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How to defer US taxes

taylor.town

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Re: How to defer US taxes

#71

Post by pwenzel »

buellerbueller wrote: post #45

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

Up to now, I would have agreed with you. However, many residents of cities victimized by ICE see paying federal taxes as money that goes directly toward an enemy that is destroying their communities. I will happily pay my city and state taxes, but I no longer feel that my my federal tax dollars are helping much.

I live in Minneapolis, MN. The Federal government has cut public health grants, Medicaid, laid off a large portion of he Department of Health, cut Department of Human services, cut school funding, cut University of Minnesota funding, cut heating assistance, cut flood mitigation, cut USDA programs, and cut SNAP. This is just the things I can remember! Our city hosts Hennepin County Medical Center, which provides emergency care to the entire state, and it is risking closing due to federal cuts.

Minnesota has historically paid more in federal taxes than other states, and contributes more than it gets back. I think it's time for a change.

Re: How to defer US taxes

#72

Post by nayuki »

> Loaned money isn't taxable income, so you can save/spend it without affecting your tax rate.

> Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.

The article talks about taxes in the USA, and I think the treatment of taxes at death is unfair by giving a significant tax advantage to people who hold assets till death, especially with the step-up basis. The way Canada handles it seems more reasonable to me:

> Capital property generally includes real estate, such as homes and cottages, investments like stocks, mutual funds or crypto-assets, and personal belongings like artwork, collections or jewelry. When a person dies, they are considered to have sold all their property just prior to death, even though there is no actual disposition or sale. This is called a deemed disposition and may result in a capital gain or capital loss

-- https://www.canada.ca/en/revenue-agency/services/tax/individ...

In exchange, Canada does not have an inheritance tax. All taxation is resolved in the estate of the deceased person before the money or assets are passed on without further taxation.

Re: How to defer US taxes

#74

Post by surprisetalk »

codemog wrote: post #55

> If you aren't actually reinvesting capital, pay your damn taxes. Don't be an asshole. Why? So my government has more missiles to blow up children? No thanks.

There are more productive ways to vote with your money than tax evasion.

You can make tax-exempt donations, or start your own non-profit organization.

Some people hoard money without building businesses, without participating in government, without contributing to welfare. People who take more than they give are assholes.

Re: How to defer US taxes

#75

Post by petcat »

codemog wrote: post #55

> If you aren't actually reinvesting capital, pay your damn taxes. Don't be an asshole. Why? So my government has more missiles to blow up children? No thanks.

You're conflating "taxes" with federal taxes.

In my state (NY), I pay income tax to the feds and NY state. I pay property tax to my county and town. This pays for things like roads, cleanup and maintenance, the school district, the library, the parks and sports recreations. The community trails and wildlife preserves.

Re: How to defer US taxes

#76

Post by dminor »

phkahler wrote: post #33
singron wrote: post #10

Earlier quoted context omitted.

Deferring taxes is essentially an interest-free loan from the government to you. You can take that money, invest it, and then keep most of the earnings when you eventually pay the taxes. There are also some loopholes where capital gains taxes deferred until after death just don't get paid at all. This is the "step-up basis" where your inheritors get to reset the basis of capital assets and neither you nor they has to…

This is what they call "buy borrow die" or some such. Buy an asset, borrow against it, die to reset the basis. Your estate will still have to repay the loans, but... that one part I don't really understand. Do they just refinance, taking a new loan against the newly valued asset? This all seems to benefit from low interest rates. Was it a thing in the 90's? Or even the 80s when rates were much higher?

It's a strategy that's only really available to the ultra wealthy, because the banks are willing to give them a bespoke loan with a much lower interest rate that's payable after they die. There's also a complex trust setup to pass the asset to their heirs.

Re: How to defer US taxes

#77

Post by throwaway667555 »

xienze wrote: post #66
gamerdonkey wrote: post #39

Earlier quoted context omitted.

The strategy is called "Buy, Borrow, Die" https://www.theatlantic.com/economy/archive/2025/03/tax-loop... (viewable by disabling JS)

What if I live for, say, decades before dying. Surely the lender expects some some amount of repayment before then.

Lenders have an amount of capital that they need to invest and earn returns -- they're generally not in the business temporarily so they don't want their capital back. And when the loans are secured by hard assets, e.g. publicly traded stocks, there's little risk of default so long as the price stays up. In times of rising stock prices, there's little to no reason for a debt holder (lender) to exit their positions at maturity. Rather roll and continue taking the return (interest).

Re: How to defer US taxes

#78

Post by __MatrixMan__ »

mcmcmc wrote: post #69
codemog wrote: post #55

> If you aren't actually reinvesting capital, pay your damn taxes. Don't be an asshole. Why? So my government has more missiles to blow up children? No thanks.

You know that’s not the entire budget right? You’re being an asshole by denying funding for disaster relief, schools, healthcare, roads, scientific research, all the public goods and services that don’t work on a profit driven model, but you still get a direct benefit from. If you want to play concerned citizen get out and protest, vote with your dollars by not throwing them at big tech companies who kowtow to politi…

> vote with your dollars by not throwing them at big tech companies

Abstaining is not voting. If you want to vote with your dollar, spend it actively undermining big tech companies. Get out there and blind some cameras or something.

Re: How to defer US taxes

#79

Post by yonixw »

> For your leveraged investments, pay yourself in refinanced cash when your investments appreciate and/or credit rates drop.

In other words: Gamble that (1) your investments appreciate, or (2) that you will find credit rates drop when convenient.

In 1 word: Gamble.

So, either you are rich and have spare money to gamble, which sure, might be beneficial against taxes. But you could also gamble against any other sector (stocks, housing, startups...)

Or, if you are not rich, just put it in the 401k (or eq).

Re: How to defer US taxes

#80

Post by PopAlongKid »

jaxefayo wrote: post #51
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.

>an angry letter when the IRS

Do you have an example? I've seen dozens of IRS letters for dozens of different taxpayers and none of them had any "angry" language in them.

The myth that the IRS is trying to scare or traumatize you is just a dark pattern by certain 3rd party "tax resolution" services. The IRS is quite tolerant of the person who breaks the law by not filing and paying on time and provides many opportunities to come into compliance, starting with an automatic first-time abatement of the most common penalties.

https://www.irs.gov/individuals/understanding-your-irs-notic...

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