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Taxing stocks

fortune

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Not sure this is the place for this question but here goes:
If I owned $20billion stock would I not be better off to borrow against it than sell it? If I sell it I pay capital gains or some other tax on it right?
But if I could borrow from it evey year I could build a mega yacht or whatever and it costs me no more than a very low interest rate.
 
It's actually much worse than that.

If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

For people who are compensated in shares, they are only taxed once when they do sell in addition to the benefits to borrowing against them.
 
Not sure this is the place for this question but here goes:
If I owned $20billion stock would I not be better off to borrow against it than sell it? If I sell it I pay capital gains or some other tax on it right?
But if I could borrow from it evey year I could build a mega yacht or whatever and it costs me no more than a very low interest rate.
You are correct. That is why the idea of a wealth tax is so popular among taxpayers.
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Not sure this is the place for this question but here goes:
If I owned $20billion stock would I not be better off to borrow against it than sell it? If I sell it I pay capital gains or some other tax on it right?
But if I could borrow from it evey year I could build a mega yacht or whatever and it costs me no more than a very low interest rate.

What you pay taxes on is only the appreciation in share price. If the shares (initially) cost you $500K and you (later) sold them for $1M, the (15% CG?) tax is due on only the $500K appreciation. Your ‘boat fund‘ would be reduced from $1M to $925K after taxes and your (at least) $20B net worth is barely dented. I doubt that someone with (at least) $20B in assets much cares about paying $75K in CG taxes in order to enjoy a $925K yacht.
 
It's actually much worse than that.

If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

That's true about most things.
For people who are compensated in shares, they are only taxed once when they do sell in addition to the benefits to borrowing against them.
That depends.
 
It's actually much worse than that.

If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

For people who are compensated in shares, they are only taxed once when they do sell in addition to the benefits to borrowing against them.
That is incorrect.

Compensation received in the form of stock is taxed as wage income at the time it's sold. Gains are taxed separately.
 
Compensation received in the form of stock is taxed as wage income at the time it's sold. Gains are taxed separately.
I could have been more specific, but that's what I meant by taxed once at the time it is sold.

Which matters in the context of OP (borrowing against your shares) because someone comped $50k in shares and paid a $50k wage won't end up with the same number of shares. They might only be able to buy $40k in shares after taxes on their income.
 
If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

Then if you use the money from the sale to finally buy something, you get taxed yet again.

Are you people sure government isn't just a large criminal gang? Because even the mafia doesn't do this kind of shit.
 
If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

Let's say you spend $1000 on stock, your original income was taxed as income, true you were already taxed on that $1000.

However let's say the stock increases in value to $1500 and then you sell it. You are taxed only on the gain of $500.

So you weren't taxed on the original money once, and then the original money again plus the gains. Only on the gains. So $1000 was taxed once and the additional $500 taxed once. No component was taxed twice.

WW
 
Then if you use the money from the sale to finally buy something, you get taxed yet again.

Are you people sure government isn't just a large criminal gang? Because even the mafia doesn't do this kind of shit.
I mean, at the end of the day it's just a convoluted way of arriving at some arbitrary amount of resources allocated to the government to reallocate.

Is it overly complicated? Yeah. Does the structure of the point in the chain those resources are siphoned from create bad incentives currently? Yes. Should we try to reform it? Absolutely.

I know I know, taxation is domestic terrorism. I'm aware of your position. But if taxes are domestic terrorism, then you better put me on your watch list. Call me the "Infrastructure Enjoyer" please.
 
I thought you weren’t taxed on stocks when you sell them, but rather when you withdraw the money from the portfolio.

You can sell your shares of Lucid motors, for example, and move the money from that sale into Tesla…and not be taxed.

But when you withdraw the money, you pay a tax.
 
Let's say you spend $1000 on stock, your original income was taxed as income, true you were already taxed on that $1000.

However let's say the stock increases in value to $1500 and then you sell it. You are taxed only on the gain of $500.

So you weren't taxed on the original money once, and then the original money again plus the gains. Only on the gains. So $1000 was taxed once and the additional $500 taxed once. No component was taxed twice.

WW
So, it is apparent to me now that my comment was not worded in a clear. The point I was trying to make is that:

You are paid $1000, taxed, and have (lets say) $900 left to buy shares to borrow against.
You are comped $1000 in shares and have $1000 in shares to borrow against.

Not that the same part of your income was taxed twice.
 
I thought you weren’t taxed on stocks when you sell them, but rather when you withdraw the money from the portfolio.

You can sell your shares of Lucid motors, for example, and move the money from that sale into Tesla…and not be taxed.

But when you withdraw the money, you pay a tax.
It doesn't work like that.
 
It's actually much worse than that.

If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

For people who are compensated in shares, they are only taxed once when they do sell in addition to the benefits to borrowing against them.
But at least you are just taxed on the gains in that scenario.
 
Just saying that a billionaire would never sell stock if he was taxed on the gains (20%?). It is far far cheaper to borrow at rates given to the very rich.
 
It's actually much worse than that.

If I buy stock, I'm taxed twice. I'm taxed on my income before I buy the stocks, then I'm taxed on the gains on those stocks when I sell.

For people who are compensated in shares, they are only taxed once when they do sell in addition to the benefits to borrowing against them.

Then be an adult and write a promissory note instead of buying stocks.
 
Just saying that a billionaire would never sell stock if he was taxed on the gains (20%?). It is far far cheaper to borrow at rates given to the very rich.
We have one that can see........
 
Not sure this is the place for this question but here goes:
If I owned $20billion stock would I not be better off to borrow against it than sell it? If I sell it I pay capital gains or some other tax on it right?
But if I could borrow from it evey year I could build a mega yacht or whatever and it costs me no more than a very low interest rate.

I would sell it, and laugh all the way to the bank.....
 
A little side story for those interested, if not just skip this post.

Neither my wife or I are "stock" people, don't know much about it. So, my wife received $1000 in AT&T stock in the late 70's as a graduation gift from high school from her parents. A few years later (after the Ma Bell breakup into the baby bells) and before we got married, she is getting her taxes done and asks the tax person about it. She's advised (bad advice) that she doesn't need to keep the old records for anything. So when cleaning house to get ready to transfer she disposed of all the old notifications on splits and mergers thinking all she needed was the current dividend statements. About 4 years ago we are meeting with an actual financial consultant to review retirement plans to review are revenue streams in retirement (pensions, 403Bs, IRAs, etc.) and that we were in great shape (we will have 8 revenue streams including - military retirement for each, SS for each, employer pensions for each, and 403Bs for each) and our income will be between 90-110% of current income depending on when we decide to pull the trigger. So we ask about these stocks that had been hanging around for years. There is a nice bit of change there but nothing drastic. But it will be a real nightmare to dispose of them because we are not able to establish gains and loses over the years from the splits and mergers.

So... Since we won't really need the stock, she advised a couple of options:
  • Liquidate the stocks and pay hirer than capital gains, we'd still get money, but the taxes will be higher then if we had all the paperwork. Or,
  • Just hold the stocks until both my wife and I pass, then pass the stocks down to our kids as part of the estate. Our estate will not be large enough to trigger the "Death Tax" and by transferring the stock to our kids the "tax basis" resets to the value at the time of our death. In other words the decades of changes get wiped out and the kids get to start fresh.
WW
 
A little side story for those interested, if not just skip this post.

She's advised (bad advice) that she doesn't need to keep the old records for anything. So when cleaning house to get ready to transfer she disposed of all the old notifications on splits and mergers thinking all she needed was the current dividend statements. There is a nice bit of change there but nothing drastic. But it will be a real nightmare to dispose of them because we are not able to establish gains and loses over the years from the splits and mergers.

So... Since we won't really need the stock, she advised a couple of options:
  • Liquidate the stocks and pay hirer than capital gains, we'd still get money, but the taxes will be higher then if we had all the paperwork. Or,
  • Just hold the stocks until both my wife and I pass, then pass the stocks down to our kids as part of the estate. Our estate will not be large enough to trigger the "Death Tax" and by transferring the stock to our kids the "tax basis" resets to the value at the time of our death. In other words the decades of changes get wiped out and the kids get to start fresh.
WW

You got more bad advice.

You can track all the mergers and stock splits. Any competent financial advisor can do that in their sleep.

But.....I'm guessing you don't wanna pay the fees to have someone else do it for you.

Fortunately, you can:

1) Contact AT&T (and, no, you don't call customer service -- address it to the CFO or legal department); or
2) Contact the SEC and ask for the Q-10s starting with the fiscal quarter in which the stocks were purchased (and the stock certificates should be dated.)

Q-10s are published quarterly on the internet on the SEC's website and I know they started that in the 1990s, but don't know exactly when, and they did add Q-10s from earlier quarters, but I don't know that you can access Q-10s from the 1970s on-line.

What I would do is see what Q-10s are published, then contact either AT&T or the SEC and get the Q-10s from "the late 1970s" up to the time you can down-load them yourself.
 
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