elon bought twitter with unrealized capital gains.
- HPsquared 3y agoSurely they became "realized" in the process.
- jackmott42 3y agoNope, because he used a loan, so he was able to buy twitter and not pay taxes. He will have to pay taxes if and when he pays off the loan, maybe.
- samsolomon 3y agoI have a hard time believing that he didn't realize gains on the Tesla stock he sold to cover part of the purchase. Twitter, the company, took out a loan as part of the financing to help Musk close. That is why Twitter desperately needs to return a profit. Because it now has to service that loan. Those are different things. EDIT: For reference it looked like he originally was going to back the loan with Tesla shares—so he wouldn't have to sell. It looks like he abandoned that idea and sold about $15.5B shares of Tesla to finance the deal. Maybe that's where the confusion is from? https://www.aljazeera.com/economy/2022/10/28/how-elon-musk-financed-his-twitter-takeover https://www.aljazeera.com/economy/2022/10/28/how-elon-musk-f...
- eli 3y agoIt's called "Buy, Borrow, Die" -- in that scheme no one ever pays capital gains tax. https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov...
- pclmulqdq 3y agoHe used a margin loan for part of it (you can think of this as extracting money from unrealized gains, but it's kind of different), liquidated shares for part of it (realizing a gain in the process), and will pay interest on that margin loan (realizing a gain for each payment) for the duration of the loan. If he wants to pay off the loan, he will have to realize a gain. The margin loan is effectively tax deferral, not tax elimination.