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How to defer US taxes

taylor.town

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Re: How to defer US taxes

#51

Post by jaxefayo »

SoftTalker wrote: post #46

It seems to me that I'm running into more people who just don't file their taxes. They wait for the IRS to send them a letter saying how much they owe, and they just pay that. I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.

I’ve never heard of anyone doing this, but now I kind of wish everyone did. Maybe it would force the IRS to just give us a bill instead of having us try our best to calculate what we owe, submitting that, and then hoping that we don’t get an angry letter when the IRS calculates it themselves and their answer doesn’t jive with ours.

Re: How to defer US taxes

#52

Post by avemg »

claythearc wrote: post #44
gautamcgoel wrote: post #31

Earlier quoted context omitted.

The thing I don't understand with these loan arguments is: don't you eventually need to pay taxes in the income you use to repay the loan? It seems to me that folks who take out such loans are just kicking the can down the road.

There are a bunch of strategies here, but one people oft repeat is the "buy, borrow, die" approach. Where, they are kicking the can down the road, but the magic happens at the die step. When the borrower dies: Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the s…

I'm familiar with this strategy but there's one thing about it that I don't understand: After death, the loans are an estate liability, right? Doesn't the estate need to be settled before heirs get their inheritance? If i had an outstanding $1MM loan, wouldn't the estate need to liquidate some of that $RIVN at the $67 basis in order to pay the loan? and then whatever $RIVN was left over would go to the heirs at a stepped-up basis?

Re: How to defer US taxes

#53

Post by jeffreyrogers »

claythearc wrote: post #44
gautamcgoel wrote: post #31

Earlier quoted context omitted.

The thing I don't understand with these loan arguments is: don't you eventually need to pay taxes in the income you use to repay the loan? It seems to me that folks who take out such loans are just kicking the can down the road.

There are a bunch of strategies here, but one people oft repeat is the "buy, borrow, die" approach. Where, they are kicking the can down the road, but the magic happens at the die step. When the borrower dies: Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the s…

Minor nitpick. The step up in basis actually happens when you die (not when your heirs receive the assets), and your estate has to pay off creditors before distributing assets. So the debt is paid off first, then your heirs get whatever is left over. Net result is the same though.

Re: How to defer US taxes

#54

Post by racingmars »

buellerbueller wrote: post #45

Or, just pay your taxes. We collectively benefit from them.

Is there really any correlation between tax revenue and spending at the federal level anymore? It seems the U.S. government is willing to spend at huge deficit levels. If everyone stopped paying federal taxes I suspect nothing would change.

Re: How to defer US taxes

#56

Post by jeffreyrogers »

avemg wrote: post #52
claythearc wrote: post #44

Earlier quoted context omitted.

There are a bunch of strategies here, but one people oft repeat is the "buy, borrow, die" approach. Where, they are kicking the can down the road, but the magic happens at the die step. When the borrower dies: Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the s…

I'm familiar with this strategy but there's one thing about it that I don't understand: After death, the loans are an estate liability, right? Doesn't the estate need to be settled before heirs get their inheritance? If i had an outstanding $1MM loan, wouldn't the estate need to liquidate some of that $RIVN at the $67 basis in order to pay the loan? and then whatever $RIVN was left over would go to the heirs at a ste…

The step up in basis happens when you die, so the estate has no capital gain. Then the debts are paid, then the heirs get whatever they're supposed to get.

Re: How to defer US taxes

#57

Post by something765478 »

SoftTalker wrote: post #46

It seems to me that I'm running into more people who just don't file their taxes. They wait for the IRS to send them a letter saying how much they owe, and they just pay that. I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.

Well, frankly, that's exactly how it should work.

Re: How to defer US taxes

#58

Post by celeritascelery »

SoftTalker wrote: post #46

It seems to me that I'm running into more people who just don't file their taxes. They wait for the IRS to send them a letter saying how much they owe, and they just pay that. I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.

That seems like a terrible idea. A good tax accountant will help you find ways to lower tax burden and save money. The IRS has no such incentive, and will probably just tax you at the standard rates for your gross income.

Re: How to defer US taxes

#60

Post by lb1lf »

SoftTalker wrote: post #46

It seems to me that I'm running into more people who just don't file their taxes. They wait for the IRS to send them a letter saying how much they owe, and they just pay that. I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.

I guess the accuracy of such solutions vary by jurisdiction; I just received my tax return for 2025 in Norway.

The sum owed I had calculated at the end of 2025 was less than 2% off from the sum our IRS equivalent came up with.

Their sum was the most favorable to me, though - they had adjusted a deduction I qualified for last year which I had missed.

This level of accuracy is down to our IRS knowing just about all there is to know about our income, assets, debts &c of course - oh, and on there being fewer loopholes in our tax code...

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