Mark-to-Market Taxation

This seems like the most logical and loophole-free system. I don't see any reason not to do it this way.

 

The reasoning behind it, is you are left an asset, how are you supposed to know what the deceased person's basis is? If you inherit an asset, your basis is the fair market value the day they died.

Major, I could see them changing it to where a spouse would inherit assets at their basis, especially securities now that the IRS is requiring investment firms to track and report basis. What saves spouses is that there are a number of spouses that are completely oblivious to the family's finances.

 

For him it is future income as well. If you want a better example, lets say you take out a home equity line. You are taking that loan out against an asset you hold, but you won't realize that equity unless you sell your house (though selling a personal residence rarely results in a taxable gain due to IRS rules allowing you to exclude up to $250,000 of the gain). Eventually you have to pay the loan. You pay your loan as you earn income. The Oracle guy pays his loan as he receives wages, dividends, interest, or sells his stock.

 

Yes, in the case of Jobs, there is huge appreciation that could go untaxed. Theoretically, she could spend all the money, thus having no money when she dies, so no estate tax ever comes.

 

That is the way it is for everybody. Most of just don't have as large of an asset, particularly with such large deferred gains. Just imagine if we raised the capital gains tax on the wealthy as Warren Buffet and President Obama want. If guys have decided to use loans against their wealth when a 15% rate has been in place, what would happen if they had a 30% rate?

Despite there being in risk in what he is doing, he is just doing what is the right investment decision.

 

That was just my thought. Come the next recession, billions will be owed back to stockholding taxpayers on mark-to-market losses at the same time that income and sales taxes are dipping and the government needs more cash than usual to fund operations.

If you're concerned about billionaires avoiding tax by borrowing money instead of cashing in stock, find some other way to fix it.

 

borrowing against stock is like borrowing against any collateral like your house. you don't pay taxes on money received from a loan. the bank is taking that collateral at their own risk.

 

I do not think that reasoning is persuasive with stock at this point. The administrator of the estate can find out the cost basis by contacting the broker.

 

#1) Up until last year, brokers were not required to track basis. If you transferred it in, the brokers are usually unaware as to your cost basis

#2) Stock isn't necessarily handled by a broker

#3) Your assets aren't necessarily publicly traded securities.

I've had plenty of clients sell stuff with no way of knowing their basis. We do our best to put the puzzle pieces together, and make our best educated guess.

The entire truth is that why would Congress pass a law to hurt the wealthy, when they are far wealthier than the average American.

 

I am not saying Congress would pass such a law, but it would be fairer than the current situation.

I agree that privately traded securities are more difficult to value than publicly traded securities. I just do not think there is an excuse with publicly traded securities to not be able to determine a good approximation of the cost basis if an exact cost basis cannot be determined. There are appraisers who can do retrospective appraisals of privately held companies to determine value as of a certain time. The burden should be on the person trying to minimize the amount of taxed paid.

 

What's interesting is that Mark Zuckerberg and his lawyers probably know exactly how to avoid paying a lot of those taxes, but they would rather become the largest taxpayer in history.

 

Canada's capital gains tax system might make a bit more sense as well. They only tax you on half of your capital gains (thereby encouraging investment), but the rate slides with your income tax rate (thereby taxing those who are more able to afford the tax at a higher rate).

 

Obama will never enact this -- it would completely gut the tax avoidance strategy of his tax policy show pony Warren Buffett. Buffett doesn't pay taxes on his shares of Berkshire Hathaway, which has accumulated an enormous gain, until they are sold, nor will he pay taxes upon his death, as he's giving everything to the Gates Foundation. Pretty nice credentials he's got there, to tell us to pay higher taxes, huh? What a dishonest man he is, and a dishonest, manipulative ploy by the Democrats to use him to advance their misguided policies.

 

you shouldn't pay taxes on an asset till its sold. this is a distraction. the problem isn't the structure its the actual rate


i've been saying this for years on this site, the number one goal of republicans since reagan was to reduce the capital gains tax rate. its how rich people live and the party is for the rich.

romney opening up his returns was the straw that broke the cammel's back, now people understand the issue.

 

The issue in this thread is the structure. It's about never having to pay taxes even when you sell, because the cost basis resets upon death and estate transfer.

 

I'm doing that to buy my 2nd UPS store. It's been a b**** trying to get them to approve me.

 

There isn't a way to avoid the taxes if you are selling something you have a capital gain on. What I don't understand is why this is taxed at such a high rate. Zuckerberg could also just want to ring the cash register on it. I mean that is a lot of ****ing money.

 

And finally mark to market taxation seems like a b**** to account for. Are they going to allow ALL mark to market losses to count as well? As things stand they only allow investors use $3,000 in losses against their income each year. You have to be a professional trader to take more.

 

my first job out of college i was going through some credit files at the bank for this loan backed by stock. this customer had a bunch of telecom stock from companies like Lucent. it was tripped out because a lot of the certificates (this is late 99) were no good because the companies had been bought or spun off into other companies or whatever. interesting they were all legacy of the old MaBell companies.