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Brew

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Everything posted by Brew

  1. It’s such a fucking beating being involved in a discussion with you over anything, so I’ll bow out of further ones at this point.
  2. I 100% get that scenario for large purchases, other investments, whatever. They are using leverage against an asset they own to invest in something else. I have zero problem with that scenario no different than taking a second out on your house to build a pool. You own the asset and use it accordingly. My read on this discussion has been they were leveraging options/other assets for more lifestyle related things, current expenses, etc. because the valuation increase is greater than the interest expense. Maybe that’s still the play, I just don’t see it. If I have $1B in that investment bank and borrow $50M to fuck around with this year, I still have to create taxable income somewhere to pay it back unless we are just running a stacking deal until I die. If I borrow $50M next year to fuck around with, now I’m into the bank for $100M and even at 1% I now owe them $101.5M at the end of year 2. If I die, the kids or the trusts owe the money back but they got $1.17B (assuming 8% growth) in stepped up basis without paying CG’s and end the day $60M or so ahead not getting into estate tax issues. Spread that out over some longer period and they are just betting on stock valuations to outpace interest I guess. However, I just don‘t see this example anywhere near as prevalent as my first example. You are talking a handful of people with the kind of unrealized appreciation where that works in end of life stages where it makes sense. Shit, most of those people still have plenty of cash where again it is a scenario 1 deal on large scale investment opportunities. Maybe everyone is doing it, but short of reviewing their financial statements it’s a still just a bunch of hypotheticals. I’m not sure it’s a reason to argue for the wealth tax as the real reason is unrealized appreciation of the investments not what they are doing with that equity. Back on that one, how are we valuing closely held entities under this new wealth tax provision?
  3. Who do you think does the tax work for the top 2 percent, typically the Big 4. I brought over the southeast regional managing tax partner for one of the top 6 firms as a partner 3-4 years ago, that discussion isn’t something that has come up. I have a number of clients that are well into the 9 figures, none in the 3 comma club so you are probably right about that. Which is also the reason I asked for an explanation rather than conjecture and what I’ve heards. Also a number of Big 4 partners don’t make that much, typically the regionals outpace them in comp and they make up for it in retirement benefits.
  4. I’ve asked before, explain the concept for me in detail. In years of practice and years of sitting in tax planning discussions with people as high up as Big 4 partners, it’s never come up. I get the concept of taking loans against assets, I don’t get the concept of this in long-term planning to avoid capital gains when they are at historical lows.
  5. Valid example, people tap home equity all the time for things. However, I would consider that outside of the loan types they are talking about. It may not be though.
  6. Another one of these topics in this discussion I have never seen in practice. Short-term needs, sure. Business funding needs, sure. Just for living that is held for a long-time to avoid capital gains, not once. More commonly I see loans against C Corps now that those rates have flipped with individuals to keep the income in the Corp and taxed there, but it is taxed. Parents to kids, see that one all the time but not sure how that would be an income scenario. I think we’re chasing boogeymen that just don’t really exist in practice outside of limited cases. There are 100’s of loopholes that should be debated and fixed and more have been created in the last few years than ever before.
  7. I’m back on RSU’s and ISO’s not necessarily generic stock options, it’s what I think of when discussing these because it’s typically where the bigger money is.
  8. We’re going in circles, but from my side there is only value if exercised. If they are never exercised, it will always be zero. I’ve seen a lot of options not get exercised because the start up never takes off, the value is never there, etc. If the stock price goes up, they always get exercised and tax is paid. Most people exercise them as soon as they are eligible, so again just tax the spread at exercise and be done with it. In 20+ years of dealing with people’s taxes, I’ve only seen one instance of an individual just carrying the options. I have a lady I’m working with right now that is getting ready to retire and instead of exercising the options she thought it was better to hold them. Now she’s dealing with several million in options on a company that went public and took off to the tune of a 40x return of her option price, so it definitely happens. However, she’s also about to pay more tax than she probably would have exercising them annually like she should have. I think it’s just a discussion on the vast minority of option holders at this point.
  9. Then just change the system to where income is generated when the option is exercised at the current price not the strike price.
  10. Most startups especially in biotech and tech use options to be able to offer additional benefits they can’t afford and also vest that individual in the potential growth of the startup.
  11. This is where everything gets convoluted and is why the system is a cluster. When I am talking about options, I’m talking about the ones that aren’t typically transferable. They are use it or lose it.
  12. Watched In the Heights with the family tonight, I have to say it was worth the watch. It ran longer than it needed, but it was definitely well done.
  13. No idea what you were going for there. Options are used a lot of times in recruitment in early stage companies because cash isn’t available for high comp. There are a multitude of reasons why those options aren’t always exercised. Stocks don’t always go up and vesting issues and stock fluctuations can make the ordinary income part not worth exercising.
  14. That makes zero sense just for the record. You don’t own anything until you have exercised the option, you just have a right to buy at a predetermined price. There are a number of reasons people don’t exercise options, most not related to a fuck up but some are.
  15. Went with the kids Friday not expecting much, it was definitely better than I expected.
  16. Options are not always exercised. I think they would have to be exercised to be included for it to work.
  17. For RSO’s it is ordinary income when they are exercised, not when they are sold. People typically sell some portion to cover the tax on the exercise which is then capital gains. ISO’s are only taxable at the sale as capital gains.
  18. Crap, I’ve always read his username as works with weed unless there is one of those around here also. Learn something new every day.
  19. Pay the pool maintenance company to come by once a week. I have found that’s the only way I get any enjoyment out of having a pool at this point and the maintenance is the main reason I had no plans to build another one. However, I’m married so that didn’t go as originally agreed upon. The biggest issue we have is even with all the automated shit on pools now, keeping the free chlorine in line has been a pain in the ass. We have more rain and probably a wider band of temps than you guys do, but it’s constantly something.
  20. There are plenty, it may look different today than it did 50 years ago but it is still there. There is no point in arguing that side as it’s a loser from the start.
  21. I’m circling back to this just to provide clarification. I don’t disagree with your overall premise, I disagree with your constant use of the term loophole. It is not a loophole that causes people not to pay tax on wealth and unearned income, it is the system as it stands currently. A loophole by definition is finding something in the system that allows you a way to not pay tax on income of which those specific items aren't part of defined income in the current system. No one pays tax on wealth outside of the wealth that exists in real property at this point.
  22. I haven’t seen anyone under $2M have any issues or it take any significant time. The only ones I have seen drawn out are the $2M+ ones that had to deal with the questionnaire when it started in late a November. I know of several in the same boat we were in timing although they had not submitted as early as we did.
  23. Damn, some of you don’t read and just look for apparent wholesale agreement without being able to have a functioning discussion. Scrolling up through the page, I think I’ve typed plenty of words (especially in relation to you not giving any specific reason why it should be) and have explained my position on it. However, I’ll summarize in one place. I think the disclosure of bands and disclosure of upper level management comp ranges are reasonable. I don’t think it is a benefit to disclose specific employee comp. Most employees think they are worth more than they are in relation to the person next to them. I don’t know that I’ve ever sat down with anyone that thinks they are overpaid. Most employees have differing viewpoints on value, workers think the generation of work is the most valuable and rainmakers think the picking up of new work is the most valuable. If you are paid less than you are worth and the market agrees, you’ll be able to get it somewhere especially right now. If you are worried about competing with the guy beside you, you are looking the wrong direction as you should be competing with the guy above you. I can keep going, I’m sure it will not matter though. I’ll ask again, how many that run a business disclose exact compensation?
  24. That’s a stupid, unrealistic comparison, because one of us would clearly be way outside market. A few thousand difference I would give you. You also have to take into account market rates and the fact that the free market dictates if I’m worth more I can probably get it elsewhere especially right now.
  25. I’m 42, worked my way up from intern to the #1 spot. It didn’t make any difference to me what the guy beside me was making. I didn’t measure myself against him, I measured myself on a promotion standpoint and how quickly I moved up the ladder and against the guys at the top. We publish averages and other numbers on partner comp to show what is available, seeing the exact number Jane makes beside them doesn’t seem like it promotes that much drive.
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