Jump to content

hornmpa96

Certifiably Surly
  • Posts

    1036
  • Joined

  • Last visited

Posts posted by hornmpa96

  1. 4 minutes ago, slorch said:

    If you are issued a 2021 Option for Widget INC at a share price of $25, what is the value of the OPTION in the year of issue?  All an option does is give the opportunity to purchase stock at a locked in price. Now, typically the value of shares goes up, and people engage in a cashless transaction, where they exercise the OPTION to buy and immediately sell at the higher price and the proceeds are absolutely taxed.

    How can you tax an OPTION that isn't guaranteed to grow?  We are so used to it, it has almost become the expectation; but it is certainly not guaranteed.

    That option has a value when issued. Even deep out of the money options likely have some value. For accounting purposes, the company values the options when issued and generates an expense.

    • Like 1
  2. Just now, We’reTexas said:

    Would a wealth tax regime also pick up private equity funds in which individuals are LPs? I imagine the valuation exercise for that would be a total mess. 

    It would. The LP interest is an asset owned by the individual. The valuation issues for non-public assets will definitely create controversy but we live with that controversy in other areas of tax (property, estate, etc).

  3. Assuming the US enacts the current proposals regarding corporate international taxation, the US will be creating tax costs for US based multinationals over and above what the OECD is asking from its members primarily due to the following differences:

    1. The US tax system applies it’s own set of accounting rules to determine taxable income. Accordingly this results in significant timing differences which create double taxation unless losses and/or tax credits can be carried forward/back. 


    2. The OECD will allow companies to earn a normal return on substantive activities measured by tangible assets and payroll in a jurisdiction without an additional tax applying at the parent level while the current US proposals would remove the current 10% exemption.

    3. The US has comprehensive expense allocation and foreign tax credit disallowance rules which effectively raise the tax rate on foreign earnings. 

    Should we be subjecting US corporations to costs over and above their foreign counterparts?

    I certainly see the reasons for making changes similar to the OECD recommendation, but should the US system be more costly to USS based multinationals?

  4. 7 minutes ago, TwiceHorn said:

    The thing that is irksome about the estate tax and that I think propels more avoidance than some notion of providing inheritance, is the confiscatory rate of 0.55 on the first non-exempt dollar.

    Eliminate or reduce the exemption to a more reasonable amount, and cut the tax down, at least the lowest bracket, to something more reasonable.

    Going back to the Green Book, the proposal is similar to this approach which requires the deceased to recognize all appreciation on assets on the final income tax return subject to a $1 million exemption plus a $500,000 exemption for a primary residence. Additionally the proposal treats capital gains as ordinary income and so the appreciation is subject to tax at 43.4% assuming the highest marginal rates apply.

    After considering the final income tax return, the estate would run through the estate tax process with the current 11.7 million exemption.

    • Hook 'Em 1
  5. 7 minutes ago, SydneyCarton said:

    I wouldn't think non public companies would be a concern. Those companies are paying out dividends which would show up on taxes, not making money which means they don't owe shit, or other documentation that I would think would be indicative things on K-1s or whatever. I have small stakes in some private companies. Real small stakes. But I have to report K-1 data for some of them, or tax. 

    This is more to do with regards big time CEO's who hoard their stock and get paid in stock. 

    The CEOs who are being paid in stock are paying tax on those stock/option grants as compensation at ordinary income rates. If holding private company stock is taxed differently than public company stock, it will definitely create an incentive for companies to stay private for as long as possible.

  6. 7 minutes ago, TwiceHorn said:

    Well, notwithstanding exemptions and avoidance strategies, that is basically the estate tax scheme today.

    Fair point - It’s probably more accurate to state that the proposal is really a change to the exemption amount although Treasury’s Green Book doesn’t present the proposal in that manner.

    • Hook 'Em 1
  7. 1 minute ago, SydneyCarton said:

    I'm not a financial guy, at all. But what about some rule indicating that people above a certain net worth must liquidate a certain amount of their stock on a regular basis, pay the taxes, and then can use that money to reinvest like normal people?

    That’s essentially Biden’s estate tax proposal. Everything above a certain amount is marked to market at death and the estate pays tax on the gain at that time.

  8. 5 minutes ago, SydneyCarton said:

    That propublica report is arguing for a mark-to-market regime. I’m curious about what unforeseen impacts would occur when we subject to people to tax when they haven’t engaged in transactions providing the cash to pay the tax.

    • Hook 'Em 2
Ă—
Ă—
  • Create New...