4 ms·

If you can’t offer growth over time, you are supposed to offer dividends or buybacks for shareholders. That’s the whole point of owning the stock.

infecto 3y ago
And buybacks mean no immediate tax implications for shareholders.
- exe34 3y ago
  Now they can use this as collateral to take out a big loan, buy some other productive company, use the profits from that to pay the loan and not pay any tax, because it's a loan. Wealth begets wealth.
  - jncfhnb 3y ago
    Does that story make sense? Why would an entity accept your very liquid shares in Apple rather than wanting a typical loan arrangement? The common example for this is for non liquid shares that you can’t really sell.
    - hparadiz 3y ago
      When you apply for a mortgage they ask you to show all your assets regardless of how liquid they are. Having a high value brokerage account is a huge plus since they can go after it in the event of a foreclosure.
      - jncfhnb 3y ago
        Mortgages are generally not full recourse, meaning they can’t do that. The collateral is the house, not your assets.
    - exe34 3y ago
      That's how Elon bought Twitter. He didn't just have the cash lying around.
      - jncfhnb 3y ago
        That’s an uncommon situation for illiquid shares of people with huge stakes of their own companies
  - cycrutchfield 3y ago
    Well yeah, loans aren’t income. Should people pay income tax when they receive a mortgage?
    - exe34 3y ago
      With a mortgage, the house itself is the collateral. In this case, the profits on the shares "aren't realised until you sell them", so it's not real profits, but somehow you can use them as collateral to get a loan and grow your total wealth - without spending a penny or even having to get a job. In that case, I think if you're using shares as collateral, the profits on those shares should be taxable.
      - cycrutchfield 3y ago
        So each time you do a cash-out refinance of your home, that should be taxed as income? You still own your house, you haven’t sold it, so why should you be taxed repeatedly on it?
        jncfhnb 3y ago
        Taxing the gain or loss on the new valuation of the home and adjusting the cost basis going forward doesn’t seem like an outrageous idea
        exe34 3y ago
        Not the whole value, just the gains.
deleted 3y ago
[deleted]

infecto 3y ago

And buybacks mean no immediate tax implications for shareholders.

exe34 3y ago
Now they can use this as collateral to take out a big loan, buy some other productive company, use the profits from that to pay the loan and not pay any tax, because it's a loan. Wealth begets wealth.
- jncfhnb 3y ago
  Does that story make sense? Why would an entity accept your very liquid shares in Apple rather than wanting a typical loan arrangement? The common example for this is for non liquid shares that you can’t really sell.
  - hparadiz 3y ago
    When you apply for a mortgage they ask you to show all your assets regardless of how liquid they are. Having a high value brokerage account is a huge plus since they can go after it in the event of a foreclosure.
    - jncfhnb 3y ago
      Mortgages are generally not full recourse, meaning they can’t do that. The collateral is the house, not your assets.
  - exe34 3y ago
    That's how Elon bought Twitter. He didn't just have the cash lying around.
    - jncfhnb 3y ago
      That’s an uncommon situation for illiquid shares of people with huge stakes of their own companies
- cycrutchfield 3y ago
  Well yeah, loans aren’t income. Should people pay income tax when they receive a mortgage?
  - exe34 3y ago
    With a mortgage, the house itself is the collateral. In this case, the profits on the shares "aren't realised until you sell them", so it's not real profits, but somehow you can use them as collateral to get a loan and grow your total wealth - without spending a penny or even having to get a job. In that case, I think if you're using shares as collateral, the profits on those shares should be taxable.
    - cycrutchfield 3y ago
      So each time you do a cash-out refinance of your home, that should be taxed as income? You still own your house, you haven’t sold it, so why should you be taxed repeatedly on it?
      - jncfhnb 3y ago
        Taxing the gain or loss on the new valuation of the home and adjusting the cost basis going forward doesn’t seem like an outrageous idea
      - exe34 3y ago
        Not the whole value, just the gains.

deleted 3y ago

[deleted]