March 10, 20214 yr https://www.investmentnews.com/ultrarich-are-aware-of-tax-loophole-on-unrealized-gains-40747 This is supposedly some potential legislation, coming up in 2022, that is to keep guys like Red McCombs, Warren Buffett, David Murdoch, and the like from entering into variable prepaid forward contracts, where they accept a huge sum of money on stock holdings and agree to divest the stocks to the purchaser at a later date to manipulate their tax bracket. Which, I believe is a loophole that needs to be closed by the SEC or FTC. However, investors, small businesses, farmers, ranchers, high valued property owners in desirable urban locations, and others who have valuable assets, but not a lot of cash flow will be liable for a substantial tax bill. https://www.realclearmarkets.com/articles/2021/01/25/beware_of_a_biden_tax_on_unrealized_capital_gains_657597.html Hopefully this legislation never makes it to the Floor, or the threshold is raised above the $3.5 million proposed. CHIEF
March 10, 20214 yr 20 minutes ago, CHIEF said: https://www.investmentnews.com/ultrarich-are-aware-of-tax-loophole-on-unrealized-gains-40747 This is supposedly some potential legislation, coming up in 2022, that is to keep guys like Red McCombs, Warren Buffett, David Murdoch, and the like from entering into variable prepaid forward contracts, where they accept a huge sum of money on stock holdings and agree to divest the stocks to the purchaser at a later date to manipulate their tax bracket. Which, I believe is a loophole that needs to be closed by the SEC or FTC. However, investors, small businesses, farmers, ranchers, high valued property owners in desirable urban locations, and others who have valuable assets, but not a lot of cash flow will be liable for a substantial tax bill. https://www.realclearmarkets.com/articles/2021/01/25/beware_of_a_biden_tax_on_unrealized_capital_gains_657597.html Hopefully this legislation never makes it to the Floor, or the threshold is raised above the $3.5 million proposed. CHIEF The thresholds in the Wyden proposal, which is the only one really discussed, are $1M annual income or $10M in assets (not sure if it's capital gain assets or all assets) for three consecutive years. Those people would then annually have to mark their assets to market and pay taxes on gains, presumably offset by losses. That places them firmly in the upper portion of the top 1% of Americans. I don't think I have a problem with any of that. Prepaid forward contracts are utter bullshit and the kind of financial douchebaggery that encourages eat the rich sentiment. Ordinarily, I would agree that the taxation of unrealized gains is highly problematic and it would fuck me running. But as I said on the wealth tax thread, when capital gains income gets high enough (as in way beyond funding any reasonably lavish lifestyle), I have no problem taxing it as income, and little problem taxing it without realization. Edited March 10, 20214 yr by TwiceHorn
March 10, 20214 yr Author 3 minutes ago, TwiceHorn said: The thresholds in the Wyden proposal, which is the only one really discussed, are $1M annual income or $10M for three consecutive years. Those people would then annually have to mark their assets to market and pay taxes on gains, presumably offset by losses. That places them firmly in the upper portion of the top 1% of Americans. I don't think I have a problem with any of that. Prepaid forward contracts are utter bullshit and the kind of financial douchebaggery that encourages eat the rich sentiment. So it is based off of income and not assets? Are you gonna get to take deductions for assets that were subject to devaluation? I'm just starting to delve into this. My cousin has a dairy within 20 minutes of Ft. Worth, it was my great-grandparents, it would probably be evaluated at about $20 million, but the immediate family probably splits up $350k a year, in good year probably $150k most years. It's in an LLC, but I would hate for him to have to sell it. CHIEF
March 10, 20214 yr What about doing away with the stepped up cost basis at death on stocks above certain levels?? Should there be limits on the amount deductions allowed for annual gifts to charities of highly appreciated assets with large unrealized gains?? Edited March 10, 20214 yr by LTtxfan
March 10, 20214 yr Why not just a fraction of a percent charge (0.1% or something) on each stock transaction over $50,000? That is supposed to generate half a trillion dollars per year. You can exempt retirement accounts and it wouldn't change much. Easy to administer and calculate.
March 10, 20214 yr 1 hour ago, CHIEF said: So it is based off of income and not assets? Are you gonna get to take deductions for assets that were subject to devaluation? I'm just starting to delve into this. My cousin has a dairy within 20 minutes of Ft. Worth, it was my great-grandparents, it would probably be evaluated at about $20 million, but the immediate family probably splits up $350k a year, in good year probably $150k most years. It's in an LLC, but I would hate for him to have to sell it. CHIEF Yea if it’s in land assets as well, as someone that will be making good money but not upper 1% money, I’d be fucked.
March 10, 20214 yr How about we just close whatever loophole this is, instead of creating a new and complicated regime of taxation to be revised/tracked/gamed?
March 10, 20214 yr 1 hour ago, CHIEF said: So it is based off of income and not assets? Are you gonna get to take deductions for assets that were subject to devaluation? I'm just starting to delve into this. My cousin has a dairy within 20 minutes of Ft. Worth, it was my great-grandparents, it would probably be evaluated at about $20 million, but the immediate family probably splits up $350k a year, in good year probably $150k most years. It's in an LLC, but I would hate for him to have to sell it. CHIEF "The proposal completely exempts middle-class workers and their families and includes specific exclusions for retirement accounts and family homes and farms." "anti-deferral accounting would not assess tax on gains from nontradable assets until the asset is sold or transferred." "Tradable assets are assets for which there is a readily ascertainable value, including actively traded property. For example, tradable assets include personal property traded on an established financial market as defined under Treas. Reg. Sec. 1.1092(d)-1. Generally, all other capital property that is not tradable property is considered nontradable property." https://www.finance.senate.gov/imo/media/doc/Treat Wealth Like Wages RM Wyden.pdf Wyden generally knows what he's doing. Edited March 10, 20214 yr by TwiceHorn
March 10, 20214 yr 48 minutes ago, GRHorn said: How about we just close whatever loophole this is, instead of creating a new and complicated regime of taxation to be revised/tracked/gamed? 1234
March 10, 20214 yr eliminate benefit of "long-term" CG implement wealth tax. set it at whatever threshold the very-rich fight over (5M, 10M, 50M, IDGAF). done
March 10, 20214 yr Wealth taxes in other countries have not done well. Lotsa rich people moved offshore.
March 10, 20214 yr 1 hour ago, Parliament said: Wealth taxes in other countries have not done well. Lotsa rich people moved offshore. you dont get rid of traffic lights because you cant catch 100% of red light runners....
March 10, 20214 yr This isn't really a wealth tax. It's a new set of "taxable event" or realization rules that make growth/income from a class of assets taxable on an annual basis. Most of us earn the majority of our income, and it is taxed annually in the usual fashion. The very wealthy often escape taxation because their "income" comes in the form of capital appreciation of assets. Yet they can still "realize" paper gains through loans and prepaid forward contracts without incurring taxation. An alternative, I suppose, would be to tax as income events lending using appreciated capital assets as collateral, but that might have even more unintended consequences. Edited March 10, 20214 yr by TwiceHorn
March 10, 20214 yr 11 minutes ago, TwiceHorn said: This isn't really a wealth tax. It's a new set of "taxable event" or realization rules that make growth/income from a class of assets taxable on an annual basis. Most of us earn the majority of our income, and it is taxed annually in the usual fashion. The very wealthy often escape taxation because their "income" comes in the form of capital appreciation of assets. Yet they can still "realize" paper gains through loans and prepaid forward contracts without incurring taxation. An alternative, I suppose, would be to tax as income events lending using appreciated capital assets as collateral, but that might have even more unintended consequences. wealth tax would use some sort of mark to market thereby eliminating the "loophole" of structures and taxable events. (very generally speaking of course)
March 10, 20214 yr 19 hours ago, LTtxfan said: What about doing away with the stepped up cost basis at death on stocks above certain levels?? 1) If the estate tax kicks in then I think the step up makes sense and that is at 11M. Under that It feels like the step up is ok.
March 10, 20214 yr 5 hours ago, 52-80 said: wealth tax would use some sort of mark to market thereby eliminating the "loophole" of structures and taxable events. (very generally speaking of course) Yeah I suppose the mechanism is the same or very similar more or less. But I see a wealth tax as simply a tax on accumulated assets, without regard to origin or previous taxation as income, whereas this tries to impose an income tax on assets that "bury" their income. For example, a person could accumulate a sizable estate from earned income and invest it in income-only investments, like CDs, or money markets, or bonds held to maturity, or bond funds, and those assets would still be taxed under a wealth tax, but wouldn't be taxed under this regime, except as ordinary income. Edited March 10, 20214 yr by TwiceHorn
March 10, 20214 yr 1 hour ago, hornbri said: 1) If the estate tax kicks in then I think the step up makes sense and that is at 11M. Under that It feels like the step up is ok. I believe step up in basis occurs whether estate tax is imposed or not. That is, even if the estate is in excess of the exemption, assets in the estate receive stepped up basis in the hands of heirs or beneficiaries. I could be wrong, but I don't think so.
March 10, 20214 yr 18 minutes ago, TwiceHorn said: I believe step up in basis occurs whether estate tax is imposed or not. That is, even if the estate is in excess of the exemption, assets in the estate receive stepped up basis in the hands of heirs or beneficiaries. I could be wrong, but I don't think so. So if you are already paying tax on the 15M value (for example) then we SHOULD allow the step up basis since they paid tax on the full value of the asset.
March 10, 20214 yr 19 hours ago, GRHorn said: How about we just close whatever loophole this is, instead of creating a new and complicated regime of taxation to be revised/tracked/gamed?
March 10, 20214 yr 16 minutes ago, hornbri said: So if you are already paying tax on the 15M value (for example) then we SHOULD allow the step up basis since they paid tax on the full value of the asset. I believe the Wyden plan addresses that somehow, but I couldn't quite figure that out. But yeah, if you are paying taxes on gains as they accumulate, basis has to be adjusted, I'd think. Edited March 10, 20214 yr by TwiceHorn
March 11, 20214 yr If the values decline (e.g., bear market) do you get to use the loss to reduce taxable income or is this heads you win, tails I lose? Edited March 11, 20214 yr by ftf82
March 11, 20214 yr 19 minutes ago, ftf82 said: If the values decline (e.g., bear market) do you get to use the loss to reduce taxable income or is this heads you win, tails I lose? I would assume so. Probably with loss carryforwards for a year or two.
March 11, 20214 yr 5 hours ago, TwiceHorn said: I believe step up in basis occurs whether estate tax is imposed or not. That is, even if the estate is in excess of the exemption, assets in the estate receive stepped up basis in the hands of heirs or beneficiaries. I could be wrong, but I don't think so. Yeah, cap gains taxes are different from estate taxes... No cap gains taxes at death due to stepped up basis on stocks/equities should be taken away. The assets are easier to liquidate to pay taxes, and it's an easy way to generate more revenue for the U.S. Treasury.
March 11, 20214 yr 6 hours ago, ftf82 said: If the values decline (e.g., bear market) do you get to use the loss to reduce taxable income or is this heads you win, tails I lose?
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.