Elon Musk and taxes

[John K]

Ahem, Crissa’s spouse is buying CTs for every member from Los Angeles In celebration.

If you don’t ask, the answer is 100% no

 

[ajdelange]

The delta in the warrant on the close of day issued is taxable income because it is an amount not had before.

And it is still an amount you don't have. I don't know if you have actually ever dealt with these things but in the day you are given the warrant it has some intrinsic value. Someone might give you $20 for a $10 warrant if he things the firm is going to do well but all you have is a piece of paper in hand and all you have 5 years later is that same piece of paper. The only way to get anything in hand other than paper is to sell the warrant or excercise it AND sell the stock.

Perhaps if you knew the intent of the AMT that would help you to understand. At the time it was creatred ISO's were big throughout the US and lots of people were getting rich on them. The government, of course, wanted a piece of the pie but were cash strapped and wanted their piece now. They didn't want to wait for the whole hold, excercise, sell cycle to wet their beaks. Hence let's call the potential future income real income today and tax it. The AMT was born.

The amount contributed to purchase the warrant is not taxable.

True

The delta is income received, even though immediately invested, and is taxable.

No, it is not income received. They are calling it income received so it can be taxed but it isn't. I can assure you that nobody ever wrote me a check nor compensated me in any other way when I exercised a warrant nor did I receive a penny for it until I sold the share.

Else, I could use warrants to transfer or pay large amount of taxable wealth as a loophole.

Well of course the whole idea behind ISO's was to do exactly that: transfer wealth to the employees of corporations if the company fared well and to do so without having to give them actual shares of stock.

You are missing the why this is taxable.

No, not at all. It is taxable because the AMT says that I can be taxed for income I did not receive.

We're never going to agree on this but the bargain element of a warrant is no more realized income that the increase in market value of a share. To say otherwise defies logic but then there are certainly lots of things that defy logic in the IRS code. If you can't follow the A and B argument above, well you can't follow it and I have no more to say on this.

 

[John K]

@ajdelange

I wish you peace and prosperity.

 

[ajdelange]

Thank you.

 

[Crissa]

Ahem, Crissa’s spouse is buying CTs for every member from Los Angeles In celebration.

Definitely no. A quarter of our income will barely cover one Cybertruck, let alone someone else's!

-Crissa

 

[ajdelange]

the fact is that they control the government. That’s why their income has has continued to grow and the rest of the population has stagnated.

I won't say that some rich folks don't own a politician or 3 but I think the real reason is that capital has greater potential to earn than labor. And that it has always been that way and always will be that way. At least that's what Thomas Pickety says and I'm beginning to think he knows what he is talking about.

 

[Crissa]

...Thomas Pickety says and I'm beginning to think he knows what he is talking about.

That has nothing to do with taxation rates.

-Crissa

 

[Tinker71]

If there is anything the IRS does crack down on it is mixing business and personal expenses. There are still abuses though, of course. The one example I have had first hand experience with is a scuba diving cruise through the Sundas (Indonesian archipelago). The diving was great but one day they loaded us all into Zodiaks and took us to a leprosarium. Why would they do that? There was a group of doctors on board. There are no active leprosaria in the USA. Therefore, if you want to visit a leprosarium you must travel to someplace like Indonesia. And the trip is tax deductible as a business expense. Note that the docs also had "seminars" in the lounge after dinner.

The thing many people don't understand is that it is true that the super rich pay taxes at overall rates that are effectively much lower but the majority of them are doing it quite legally. So if you really want to point the finger of blame for tax inequity don't point it at the rich folks. Point it at your elected representatives who passed the laws the rich folks are using to shield themselves. Can't blame 'em IMO.

It is only legal because the mega rich get their cronies in office. Since citizens united it has gotten worse . They finance misinformation campaigns and discouraged/underfunded audits on the rich. Many of them are getting away with criminal tax evation.

 

[ajdelange]

I know people just love to think that way but I really don't think that's the root cause. Pickety is pretty convincing. You think "many.. are getting away with criminal tax evasion". Be curious as to how you come to that conclusion. You don't say "I think" or "I suspect" so you must have some pretty solid evidence.

 

[CyberGus]

No one will care about money when we're living on Mars fighting over oxygen.

 

[Crissa]

Pickety is pretty convincing.

Piketty doesn't have anything to do with low taxes on the rich. He advocates a wealth tax, too.

-Crissa

 

[Darien]

If there is anything the IRS does crack down on it is mixing business and personal expenses. There are still abuses though, of course. The one example I have had first hand experience with is a scuba diving cruise through the Sundas (Indonesian archipelago). The diving was great but one day they loaded us all into Zodiaks and took us to a leprosarium. Why would they do that? There was a group of doctors on board. There are no active leprosaria in the USA. Therefore, if you want to visit a leprosarium you must travel to someplace like Indonesia. And the trip is tax deductible as a business expense. Note that the docs also had "seminars" in the lounge after dinner.

The thing many people don't understand is that it is true that the super rich pay taxes at overall rates that are effectively much lower but the majority of them are doing it quite legally. So if you really want to point the finger of blame for tax inequity don't point it at the rich folks. Point it at your elected representatives who passed the laws the rich folks are using to shield themselves. Can't blame 'em IMO.

I thought

 

[Darien]

I thought

I thought this was a site for the truck. Not for debating How he spends or don’t spend his money. Get life. !!!!

 

[Tinker71]

I know people just love to think that way but I really don't think that's the root cause. Pickety is pretty convincing. You think "many.. are getting away with criminal tax evasion". Be curious as to how you come to that conclusion. You don't say "I think" or "I suspect" so you must have some pretty solid evidence.

The fact that Donald Trump is being charged in New York is a pretty good start. Several of his top people were living in Trump properties. If they were not paying taxes on that benefit that is tax evasion for them. If Trump was pushing income off to his family without them reporting, that is tax evasion for them. Overstating loss on investment is tax evasion.

I bet his accountants are pretty good though at pushing the law to the limit. I guess we will see.

 

[TheLastStarfighter]

I hate misleading posts like this, that imply that owning a company's assets that increased in value is the same as making a bunch of cash. It's either intentionally misleading to fuel a hatred of the rich, or just utter stupidity, and I don't know which one is worse every time one of these things get shared on my Facebook.

I agree in principle that the rich should pay more in taxes, and that taxes should be progressive. But it's a very complex problem. Most solutions proposed by politicians tend to target the upper middle class, more so than the elite rich. I'm sure that's intentional. A doctor making 6 figures may be "rich" compared to someone working minimum wage, but they aren't filthy rich. Not necessarily anyway. But it's a great distraction.

The issue of taxing the super rich is extremely complex. If you tax their wealth or income or company's income to the extreme, they'll just move elsewhere. A heavy wealth tax can also kill the companies they own. Elon may have a ton of assets right now, but it's easy to forget that Tesla was near bankrupt several times before reaching success. A wealth tax on his shares could have done the company in. Many wealthy entrepreneurs have dealt with extreme risk before making it, and many did not make it. It's like Hollywood actors - sure they are rich, but 98% of actors live in poverty or work additional jobs to support themselves. A luxury tax on purchases has potential, but again, if you charge a 20% tax on a new yacht, I'll just go buy my Super yacht in Dubai. Then the local yacht seller loses out on the sale, and the people working good jobs making said yacht lose their income.

Ultimately I think the goal of society should be less about ensuring that the rich pay their "fair share", and more about ensuring that everyone has good access to a happy, healthy life. It doesn't bother me that Jeff Bezos has way, way more money than me, as long as I have a nice car, a good home, stable income and fun things to do. One option is to tax Jeff to help that happen, but the other is to make sure he pays and treats his employees well. I think it's probably easier to legislate minimum wages, benefits, job security, working conditions and locations for production than it is to try and milk more taxes.